AngloGold has sold its Cripple Creek & Victor mine (CC&V) to Newmont for US$820 million in cash.
The sale of the operation, in the US, also includes a small net smelter return royalty.
According to AngloGold, the move is part of the company’s strategy to reduce debt levels.
“The US$820 million in cash proceeds from the sale of CC&V will immediately strengthen the company’s balance sheet and allow it to implement a deleveraging strategy to lower financing costs,” AngloGold said in a company statement.
Its smelter royalty is payable on all ounces of gold recovered over the mine’s remaining life, from both surface and underground operations, and is payable quarterly in arrears at the rate of 2.5 per cent of the net revenue, after refining and smelting costs, based on the average gold spot price.
“AngolGold Ashanti will also no longer have to fund the remaining capital of approximately US4200 million required to complete the CC&V mine life extension 2 project, further improving its free cash flow position.”
“CC&V represents a value-accretive opportunity for Newmont to improve mine life and costs in a favourable jurisdiction,” Newmont’s president Gary Goldberg said in a company statement.
“Consistent with what we’ve achieved elsewhere, we believe we can lower direct mining costs by up to ten per cent through improved productivity and optimisation,” he said.
“Funding the acquisition with equity allows Newmont to maintain financial flexibility while continuing to develop profitable projects.”
AngloGold CEO Srinivasan Venkatakrishnan (Venkat) added: “This deal significantly de-risks [AngloGold’s] balance sheet without diluting our shareholders, and places us in a much stronger position – it puts 820 million US dollars into our bank account, saves 200 million US dollars in capital expenditure, and gives us continued exposure to the asset through an uncapped royalty on future unground production.”
Following the transaction, the miner is focused on production at its Tropicana project, in WA.
The transaction will close in the third quarter of the year.