Newmont Mining Corporation ( NEM ) announced that it has inked a deal with Fresnillo plc to sell its 44% stake in the Penmont joint venture in Mexico to the latter for a gross value of about $477 million, including cash proceeds of $450 million at deal closure. The sale is in sync with Newmont's strategy of selling smaller assets to pursue potentially larger growth projects such as the Merian gold mine in Suriname.
The sale is expected to close in early Oct 2014. It is subject to the approval of Fresnillo's shareholders. Under the agreement, Fresnillo will buy all of Penmont's assets and liabilities including all environmental and employee obligations.
Newmont has raised $1.3 billion from non-core assets sale since last year. These divestments have improved the company's financial flexibility and placed it in a better position to finance profitable operations.
Newmont holds a 44% stake in the Penmont joint venture and related gold properties (La Herradura, Soledad-Dipolos and Noche Buena), which are located in the Sonora region of Mexico. Penmont produced roughly 183,000 attributable ounces of gold last year. Newmont had 2.2 million attributable ounces of gold reserves as of Dec 31, 2013.
In Jul 2014, Newmont completed the sale of its Jundee underground gold mine in Australia to Northern Star Resources for roughly $91 million. Total proceeds from the sale were around $77 million of cash and $14 million for working capital.
Newmont currently carries a Zacks Rank #3 (Hold).
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