Newmont Corporation (TSE: NGT) (NYSE: NEM), the world’s largest gold company, is selling its Musselwhite gold mine in Ontario for USD$850 million to Orla Mining (TSE: OLA) (NYSEAMERICAN: ORLA).
The company announced on Monday that it will pay Newmont USD$810 million in cash with additional instalments depending on gold price fluctuations. This will be split into two tranches if gold exceeds $2,900/ounce and $3,000/ounce in the first and second full-year periods. The deal is expected to close in Q1 2025.
Orla is transforming into a multi-asset miner by acquiring the Musselwhite underground gold mine in northwestern Ontario. The mine has been operational for over 25 years and held 1.5 million ounces of proven and probable gold reserves as of Dec. 31, 2023.
This acquisition elevates Orla from a single-asset producer to a company producing over 300,000 ounces of gold per year. This would more than doubling its output. With gold prices surging due to actions by the US Federal Reserve, Orla enhances its exposure to record highs. The company expects Musselwhite to generate over USD$150 million in average annual free cash flow over the next six years.
Orla aims to increase its output to 500,000 ounces per year by developing the South Railroad project in Nevada.
“We intend to not only continue to operate Musselwhite, but to seek optimization opportunities and to invest in its future, grow its reserves and resources, and extend its mine life, said Jason Simpson, chief executive officer for Orla.
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Newmont is selling off non-core assets after Newcrest acquisition
The Colorado-based Newmont gold miner aims to raise up to USD$2.9 billion by selling non-core assets following its USD$17 billion acquisition of Newcrest.
Currently, Newmont is marketing other Canadian assets. These include the Éléonore and Porcupine mines and the Coffee project. In the US, it plans to sell the Cripple Creek & Victor mine (CC&V). The company has already sold two Australian assets for up to USD$475 million and agreed to sell its Akyem mine in Ghana to China’s Zijin Mining Group for up to USD$1 billion.
Newmont is divesting non-core assets to streamline its portfolio and focus on high-margin operations. This strategy allows the company to optimize its asset base while generating substantial funds to strengthen its balance sheet and reinvest in core projects.
Orla confirmed that the Musselwhite team will continue running the operation without any job losses following the takeover. The company stated that the transaction will secure Musselwhite’s position as “one of the best gold mines in Canada” for years to come.
The company plans to extend Musselwhite’s life span and committed to working with First Nations partners in a spirit of trust and transparency. Over its 28 years of operation, Musselwhite has produced nearly six million ounces of gold. It also currently employs approximately 1,000 workers, including contractors.
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