Newmont (NEM) Wraps Up Penmont Stake Sale to Fresnillo - Analyst Blog

Newmont (NEM) has completed the earlier announced sale of its 44% stake in the Penmont joint venture in Mexico to Fresnillo plc for $450 million in cash. The Colorado-based gold miner announced the deal last month.

Under the agreement, Fresnillo bought all of Penmont's assets and liabilities including all environmental and employee obligations.

Penmont produced roughly 183,000 attributable ounces of gold last year. Newmont recognized net book value of the Penmont joint venture aggregating around $365 million as of Dec 31, 2013. The company had 2.2 million attributable ounces of gold reserves at the end of 2013.

The divestment is in sync with Newmont's strategy of selling smaller assets to pursue potentially larger growth projects including the Merian gold mine in Suriname. It is a part of the company's strategy to boost shareholder value and reinforce its financial flexibility.

With the closure of the Penmont stake sale, Newmont has now raised $1.3 billion from non-core assets sale, placing it in a better position to finance profitable operations.

Gold miners are shedding non-core assets to optimize their portfolio as they grapple with lower gold prices and high mining costs.

Newmont, in Jul 2014, completed the sale of its Jundee underground gold mine in Australia to Northern Star Resources. Earlier, the company sold its Midas mine in Nevada to Klondex Mines Ltd.  

Another gold major Barrick (ABX) closed the sale of its 33.3% interest in the Marigold mine in Nevada to Silver Standard Resources (SSRI) in Apr 2014 as part of its ongoing efforts to shed some higher-cost assets. Marigold was jointly owned by Goldcorp (GG) and Barrick. Prior to that, Barrick sold its Kanowna and Plutonic gold mines in Australia to Northern Star.

Newmont is a Zacks Rank #3 (Hold) stock.

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