Gold miner Newmont (NEM - Free Report) has closed the earlier announced sale of its Jundee underground gold mine in Australia to Northern Star Resources for roughly $91 million. The company announced the deal last month. Total proceeds from the sale consist of around $77 million of cash and $14 million for working capital.
The Jundee gold mine in Western Australia began production in 1995 from a complex of open pit mines. It started operation as an underground mine in 1997. The mine produced 279,000 ounces of gold last year.
Under the agreement, Northern Star bought all of Jundee’s assets and liabilities including all environmental and employee obligations. All existing fixed plant and onsite equipment owned by Newmont has been transferred to Northern Star. Moreover, most of Jundee’s non-contract staffs were offered continuing employment.
The divestment underscores Newmont’s strategy to focus more on its core assets that have longer life and lower cost. As part of this strategy, the company has sold its Midas mine in Nevada to Klondex Mines Ltd. It has also sold its equity interest in Paladin Energy Ltd. With the completion of the Jundee deal, Newmont has generated around $800 million in proceeds over the last 12 months from the sale of non-core assets.
Gold miners are shedding non-core assets to optimize their portfolio as they grapple with lower gold prices and high mining costs. Another gold major Barrick Gold (ABX - Free Report) also sold its Kanowna and Plutonic gold mines in Australia to Northern Star as part of its aggressive portfolio optimization strategy.
Newmont saw its profit from continuing operations (as reported) tumble roughly 63% year over year in first-quarter 2014, hurt by lower pricing for gold and copper. Nevertheless, the company witnessed a rise in gold and copper productions in the quarter.
Newmont is a Zacks Rank #3 (Hold) stock.
Better-ranked gold stocks include Pretium Resources Inc. (PVG - Free Report) and Rio Alto Mining Limited with both retaining a Zacks Rank #1 (Strong Buy).