Newmont in Deal with Klondex - Analyst Blog

Newmont Mining Corporation ( NEM ) has entered into an agreement with Klondex Mines Ltd. to process Klondex's higher grade mineralized material from the Fire Creek gold and silver project in Nevada. The proceeds from the materials processing will be utilized by Klondex to fund its own waste development. A second drill has been intended to follow up on recent discoveries.

Per the agreement, Newmont will handle, mill and refine the minerals as well as tail the disposals. Klondex on the other hand, will be delivering the materials. Shipments will be made in lots of 1000 tons and the first such shipment is expected in the month of Aug 2013. Shipments are expected to continue through the end of 2014 as high grade material is generated. As per Klondex, all the near term shipments of mineralized material will be sent for processing to Newmont. It includes the material for the month of May that was previously scheduled for direct-smelter processing.

Newmont will make an upfront payment of 60% of the amount to Klondex and the first payment is expected to be paid in Aug. Newmont will pay the remaining amount on finalization of settlement assays.

As per Klondex, the agreement with Newmont is part of the company's method to monetize its high grade material, and will be a great opportunity to improve margins and separate the high grades.

Newmont, which is among the leading gold mining companies along with Goldcorp ( GG ) and Barrick Gold ( ABX ), recently released its second-quarter 2013 results. The company posted adjusted (barring one-time items including non-cash asset impairment charges) loss of 10 cents a share, in contrast to last year's earnings of 59 cents. The results also missed the Zacks Consensus Estimate of earnings of 41 cents.

Newmont currently carries a short-term Zacks Rank #5 (Strong Sell).

Pretium Resources Inc .( PVG ), which also belong to the gold mining industry, carries a Zacks Rank #2 (Buy).

BARRICK GOLD CP (ABX): Free Stock Analysis Report

GOLDCORP INC (GG): Free Stock Analysis Report

NEWMONT MINING (NEM): Free Stock Analysis Report

PRETIUM RES INC (PVG): 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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