Newmont winds up divestments with Porcupine sale
Smaller companies transform with gold mine acquisitions
Newmont Corporation (NYSE: TSX) has announced the sale of its Porcupine operation in Ontario, Canada to Discovery Silver Corp (TSX: DSV).
Discovery, led by former Kirkland Lake Gold CEO Tony Makuch, will pay up to US$425 million, comprising US$200 million in cash, US$75 million in shares and deferred consideration of US$150 million starting in late 2027.
Porcupine is expected to produce 285,000 ounces of gold per year over the next decade.
Discovery said the acquisition had a base case net present value of US$1.2 billion, based on a consensus long-term gold price of US$2150 an ounce, and US$2.3 billion at $2650/oz.
Discovery has entered into binding commitments for roughly US$555 million of financing to fund the acquisition, including US$400 million in royalty and debt agreements with Franco- Nevada Corporation (TSX: FNV) and around US$155 million from a bought deal public offering of subscription receipts.
“For shareholders, the transaction is attractive and will establish a new North American precious metals producer with excellent value creation upside through future operating performance, multiple development projects and extensive exploration potential,” Makuch said.
“We are also diversifying our portfolio, which will reduce risk and provide shareholders with significant leverage to both gold and silver prices.”
Milestone for Newmont
The proposed sale of Porcupine takes the value realized in Newmont’s divestment program to US$4.3 billion.
“Today’s announcement represents a significant milestone for Newmont as we have agreed to sell the final non-core operation from our divestiture program,” Newmont president and CEO Tom Palmer said.
“The sale is part of Newmont’s ongoing program to divest non-core assets as we make a strategic shift to focus on our tier one assets.”
Newmont announced the plan to divest six non-core operations and two projects in February 2024, following the close of its acquisition of Australia’s Newcrest Mining.
Aside from Porcupine, Newmont sold the Telfer mine and Havieron project in Australia to Greatland Gold (LSE: GGP) for US$475 million, the Akyem operation in Ghana to Zijin Mining Group Co (SH: 601899) for US$1 billion, the Musselwhite operation in Canada to Orla Mining (TSX: OLA) for US$850 million, the Éléonore operation in Canada to private company Dhilmar for US$795 million and Cripple Creek & Victor in the US to SSR Mining (TSX: SSRM) for US$275 million.
The company also realized US$527 million from the completed sale of other investments, including the sale of the Lundin Gold (TSX: LUG) stream credit facility and offtake agreement, and the monetization of Batu Hijau contingent payments.
The only remaining non-core asset in the portfolio is the Coffee project in the Yukon, Canada.
Telfer performing well
The first of Newmont’s divestments to go through was the sale of Telfer and Havieron to Greatland on December 4.
Last week, Greatland reported production of 29,864oz of gold and 1189 tonnes of copper in the first 27 days of its ownership through to December 31.
Greatland said it equated to a monthly production rate roughly 33% higher than the average contemplated by its initial Telfer mine plan of 426,000oz of gold equivalent over 15 months, or an average of 28,400oz AuEq per month.
"Transforming overnight from an explorer and developer to the owner and operator of Australia's third largest gold-copper processing operation is a substantial achievement and a credit to the hard work and quality of our team,” Greatland managing director Shaun Day said.
A feasibility study for the large undeveloped Havieron project is due in the second half of 2025.
"The combination of the high Australian dollar gold price, very substantial mined stockpiles at surface, Telfer mine life extension targets, and the approaching development of the world class Havieron gold-copper asset presents a unique opportunity for near-term cashflow and medium-term growth,” Day said.
Greatland is planning to list on the ASX in the June 2025 quarter.
Musselwhite sale approved
Last week, Orla reported that its shareholders had approved the acquisition of Musselwhite and associated financing package.
The financing package includes US$250 million in debt facilities, a US$350 million gold prepayment from a syndicate of lenders, and US$200 million in senior unsecured convertible notes, led by the company’s cornerstone shareholders, Fairfax, Pierre Lassonde, and Trinity Capital Partners Corporation.
The transaction is expected to close in the current quarter.
Orla also reported record annual gold production for 2024 from its Camino Rojo mine in Mexico and South Carlin Complex in Nevada.
December quarter production was 26,531oz of gold, taking total 2024 production to 136,748oz.
Orla achieved its improved full-year 2024 production guidance range of 130,000-140,000oz, representing a 19% beat to the mid-point of its initial 2024 guidance of 110,000-120,000oz.
The company expects full-year all-in sustaining costs to be at the low end of the improved guidance range of US$800-900 per ounce of gold sold.