Newmont Acquiring Boddington Project in Western Australia

Denver, Colorado — Newmont Mining Corporation (NEM: $50.42) announced today that it will acquire the remaining interest in the Boddington project in Western Australia from a subsidiary of AngloGold Ashanti Ltd.

Newmont will own 100% of the Boddington project, which is the largest gold project in Australia, and Newmont’s proven and probable gold reserves at Boddington will increase by 6.6 million ounces to 20.1 million ounces.

Newmont will pay $750 million cash at closing, $240 million payable in cash and/or Newmont common stock, at Newmont’s option, in December 2009, and a royalty capped at $100 million, equal to 50% of the average realized operating margin (if any) exceeding $600 per ounce, payable on one-third of gold sales from Boddington.

The deal is expected to close in March 2009, subject to certain conditions, including approvals from the Australian Foreign Investment Review Board, Western Australia Ministry of Mines and South African Reserve Bank.

The valuation date for the transaction is January 1, 2009, and closing adjustments will be made to reflect Newmont’s economic ownership position from that date, which will require Newmont to reimburse AngloGold for all contributions made to the Boddington joint venture after that date. With the acquisition, Newmont expects to incur an additional approximately $250 million of capital expenditures in 2009.

Newmont has received a commitment for a $1.0 billion, 364-day bridge facility to support the transaction and for additional capital expenditures that result from its increased ownership in the Boddington project. The bridge facility is subject to customary closing conditions.

Boddington is a large, open pit mine in Western Australia, located 130 kilometers southeast of Perth. At the end of 2008, the Boddington project was 89% complete, with start-up expected in mid-2009. Newmont continues to expect total capital costs to be between $2.6 and $2.9 billion.

Boddington will be Australia’s largest gold producer upon completion, with expected average annual gold production of approximately one million ounces at costs applicable to sales of approximately $300 per ounce for the first five years of operation, and an expected mine life in excess of 20 years. Newmont believes Boddington has significant exploration potential, as demonstrated in 2008, with the reserves increasing from 16.6 in 2007 to 20.1 million ounces in 2008.

Richard O’Brien, President and Chief Executive Officer of Newmont said, “We are very pleased to consolidate our interest in Boddington, a world-class asset that we obviously know well. We expect Boddington will have low operating costs, a mine life in excess of 20 years and significant exploration potential in a favorable geo-political jurisdiction.”

Add comment January 27th, 2009

Newmont Announces Positive Operating Results

Denver, Colorado — Newmont Mining Corporation (NEM: $50.42) announced 2008 equity gold sales of approximately 5.2 million ounces at costs applicable to sales of $440 per ounce. With the start-up of the Boddington project in Australia in mid 2009, the Company expects continued operating performance improvements in 2009, with an equity gold sales outlook of between 5.2 and 5.5 million ounces at costs applicable to sales of between $400 and $440 per ounce.

The 2009 expectations assume ownership of 100% of the Boddington project, reflecting the expected completion of the acquisition of the remaining interest from AngloGold Ashanti Ltd., announced earlier today

Consolidated capital expenditures for 2008 were approximately $1.9 billion, consistent with original expectations for the year. With completion of the power plant in Nevada and the gold mill in Peru in 2008, and completion of the Boddington project expected in mid-2009, consolidated capital expenditures are expected to decline to between $1.4 and $1.6 billion ($1.3 to $1.5 billion on an equity basis).

Richard O’Brien, President and Chief Executive Officer, said, “We are pleased with the results of our initiatives to improve operating results, resulting in gold sales and costs applicable to sales performance consistent with our original expectations for the year. We achieved our goal of delivering on our plans for this year.”

“For 2009, we expect equity gold sales to increase to between 5.2 and 5.5 million ounces at costs applicable to sales of between $400 and $440 per ounce, assuming the completion of the Boddington acquisition,” noted O’Brien.

The recent financial market volatility pulled the value of certain investments down during the fourth quarter of 2008, resulting in a pre-tax charge of approximately $159 million for non-cash write-downs of marketable securities and property, plant and mine development. As of December, the Company’s Canadian Oil Sands Trust investment was valued at $534 million.

The Company reported year-end 2008 proven and probable gold reserves of 85.0 million equity ounces, compared with 86.5 million equity ounces at the end of 2007. Year-end 2008 reserves would have been 91.6 million equity ounces, an increase of approximately 6% over year-end 2007, if the expected acquisition of the Boddington project had occurred at the end of 2008.

Newmont added 6.3 million equity ounces of gold reserves due to margin changes and additional drilling, offset by revisions of 1.1 million equity ounces. The assumed gold price for the C$575 per ounce in 2007.

Add comment January 27th, 2009