Newmont Corporation (NYSE: NEM) (TSX: NGT) has agreed to sell the Telfer operation and 70 per cent of the Havieron gold-copper project in the Paterson region of Australia to Greatland Gold plc (LON: GGP).
The company explained on Wednesday that this was part of its ongoing program to divest non-core assets.
Newmont expects to receive up to USD$475 million in gross proceeds under the terms of the agreement. This includes USD$207.5 million in cash, payable at closing, and USD$167.5 million in equity, to be issued in the form of Greatland shares at the time of closing. Additionally, Newmont may receive up to USD$100 million in deferred contingent cash consideration.
“Including the Telfer divestiture, we continue to expect to reach at least $2 billion in total proceeds from the sale of our high-quality, non-core assets, enabling us to focus attention on our suite of Tier 1 assets, further reduce debt, and return capital to shareholders,” said Tom Palmer, Newmont’s president and CEO.
Newmont is on track to meet its 2024 commitments. With the transaction expected to close in the fourth quarter of 2024, the company has slightly adjusted its non-core gold and copper production guidance to account for the Telfer divestiture, which was classified as “held for sale” in Newmont’s financial statements.
These divestitures are not just about shedding assets but are deeply tied to Newmont’s financial strategy.
By selling these assets, Newmont is looking to reduce debt, particularly following its acquisition of Newcrest.
The sales are expected to help Newmont reach at least USD$2 billion in total from non-core asset sales. This will help pay off debt and return capital to shareholders.
Guidance chart via Newmont.
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Newmont’s actions part of a broader industry trend
Newmont’s actions could signal a broader trend in the mining industry towards consolidation and focus on quality over quantity. This shift might encourage other mining companies to reassess their portfolios, potentially leading to more mergers, acquisitions, or divestitures as companies aim to optimize their operations in a volatile economic environment.
The company’s actions have been part of a broader industry trend of consolidation and quality over quantity. Mining companies have shifted towards an increasing focus on high-quality assets, divesting non-core properties to reduce operational risks and improve capital efficiency. With fluctuating commodity prices and economic uncertainties, this approach allows companies to streamline operations and remain competitive.
The trend is not unique to Newmont either.
Other industry players, such as AngloGold Ashanti Limited (NYSE: AU) and Calibre Mining Corp (TSE: CXB) (OTCMKTS: CXBMF), have also pursued major acquisitions.
These include Anglo Ashanti’s USD$2.5 billion deal to acquire Centamin and also Calibre’s acquisition of Marathon Gold and its Newfoundland based tier 1 asset, the Valentine Project in Newfoundland.
These moves aim to create larger, more stable mining entities that can better weather market volatility while prioritizing core, high-value assets
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