August 3, 2015 By Wayne Heilman, The Gazette ~
Greenwood Village-based Newmont Mining Corp. said Monday it completed its $820 million acquisition of the Cripple Creek & Victor gold mine, vowing to continue to ongoing expansion of the state's largest gold mine. Ore is mined from the open pit Thursday, June 11, 2015, at the Cripple Creek and Victor Gold Mining Company. Newmont Mining Corp. agreed to buy the gold mine for $820 million from AngloGold Ashanti Ltd. (The Gazette, Christian Murdock)
The deal, which includes a 2.5-percent royalty on gold production from underground mining, comes nearly two months after Newmont agreed to purchase the mine from South African mining giant AngloGold Ashanti Ltd. Newmont retained the mine's 570 employees, including current management.
The Cripple Creek & Victor mine "adds profitable production and free cash flow while improving our portfolio mine life and costs in a favorable jurisdiction," Newmont CEO Gary Goldberg said Monday in a news release. "Consistent with what we've achieved at our other operations, we believe we can lower CC&V's direct mining costs by up to 10 percent through mine plan optimization, and improve mill recoveries by up to 2 percent by applying proprietary technology. We look forward to welcoming CC&V's team to Newmont."
The deal will add 350,000-400,000 ounces of gold production annually in 2016 and 2017 at a cost of $825-$875 an ounce, add reserves to the company's gold reserve base and bring "strong earnings and cash flow with additional opportunities to improve value," Newmont said.
Newmont paid for the acquisition by selling $674 million in stock June 15 and used some of the $3.31 billion in cash it had on hand as of June 30.
A $585 million expansion of the mine is about two-thirds complete and Newmont said it expects to finance the remaining costs with cash generated from the mine, which made $48 million in profits on $266 million in revenue during 2014. The project includes a new leach pad, recovery plant and mill and is expected to be completed by mid-2016, adding another 30 jobs to the mine's work force.
Although early drilling results on underground deposits at the mine have been promising, Goldberg said in June that more exploratory drilling is needed and a decision on whether or how to tap those deposits likely is a couple of years away,
The deal gives Newmont is first Colorado gold mine since 1978, when the company closed the Idarado mine near Telluride. The company also operated the Black Cloud lead and zinc mine near Leadville, which closed in 1999.
During the past two years, Newmont has sold $1,7 billion in mines in Nevada, Australia, Mexico and New Zealand, but also has announced plans to open a $1 billion mine in the South American nation of Suriname and two new mines in Nevada to help offset production at the mines it has sold or where operations are winding down. During the first half of the year, the company earned $255 million on revenue totaling $3.88 billion.