((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
(Added information on Newmont's objectives in paragraph 2, and details of the transaction in paragraphs 4 and 6)
Orla Mining OLA.TO will buy Ontario's Musselwhite gold mine from Newmont NEM.N in a deal valued at $850 million that will allow it to more than double its production of the precious metal, the company said on Monday Canadian mining industry.
The transaction will allow Newmont to generate up to $2.9 billion in gross proceeds from divestitures of non-core businesses. The world's largest gold producer had set a target of more than $2 billion in such sales following its $17 billion purchase of Newcrest.
Newmont shares rose 2.3% in pre-market trading.
Orla's gold production will increase to over 300,000 ounces immediately following the purchase and will also increase exposure to current record gold prices, the company said.
Gold prices XAU= have reached new highs this year, boosted by the U.S. Federal Reserve's larger-than-expected interest rate cut and demand for the safe-haven asset.
The Musselwhite mine is expected to generate more than $150 million in average annual free cash flow over the next six years, Orla said.
The company will pay Newmont $810 million in cash and the remainder in two tranches if gold prices exceed $2,900 per ounce and $3,000 per ounce in the first year and second full year following the closing of the agreement, expected during the first quarter.
Spot gold XAU= was trading 1.2% higher at $2,591.43 an ounce by 1027 GMT on Monday. US gold futures GCv1 were up 1% at $2,595.80.
Musselwhite was one of two Canadian projects, along with Eleonore in Quebec, that Newmont sought to divest along with previous deals.
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