Newmont has agreed to sell its Kalgoorlie power business to Australia’s Northern Star Resources Ltd in a deal that could see the leading gold miner pocket $95 million of cash.
The deal follows the January 2020 sale of Newmont’s 50% stake in Kalgoorlie Consolidated Gold Mines (KCGM). Of the $95 million in cash, $25 million relates to an option payment previously received from Northern Star as part of this stake. The cost of the option will be deducted from the final purchase price, leaving Northern Star to pay the balance of $70 million at completion, expected to occur in December 2021.
Newmont said the Kalgoorlie power business has been a profitable asset for Newmont since the sale of its stake in KCGM. It supplies electricity to KCGM via a suite of contracts, licences, approvals and third-party arrangements, including a 50% interest in the 110 MW duel fuel gas turbine Parkeston Power Station near Kalgoorlie, owned in joint venture with Canadian energy utility, TransAlta Corp.
Northern Star said the purchase provided the company with significant synergies and value, including infrastructure and power security to support the requirements of KCGM; lower power costs at KCGM; further options for Northern Star to implement renewable energy.
Northern Star Managing Director, Stuart Tonkin, said: “The purchase means our Kalgoorlie power supply will now form part of our studies into ways to meet our commitment to becoming carbon-neutral.”
Newmont President and CEO, Tom Palmer, added: “Australia is a critical contributor to Newmont’s global portfolio of world-class assets, located in top-tier jurisdictions. With the sale of this non-core asset, we will continue our regional focus on delivering long-term value at our Boddington and Tanami operations and advancing our future project pipeline through active exploration campaigns.”