Newmont Wraps up Midas Sale - Analyst Blog


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Newmont ( NEM ) has completed the sale of its Midas operation in Nevada to Klondex Mines Ltd. for total consideration of more than $83 million. The gold miner acquired the mine through its merger with Normandy in 2002.

Newmont, in Dec 2013, landed a deal to sell its Midas underground operation and mill complex to Klondex for $55 million in cash and $28 million for the replacement of its surety arrangements with Nevada and federal regulatory authorities. Under the deal, Newmont also received 5 million purchase warrants of Klondex having a 15-year term, subject to acceleration in specific circumstances.

The Midas mine operates through roughly 200 employees and is located in north central Nevada, between Elko and Reno. Proven gold reserve at the mine was 30,000 ounces at the end of 2012, accounting for just 0.2% of total reserves of 14.8 million ounces for Newmont's Nevada mines.

The divestment underscores Newmont's strategy to focus more on its core assets that have longer life and lower cost. Newmont is making notable progress with its growth projects that are expected to boost its production performance. The company's key projects include Batu Hijau in Indonesia and Akyem in Ghana.

Gold miners are shedding non-core assets to optimize their portfolio as they grapple with higher mining costs and lower gold prices. Last month, another gold major Barrick Gold ( ABX ) agreed to sell its Kanowna gold mine in Western Australia to Northern Star Resources Ltd as part of its aggressive portfolio optimization strategy. The company is also divesting its Plutonic mine in Australia to Northern Star Resources.

Newmont recently divulged its preliminary production results for 2013. Attributable gold production was 5.1 million ounces for the year, meeting the higher end of the company's guidance of 4.8 to 5.1 million ounces. Attributable gold production for the fourth quarter was 1.5 million ounces, an increase from roughly 1.3 million ounces registered a year ago.

Newmont, a Zacks Rank #3 (Hold) stock, will report its fourth-quarter results after the close on Feb 20.

Other gold stocks worth considering include Franco-Nevada Corp. ( FNV ) and Lake Shore Gold Corp. ( LSG ) with both carrying a Zacks Rank #2 (Buy).

BARRICK GOLD CP (ABX): Free Stock Analysis Report

FRANCO NV CP (FNV): Free Stock Analysis Report

LAKE SHORE GOLD (LSG): Free Stock Analysis Report

NEWMONT MINING (NEM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
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