Newmont Mining (NEM-N) has inked a definitive deal to consolidate its holdings in the Yamfo-Sefwi belt in Ghana by buying out Moydow Mines International‘s (MOY-T) stake in the Ntotoroso project.
Under the deal, Newmont will issue Moydow 800,000 common shares and will pay a 2% royalty on all gold and silver production from Ntotoroso exceeding 1.2 million gold equivalent oz. Newmont will also forfeit for cancellation more than 1.3 million Moydow shares (representing about 5% of Moydow’s outstanding issue).
The share portion of the deal is valued at more than US$30 million based on Newmont’s closing price of US$37.54 per share in New York on Aug. 22, the day before the deal’s announcement.
Moydow says it will distribute to shareholders proceeds from the sale of 600,000 of the Newmont shares. Following the cancellation of its own shares, Moydow will be left with around 26.4 million outstanding shares resulting in a distribution of about $1.20 per share (on an undiluted basis).
The deal is subject shareholder and regulatory approvals, and is expected to close by Oct. 30.
Newmont inherited Ntotoroso, which sits in the middle of the 2-km-long belt, via its takeover of Australia’s Normandy Mining in 2002. The project is home to a reserve of 14.8 million tonnes running 2.4 grams gold per tonne, based on a gold price of US$275 per oz. (T.N.M., Mar. 31-Apr. 6/03). Elsewhere along the belt, Newmont’s equity ounces in 11 deposits totals some 3.3 million oz. contained in 56.2 million tonnes averaging 1.9 grams gold.
Moydow shares jumped 7, or more than 5% of value, to a new 52-week high of $1.38 in early trading in Toronto on Aug. 26; shares in Newmont were US26 higher at US$37.02 in New York.
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