Newmont, the world’s largest gold producer, has announced plans to raise $2 billion in cash by selling some of its mines and projects. The move comes after the company completed its $15-billion takeover of Newcrest Mining, the biggest acquisition in the mining industry this year.
The merger of Newmont and Newcrest, which was finalized on Monday, creates a mining giant with 20 operations in 11 countries and an annual gold output of 8.5 million ounces. The deal also increases Newmont’s exposure to copper, a metal that is expected to benefit from the global transition to clean energy.
However, the deal also adds to Newmont’s debt burden and portfolio complexity. The company said it would divest some of its assets and delay some of its projects to improve its cash flow and focus on its core operations. The company did not specify which assets or projects would be sold, but said it would take its time to evaluate its options.
Newmont’s CEO Tom Palmer said the company had a clear path to execute its strategic plan and position itself for long-term growth and profitability. He said the company was grateful for the support of its stakeholders as it worked to integrate the new business and strengthen its capital structure.
Newmont’s acquisition of Newcrest is the latest in a wave of consolidation in the gold sector, as miners seek to boost their reserves, lower their costs, and diversify their portfolios. Newmont itself was involved in another mega-deal in 2019, when it bought Goldcorp for $10 billion, becoming the top gold miner in the world.
However, the deal also faced some challenges, such as a four-month strike at its Penasquito mine in Mexico, which affected its production and earnings. The company also had to sell some of its assets, such as the Red Lake mine in Canada and stakes in two projects in Australia and Ghana, to streamline its portfolio and reduce its debt.
Newmont’s merger with Newcrest also comes amid a volatile environment for gold prices, which have been influenced by factors such as the pandemic, the inflation outlook, the US dollar, and the geopolitical tensions. Gold prices reached a record high of more than $2,000 an ounce in August 2020, but have since fallen to around $1,800 an ounce.
Newmont said it was confident that gold demand would remain strong in the long term, as investors sought a safe haven and a hedge against inflation. The company also said it was optimistic about the prospects of copper, which is widely used in electric vehicles, renewable energy, and infrastructure.
Newmont said it was committed to delivering value to its shareholders, customers, employees, and communities. The company also said it was dedicated to operating responsibly and sustainably, and to contributing to the global efforts to combat climate change.
Source: Mining Weekly
