Newmont to swallow Miramar (October 15, 2007)

Vancouver –With a mandate to replace dwindling reserves, Newmont Mining (NMC-T, NEM-N) has set Miramar Mining (MAE-T, MNG-X) in its sights, announcing that it is launching a bid for the company to acquire its sizable Hope Bay gold project, in Nunavut.

The $6.25-per-share, all-cash offer values Miramar at about $1.5 billion on a fully diluted basis — a 29% premium over the 20-day volume-weighted average trading price prior to the bid.

Miramar’s board fully supports the offer and recommends shareholders tender to it.

“We believe Newmont’s offer takes into account the value of the existing resources at Hope Bay along with the significant upside potential,” said Miramar president and CEO Tony Walsh in a statement.

Newmont already has an 8.4% stake in Miramar, which rises to 15% on a fully diluted basis.

The prize is Miramar’s Hope Bay gold deposits, located near Bathurst Inlet on Nunavut’s Arctic coast, where three separate mineralized areas containing more than 10 million oz. gold have been identified.

The three deposits (Boston, Doris and Madrid) host total indicated resources of 36 million tonnes grading 4.5 grams gold per tonne, for just over 5.2 million contained ounces gold. Doris contains 1.2 million tonnes of 19.3 grams gold including reserves calculated at Doris North, while Boston has 2.3 million tonnes of 10.7 grams gold. Most of the resource is at Madrid, with 32.5 million tonnes of 3.5 grams gold.

Additional inferred resources at Hope Bay stand at 46.6 million tonnes averaging 2.9 grams gold.

Miramar acquired Hope Bay in late 1999 from BHP Billiton (bhp-n, blt-l) predecessor BHP Minerals for $25 million after the senior spent about $90 million exploring the region.

The land position covers the entire 80 by 20-km Hope Bay Greenstone Belt, offering substantial new exploration potential.

Miramar had hoped to bring Hope Bay to production through phased development, first with a “starter phase” targeting high-grade ore at Doris, anticipated to produce about 150,000 oz. gold annually for four years. After that, production was expected to grow to about 500,000 oz. per year as the Madrid and Boston orebodies were brought on-stream.

Longer-term goals had output potentially rising to 1 million oz. per year with successful expansion of resources and further discoveries.

In a statement, Newmont CEO and president Richard O’Brien said the company chose to invest in Miramar in 2005 because of the Hope Bay project and the “potential strategic opportunity” it offered.

“We have been impressed with the progress of the project since that time, and believe that, as a result of its scale, the true potential of the project can be realized with the additional expertise and resources of a global gold company like Newmont,” O’Brien added.

Hope Bay recently received a positive decision from the Nunavut Water Board for a water licence for the Doris North mine, recommending a 5-year Type A licence be issued.

Aside from the usual regulatory approvals, Newmont’s offer is conditional on acquiring two-thirds of Miramar’s fully diluted common shares.

Newmont forecasts 2007 attributable gold sales of about 5.4 million oz., a drop from the 5.9 million oz. recorded in 2006, as it moves to cycle new mines in Nevada, Ghana and Australia to production in the new year.

Shares of Miramar leapt more than 20% on the news, closing up $1.09 at $6.28 apiece on trading volume of more than 113 million shares.