Newmont completes KCGM stake sale, updates outlook

Kalgoorlie gold mine in Australia. Image courtesy of Wikimedia Commons

Newmont (NYSE: NEM, TSX: NGT) announced Thursday afternoon that the company has completed the sale of its 50% stake in Kalgoorlie Consolidated Gold Mines (KCGM) to Northern Star Resources (ASX: NST). As previously announced in December, Newmont will receive a total of $800 million in cash proceeds from the sale.

“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,” president and CEO Tom Palmer said in a media brief.

Newmont has met its divestiture target of $1-$1.5 billion, with more than $1.4 billion in cash proceeds expected in the first quarter of 2020

“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.

Combined with its prior 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-$1.5 billion, with more than $1.4 billion in cash proceeds expected in the first quarter of 2020.

In addition, Newmont has updated its 2020 guidance and long-term outlook. For the new year, the company expects to produce 6.4 million ounces of gold across all operations (including Pueblo Viejo) at an AISC of $975 per ounce.

In the long run, production guidance is set at between 6.2 and 6.7 million ounces through 2024 at an AISC of $850-$950 per ounce for 2021-2022 and $800-$900 per ounce for 2023-2024.

The company’s capital guidance has been lowered to $950 million for 2020 and between $0.9-$1.1 billion longer term through 2024.

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