Newmont Mining Corp. (NEM), the second-largest gold miner, is looking for acquisitions to add low-cost gold or copper output after asset valuations declined.
The company will assess deals on the basis of net present value and return on investment, Chief Executive Officer Gary Goldberg said yesterday in an interview in Denver, where he’s attending the Denver Gold Forum. It will focus on assets with longer mine lives and lower costs and where the social, political and technical risk is manageable, he said.
Newmont joins Centerra Gold Inc. and B2Gold Corp. in flagging interest in deals as miners sell assets and explorers struggle for funding after gold fell into a bear market in April. Barrick Gold Corp. is in talks to sell more mines in Australia after agreeing last month to sell three mines in the South Pacific nation to Gold Fields Ltd. for $300 million.
“Now is the time when the markets are down to be looking at potential for acquisition of assets,” Goldberg said, adding there aren’t any transactions imminent. “We’re still looking at things.”
The company will also consider partnering with others on acquisitions and at existing assets, Goldberg said. There’s an opportunity to work with other companies in the area to develop infrastructure, including ore processing facilities, at Newmont’s stalled Minas Conga mine in Peru, he said.
Open to Talks
Newmont is also open to discussions with Barrick, the largest producer, about cooperation in Nevada, where the producers have mines in close proximity to each other. Toronto-based Barrick would consider a joint venture in Nevada with Newmont to reduce costs, Chief Executive Officer Jamie Sokalsky said yesterday in an interview. The parties have had talks on the subject in the past, he and Goldberg said.
“Clearly there’s some overlap and opportunities for synergies in the process,” Goldberg said. “I think it’s one that’s worthy of more conversations.”
The company is also willing to consider buying assets where the primary metal is copper, Goldberg said. Newmont, which gets about 90 percent of its revenue from gold, already produces copper along with gold at some mines.
Taking on more copper is also a “logical” step after the valuation premium that gold companies used to attract has disappeared, he said. The company is adding in-house capacity to assess copper supply and demand trends.
“It might be a good time to be buying,” Goldberg said. “It doesn’t mean we’re going to shoot for X million tons of copper production by a certain year.”
While the company agreed this month to discuss the sale of its Midas mine in Nevada to private equity group Waterton Global Resource Management, Newmont isn’t focused on selling assets and will look instead to improve its less profitable operations, Goldberg said. It may consider transactions where it maintains exposure to an asset by exchanging it for shares in the buyer, he said.
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