Newmont Corporation (NEM)

[NYBob]

Newmont Completes Sale of Interests in KCGM and Updates 2020 Guidance and Long-Term Outlook
7 hours ago from Business Wire
DENVER
Newmont (NYSE: NEM, TSX: NGT) (Newmont or the Company) today announced it successfully completed the sale of its 50 percent stake in Kalgoorlie Consolidated Gold Mines (KCGM) to Northern Star Resources Limited (ASX: NST) (Northern Star) receiving cash proceeds of $800 million.

“Newmont is pleased to complete the sale of KCGM to Northern Star and hand over the asset in good order to a well-established gold producer with a commitment to safety, community development and responsible environmental practices,” said Tom Palmer, President and Chief Executive Officer. “Proceeds from the transaction will support Newmont’s disciplined approach to capital allocation, which includes strategically reinvesting in the business, strengthening the Company’s investment-grade balance sheet and returning cash to shareholders,” Palmer added.

Total proceeds from the transaction include a $25 million payment that gives Northern Star specified exploration tenements, transitional services support and an option to exclusively negotiate for the purchase of Newmont’s Kalgoorlie power business for a 120 day period. The $25 million payment will be credited against the purchase price for the power business or $22.5 million would be returned to Northern Star if the power business is sold to a third party.

Combined with the previously announced agreements to sell Red Lake in Canada for $375 million and the Company’s stake in Continental Gold for $260 million, Newmont has met its divestiture target of $1.0 to $1.5 billion, with more than $1.4 billion in cash proceeds expected to be received in the first quarter of 2020. The sale of KCGM further streamlines Newmont’s portfolio, with 12 top-tier assets located on four continents in the world’s most favorable gold mining jurisdictions.

Following the divestiture of KCGM, the Company is updating its 2020 guidance and long-term outlook1.

Attributable gold production2: Production guidance is expected to be 6.4 million ounces for 2020 and between 6.2 and 6.7 million ounces longer-term through 2024.
Gold costs applicable to sales (CAS):CAS guidance is unchanged at $750 per ounce for 2020 and between $650 and $750 per ounce for 2021 and 2022; CAS is expected to be between $600 and $700 per ounce for 2023 and 2024.
Gold all-in sustaining costs3(AISC): AISC guidance is unchanged at $975 per ounce for 2020 and between $850 and $950 per ounce for 2021 and 2022; AISC is expected to be between $800 and $900 per ounce for 2023 and 2024.
Capital: Attributable sustaining capital guidance has been lowered to $950 million for 2020 and between $0.9 to $1.1 billion longer-term through 2024.
Consolidated expense outlook: The 2020 outlook for general & administrative costs is unchanged at $265 million, depreciation and amortization has been lowered to $2,125 million, and investment in exploration and advanced projects has decreased to $450 million. Outlook for interest expense and adjusted tax rate remains unchanged.
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1Outlook guidance used in this release are considered “forward-looking statements” and users are cautioned that actual results may vary; refer to the cautionary statement at the end of this release.
2Attributable gold production outlook includes the Company’s equity investment (40%) in Pueblo Viejo but does not include other equity investments.
3AISC as used in the Company’s outlook is a non-GAAP metric – see end of this release for information and reconciliation to CAS outlook.

Australia region:

Australia remains a core operating region for Newmont, and the sale of KCGM allows the Company to focus on investing in profitable growth and long-term value creation at our world class Tanami and Boddington complexes, in addition to Newmont’s active exploration campaigns across the region. The following table shows the Company’s revised production and improved cost outlook for the Australia region over the next three years.