Newmont on cash hunt after closing world’s biggest gold deal for Australian gold miner Newcrest

Newmont, the world’s top gold producer, will forge ahead on a plan to find $US2 billion ($3b) in cash including through mine sales and project divestments after closing the largest takeover in the mining industry this year.

Denver-based Newmont closed its roughly $US15b acquisition of Newcrest Mining on Monday, ending a nearly year-long effort to buy the gold miner.

Now, with all regulatory hurdles out of the way, Newmont chief executive Tom Palmer says the combined company can start a process to sell mines and decide which exploration projects to prioritise over the next two years.

“It will come from a combination of divestments of assets and resequencing of projects so that we ensure we’ve got the appropriate and steady allocation of cash for reinvestment,” Mr Palmer said.

The mining mega-deal comes as gold producers face the prospect of stagnating output, harder-to-mine deposits and rising input costs.

Newmont’s bullion output has stalled for the past three years, and the company predicted that without a major acquisition its production would remain the same for another decade.

Adding to the firm’s woes this year was a four-month strike at its Penasquito mine in Mexico. The strike forced Newmont to cut guidance and post lower-than-expected earnings in the latest quarter.

A common manoeuvre

Miners typically shed assets following mergers and acquisitions to bring in cash and keep their portfolios manageable. After Newmont’s takeover of Goldcorp in 2019 — a deal that propelled Newmont to the gold sector’s top spot — the company sold one mine as well as two stakes in other projects within the first year.

With the takeover of Newcrest, Newmont will operate 20 mines in 11 countries. The move boosts the company’s gold output to an estimated 8.5 million ounces a year while significantly increasing its exposure to copper.

“We’ll look at the portfolio we have and take our time to integrate it safely, and welcome new colleagues into our business. And then we’ll think carefully about how we might rationalize our portfolio over the next 12 to 24 months to meet that $2 billion commitment,” Mr Palmer said.

Mr Palmer said the company has not yet decided which assets to sell, though the strategy has been subject to industry speculation. Two Australian mines acquired from Newcrest - Telfer and Havieron - are among several operations analysts have predicted Newmont will put up for sale.

In a separate Bloomberg Television interview in Sydney on Tuesday, Mr Palmer said Newmont would seek to expand copper production over the long-term, after gaining mines producing the metal along with the Newcrest takeover.

On the gold market, Palmer said the outlook for prices was positive in 2024 and 2025 with interest rates expected to ease. Bullion had “stubbornly held” around $1,900-$2,000 an ounce with support from “some volatility around the world” and central-bank buying, he said.

Bloomberg