Despite the tough times, Newmont Mining was able to raise $1.56 billion to acquire full control of the Boddington gold mine in Australia. Newmont sold 30 million shares at $37/share and sold $450 million of convertible notes with a 3-percent coupon due in 2012 to come up with the money to purchase 33 percent of the mine away from AngloGold Ashanti.

Bloomberg reported that the sale was managed by Citigroup Inc., JPMorgan Chase & Co. and BMO Capital Markets.

Boddington will be Australia's largest gold mine when it is completed this year, yielding 31 t/a (1 million ozpy) at a projected cost of $9.64/g ($300 oz).

The Boddington deposit will cost $2.6 billion to $2.9 billion to develop and will take a year to build up to full production, Newmont said. The company plans to produce 162 to 1711 (5.2 million to 5.5 million oz) of gold next year at a cost of $12.86 to $14.14/g ($400 to $440/oz).

Gold gained for the eighth straight year in 2008 as investors sought a safe-haven investment. Kinross Gold Corp. and Yamana Gold Inc. are among producers to take advantage of rising share prices to replenish capital as debt markets remain strained.

The share sale will allow Newmont to make acquisitions and maintain investment-grade ratings on its debt, Newmont chief executive officer Richard T. O'Brien said.

"It's the kind of market that opportunities arise, and we want to be on the receiving end of that," O'Brien said.

AngloGold will receive $750 million in cash when the transaction closes in March, Newmont said. Newmont will then pay an additional $240 million in cash or stock in December and as much as $100 million in future royalty payments.

The initial cash will be used to repay part of the $1 billion bridge loan AngloGold received from Standard Chartered PIc in November, AngloGold chief executive officer Mark Cutifani said. That leaves the company with net debt of about $550 million, giving it room to invest in expansions and acquisitions, he said.

"It's a win-win," Cutifani said in an interview from Johannesburg, where the company is based. "It's an asset we don't manage, and so it made sense from our point of view, given that we met our value threshold."

Copyright Society for Mining, Metallurgy, and Exploration, Inc. Mar 2009

(c) 2009 Mining Engineering. Provided by ProQuest LLC. All rights Reserved.

A service of YellowBrix, Inc.