Newmont Mining announced Tuesday that it will raise $1.2 billion through offerings of common stock and convertible notes to fund the acquisition of the 33.33% interest in the Boddington gold project in Western Australian that it does not already own, as well as fund additional capex.
AngloGold Ashanti has agreed sell its interest to Newmont, which will give the U.S.-based gold miner 100% ownership of Boddington, which will become Australia's biggest gold mine. Total consideration for the 33.33% AngloGold Ashanti interest includes $750 million payable in cash, $240 million payable in cash and/or Newmont stock, and a royalty capped at $100 million.
Meanwhile, Newmont also forecast higher equity gold sales of between 5.2 million to 5.5 million ounces at lower costs applicable to sales of between $400 and $440 ounces this year. The higher gold sales are anticipated due to the start-up of the Boddington expansion this year, as well as increased gold sales at Yanacocha and Batu Hijau.
The A$2.4 billion Boddington expansion is expected to yield 850,000 ounces of gold and 30,000 tonnes of copper a year for more than 20 years. After the acquisition, expected to close in March, Newmont's proven and probable gold reserves at Boddington will increase by 6.6 million ounces to 20.1 million ounces
In a statement, Newmont President and CEO Richard O'Brien said, We are very pleased to consolidate our interest in Boddington, a world-class asset that we obviously know well. We expect Boddington will have low operating costs, a mine life in excess of in 20 years and significant exploration potential in a favorable geo-political jurisdiction.
Newmont also anticipates a lower capex expenditure companywide of between US$1.4 billion and $1.6 billion in 2009 with 60% allocated to Australia/New Zealand, 15% in Nevada, and the remaining 25% at other locations.
We anticipate that approximately 45% of the 2009 capital will be allocated to sustaining investments with the remaining 55% allocated to project development initiatives, including the completion of the Boddington project, Newmont said in a news release.
The company also reported year-end 2008 proven and probable gold reserves of 85 million equity ounces, compared with 86.5 million equity ounces at the end of last year. Newmont added 6.3 million equity ounces of gold reserves due to margin changes and additional drilling, which were offset by revisions totaling 1.1 million equity ounces.