Greenwood Village-based Newmont Mining Corporation has agreed to buy Colorado’s largest gold mine from AngloGold Ashanti Ltd. for $820 million in cash.
The Cripple Creek & Victor gold mine, located near Victor in Teller County, would become Newmont’s first active operation in Colorado since the Idarado mine near Telluride closed in the late 1970s, company spokesman Omar Jabara said. The company, one of the world’s largest gold producers, also operates in Nevada, Australia, New Zealand, Ghana, Peru, Suriname and Indonesia.
Newmont CEO Gary Goldberg said in a statement that the Colorado mine represents a valuable opportunity to “improve mine life and costs in a favorable jurisdiction.”
“Consistent with what we’ve achieved elsewhere, we believe we can lower direct mining costs by up to 10 percent through improved productivity and optimization,” Goldberg said.
The deal, which was announced Monday, also includes a 2.5 percent royalty on any gold production from future underground mining.
Prior to the sale, AngloGold was exploring the possibility of renewing underground mining at Cripple Creek, but no plan has been developed yet, Jabara said.
In 2014, surface-mining operations at Cripple Creek produced 210,921 ounces of gold and 110,383 ounces of silver, according to the company website.
“We would need to make a decision if we want to develop (underground mining) or not and that would depend on a lot of things, including the price of gold, the cost of production,” Jabara said.
Newmont will pay for the mine acquisition by selling 29 million shares, supplemented by cash on the balance sheet, according to a news release. The sale is expected to close in the third quarter.
Newmont plans to retain the mine’s workforce of 570 and continue with the extensive mine expansion already underway, Jabara said. In 2013, AngloGold announced a $585 million project to extend the life of the mine and add a leach field, recovery center and mining facility.
Kristoffer Inton, an equity analyst with Morningstar, an investment research firm in Chicago, said given the company’s current positions, the Cripple Creek mine “fits better” with Newmont than it does with AngloGold.
“Newmont, they like to own mines in the U.S. and other low-risk jurisdictions,” Inton said. “The opportunity to acquire these mines in Colorado fits the bill for them.”
The South Africa-based AngloGold, on the other hand, has been considering the sale of “non-core assets” to reduce debt, Inton said.
In a statement, the AngloGold CEO said the sale was ” part of its strategy to cut debt.”
Gold from the Cripple Creek mine donated by AngloGold was used in the restoration of the Colorado Capitol dome. The mine also was the source of the dome’s original gilding.
Emilie Rusch: 303-954-2457, erusch@denverpost.com or twitter.com/emilierusch
