Newcrest Mining wants to raise up to $1.1 billion of new capital from shareholders to expand its interest in gold produced from mine in South America and to expand its existing mines.
The raising is aimed at expansion of its stake in a big gold mine in southern Ecuador and existing mines in its portfolio and not battening down the hatches ahead of the COVID-19 pandemic sweeping over mining.
The $1 billion underwritten institutional placement will see the gold miner issue 39.1 million new fully paid ordinary shares at $25.60 apiece, a 7% discount to Newcrest’s last traded price of $27.54 on Wednesday.
As well, the company says it plans a non-underwritten share purchase plan aimed at rising up to $100 million from retail shareholders.
Newcrest said the new capital will be used to fund its purchase of the Fruta del Norte mine in southern Ecuador. The miner will pay $US460 million ($A703 million) for a further stake in the goldmine’s output.
Newcrest is actually buying the financing facilities in the Fruta del Norte mine from Orion Mine Finance Group and funds managed by Blackstone, the New York-based fund manager.
The mine is owned by Canada’s Lundin Gold, in which Newcrest owns a 31.9% stake and buying the gold prepay and stream facilities and an offtake agreement gives Newcrest further exposure to gold produced from the Tier 1 mine.
Newcrest CEO Sandeep Biswas said in a statement the acquisition would give the company exposure to about 400,000 ounces of gold from the mine through 2026.
“With gold prices at the levels we see today, Newcrest expects to receive significant cash flows which will rank ahead of Lundin Gold’s equity owners,” he said.
The funds will also be used to fund future growth options including possible expansions of its mines in Canada (Red Chris) and Western Australia (Telfer).
During the March quarter, Newcrest produced 519,000 ounces of gold and 35,000 tonnes of copper, down from 550,000 ounces and 38,000 tonnes in the previous period.
“Newcrest’s gold production in the quarter is in line with our expectations following the recent update to guidance on 11 March 2020 and reflects the impacts of planned shuts at Cadia and Telfer and the divestment of Gosowong in March,” Biswas said.
Production at Telfer was 6% lower than the prior quarter due to a reduction in underground ore mill feed, while both of Cadia’s concentrators were shut according to planned maintenance.
Newcrest expects its gold production in the June quarter will bounce back to top the March quarter’s level.
