business
Newmont to buy gold miner Miramar
Speculation that Barrick Gold may buy Newmont Mining is questioned by Barrick's CEO.
By Andy Vuong The Denver Post
Article Last Updated: 10/10/2007 03:16:53 AM MDT
Newmont Mining said Tuesday that it plans to acquire Miramar Mining for $1.53 billion in cash, a move that will bolster the Denver-based company's gold production and reserves.
Miramar's Hope Bay Project, about 100 miles north of the Arctic Circle, is estimated to contain at least 9 million ounces of gold.
"Miramar's work to date has shown that it's one of the largest undeveloped gold deposits in the world," Newmont spokesman Omar Jabara said.
Newmont, the world's second-largest gold producer, will pay $6.36 per share for Miramar, a 20 percent premium over the Vancouver, British Columbia-based company's closing stock price of $5.29 on Friday.
Miramar shares rose $1.10 Tuesday, or 21 percent, to $6.39 on the Toronto Stock Exchange. Newmont gained $1.19, or 2.7 percent, to $46.02 in New York.
Miramar's board unanimously agreed to the takeover bid and will recommend it to shareholders, the companies said.
The deal, which has a $42.1 million breakup fee, is expected to close in about two months, Jabara said.
"It's going to be a win-win for both parties," said Tom Winmill, a portfolio manager for Midas Fund, which owns shares of Miramar. "Newmont has vast technical experience and resources they can bring to bear, and this probably is as good a time as any to make a handoff from a junior to a senior mining company."
Winmill said Newmont is paying about $145 per ounce, based on his estimate of about 10 million ounces of resource. The average paid for comparable companies is about $80 an ounce, he said.
In 2005, Newmont paid $36 million for 8.4 percent of Miramar's common shares.
"We made an initial investment in Miramar in 2005 because we saw the potential strategic opportunity offered by the Hope Bay Project as part of our broader exploration and growth portfolio," Newmont chief executive Dick O'Brien said in a statement.
O'Brien took the reins in July and has said he wants to expand the company through development of existing holdings and acquisitions of other firms or properties.
Newmont said the deal will help the company establish a new core mining district in the Nunvut Territory of Canada. Details of the deal are expected to be released to shareholders by the end of the month.
Miramar has about 250 employees. Newmont has about 15,000 employees, including about 400 in Colorado. |
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