Newmont Mining Corp., the largest U.S. gold producer, said Tuesday it will pay $1.09 billion to AngloGold Ashanti Ltd. for the remaining 33 percent stake in the open-pit Boddington mine that it currently doesn't own.

Newmont, headquartered in Denver, will pay AngloGold $750 million in cash when the deal closes in March, pending approval by Australian and South African regulatory agencies and banks.

The gold producer will pay an additional $240 million in cash or stock in December and as much as $100 million in future royalty payments.

The deal gives Newmont full ownership of the Boddington mine, which will become Australia's largest gold mine when completed later this year.

Newmont has secured a $1 billion, 364-day bridge loan to pay for the deal, a move that President and Chief Executive Richard O'Brien called a "safeguard."

"Anytime you go into an acquisition of this size, it's prudent to make sure you can pay for it," O'Brien said. "I have every belief the equity offering . . . will be successful."

Once the mine becomes operational in mid-2009, Newmont expects it will boost its equity gold sales this year to 5.2 million to 5.5 million ounces at between $400 and $440 an ounce. For 2008, Newmont reported equity gold sales of 5.2 million ounces at a cost of $440 per ounce.

Full ownership of the Boddington mine will increase Newmont's proven and probable gold reserves by 6.6 million ounces. Newmont's reserves at the end of 2008 stood at 85 million ounces.

The capital cost to develop the mine will range from $2.6 billion to $2.9 billion, and it will take about a year to ramp it up to full production. The mine has a probable life of 20 years, Newmont estimates.

Despite the tight credit markets and economic recession, O'Brien said the deal made sense given the price of gold. "This is actually a really good time for us to make this purchase," he said.

Originally published by Gargi Chakrabarty, Rocky Mountain News.

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