CC&V was sold for US820m cash and a net smelter royalty. AngloGold had been planning to spend $200m in capex on the mine, so taking it all round, AngloGold gains about 1bn from the deal.
CEO Srinivasan Venkatakrishnan says the money will be used to partly pay down debt of 3,67bn at the end of December, which will save some debt servicing costs. The net smelter royalty, which is at a rate of 2,5% of CC&V's net revenue after smelting and refining costs from the current planned underground or surface operations, will also add to cash flow.
CC&V, which mines from open pits but plans to move underground, produced 211000oz of gold last year.
The loss of ounces from CC&V is relatively insignificant for AngloGold, which produced 4,4moz of gold last year. The loss will be offset by other lower-cost production, as the newer Kibali and Tropicana mines ramp up. In the current tight gold price environment, management of gold mines tends to focus on profitable ounces, not volumes, unlike five years ago.
CC&V's all-in sustaining production cost of $1147/oz was above AngloGold's average cost of $1026/oz last year.
Newmont, naturally, takes a different line. It says it believes it can lower CC&V's operating costs by about 10% through improved productivity and optimisation. It says the deal will add 350000oz-400000oz of gold a year to Newmont in 2016 and 2017, after the completion of the current expansion, at an allin sustaining cost of $825/oz875/oz.
On the NYSE, Newmont shares fell almost $2 to $23,62 in the days following the announcement, but that could be partly because it is raising 682m through a share issue to part-finance the deal. AngloGold's shares gained 37c to $9,07.
Source: Financial Mail
For more than two decades, I-Net Bridge has been one of South Africa’s preferred electronic providers of innovative solutions, data of the highest calibre, reliable platforms and excellent supporting systems. Our products include workstations, web applications and data feeds packaged with in-depth news and powerful analytical tools empowering clients to make meaningful decisions.
We pride ourselves on our wide variety of in-house skills, encompassing multiple platforms and applications. These skills enable us to not only function as a first class facility, but also design, implement and support all our client needs at a level that confirms I-Net Bridge a leader in its field.
Go to: http://www.inet.co.za
