Newmont aims to sell US$2B in assets post-Newcrest

Newmont (NYSE: NEM) plans to raise US$2 billion in cash through mine sales and project divestments following the acquisition of Newcrest Mining.

The approximately US$15 billion deal was completed on Monday. The acquisition adds five active mines and two advanced projects to Newmont’s portfolio.

The merged company can now initiate a process to sell mines and determine which exploration projects to prioritize over the next two years, Newmont CEO Tom Palmer told Bloomberg.

“It will result from a combination of asset divestments and the resequencing of projects to ensure we have the appropriate and consistent allocation of cash for reinvestment,” Palmer said.

Among the assets under discussion is Newmont’s Cripple Creek & Victor mine 150 km south of Denver.

Cripple Creek “is certainly in that category of operations you debate around their fit,” Palmer told The Wall Street Journal.

Newmont acquired the Cripple Creek mine from AngloGold Ashanti for US$820 million eight years ago.

Small contributor

In the nine months to September 30, Newmont extracted 134,000 oz. of gold from Cripple Creek. Although this represented a 7% increase compared to the previous year, the operation remained one of the smallest contributors to overall output.

The acquisition of Newcrest, the largest takeover in the mining industry this year, comes as gold producers face the prospect of stagnating output, harder-to-mine deposits and rising input costs.

Newmont’s bullion output has stalled for the past three years, and the company predicted that without a major acquisition its production would remain the same for another decade.

The miner also faced a four-month strike at its Penasquito mine in Mexico and was forced to cut guidance and post lower-than-expected earnings in the latest quarter.

Shares of Newmont fell 2.8% on Monday afternoon in New York to US$51.87, valuing the company at US$30.1 billion. They’ve traded in a range of US$47.93 to US$76.08 over the last 52 weeks.