Following weeks of speculation, CC&V officials confirmed late Monday afternoon that its parent company, the South Africa-based AngloGold Ashanti Limited, has agreed to sell CC&V and its assets to the Greenwood Village-based Newmont Mining Corporation for $820 million in cash. The deal, expected to close in the third quarter of 2015, also includes a 2.5 percent net smelter return royalty for gold production from potential future underground ore obtained during the remaining life of CC&V.
The proposed transaction is being described by leaders of both companies as a “win-win” deal.
The cash proceeds from the sale of Cripple Creek & Victor (“CC&V”) will immediately strengthen AngloGold’s balance sheet and allow it to implement a strategy to lower financing costs, according to a company press release. Moreover, AngloGold Ashanti will no longer have to fund the remaining cost of approximately $200 million to complete the CC&V Mine-Life Extension Two project, allowing CC&V to operate until at least 2026.
“After a competitive bidding process, we’re pleased to have arrived at a transaction that recognizes the value of this asset,” said Srinivasan Venkatakrishnan (Venkat), chief executive officer of AngloGold Ashanti. “This deal significantly de-risks the balance sheet without diluting our shareholders, and places us in a much stronger position – it puts 820 million into our bank account, saves 200 million in capital expenditure, and gives us continued exposure to the asset through an uncapped royalty on future underground production.”
Newmont officials, meanwhile, say the deal will allow their company to greatly improve their gold mining assets. In press statements, they also welcomed the opportunity to work with CC&V’s experienced mining team.
Newmont is a leading gold and copper producer throughout the world. The company, according to a Newmont press release, employs approximately 28,000 employees and contractors, with the majority working at managed operations in the United States, Australia, New Zealand, Ghana, Peru, Suriname and Indonesia. Newmont is the only gold producer listed in the S&P 500 index and in 2007 became the first named to the Dow Jones Sustainability World Index. Newmont also has generated nearly $1.5 billion through fairly valued asset sales over the last two years.
The sale has ended much speculation regarding CC&V’s future. During a public forum in May, CC&V Community Affairs Manager Jane Mannon confirmed that five major mining companies had toured their facilities and may have submitted bids to AngloGold. The South Africa mining giant had earlier announced intentions to sell certain prime assets in order to reduce its debt by at least $1 billion.
Mannon and other CC&V officials, however, have maintained that it’s business as usual for CC&V, which is embarking on a major expansion, and completing many new facilities, and is pursuing the first major underground mining venture in the district in decades.
Talks between AngloGold and Newmont got more serious in recent weeks. On June 1, Reuters reported that AngloGold was engaging in exclusive negotiations with Newmont
The transaction, though, could have big impacts for Teller County and the Cripple Creek/Victor district. By the end of this year, CC&V was expected to operate with more than 600 employees, produce 350,000 ounces of gold and have a payroll that exceeded $35 million. It also has gained a reputation as one of the biggest supporters for community groups and organizations in southern Teller.