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Newmont Closes Acquisition of Cripple Creek & Victor - Analyst Blog

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Newmont Mining CorporationNEM has closed the acquisition of Cripple Creek & Victor (CC&V) gold mine in Colorado from AngloGold Ashanti Ltd. for $820 million, and a 2.5% net smelter return royalty on potential future gold production from underground ore.

The acquisition represents an opportunity for Newmont to improve mine life. Also, the company believes that with this acquisition it can add profitable gold production and save direct mining costs by up to 10% through improved productivity and optimization.

Expansion of Cripple Creek is around two-thirds complete with the mine expected to produce between 350,000 ounces and 400,000 ounces of gold a year in 2016 and 2017 at all-in sustaining costs of between $825 and $875 an ounce. Newmont also expects to report strong earnings and cash flow with additional opportunities to improve value. The company will retain the work force of CC&V in order to ensure business continuity.

Newmont has generated about $1.7 billion through fairly valued asset sales over the last couple of years. The company cut its all-in sustaining costs by 14% year over year in the second quarter of 2015 and remains on track to deliver new, profitable gold production from its Turf Vent shaft in Nevada in late 2015; from Merian in Suriname starting in late 2016; and from Long Canyon Phase 1 in Nevada starting in 2017.

Newmont recently released its second-quarter 2015 results. The company's second-quarter adjusted earnings per share of 26 cents surged roughly 30% from 20 cents earned in the year-ago quarter. Earnings also beat the Zacks Consensus Estimate by a penny. The results were supported by favorable oil prices and exchange rates, which mostly offset headwinds from lower metal prices.

On a reported basis, the company posted net income from continuing operations of $63 million or 13 cents per share, down roughly 65% from net earnings of $182 million or 37 cents per share recorded a year ago.

Newmont's revenues improved roughly 8% year over year to $1,908 million in the reported quarter due to higher copper production and sales at the Batu Hijau mine that offset lower metal prices and asset sales. However, revenues missed the Zacks Consensus Estimate of $2,026 million.

Newmont's shares rose as much as around 2.6% in the trading session yesterday, before closing the day lower at $16.40.

Newmont currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the mining space are Vista Gold Corp. VGZ , Primero Mining Corp. PPP and Avino Silver & Gold Mines Ltd. ASM . All of these stocks carry a Zacks Rank #2 (Buy).

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NEWMONT MINING (NEM): Free Stock Analysis Report

PRIMERO MINING (PPP): Free Stock Analysis Report

AVINO SILVER&GD (ASM): 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.


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

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