"Newmont is preparing to launch its own Canadian oil- sands project"
Sunday, April 10, 2005
Denver, CO
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Article Published: Sunday, April 10, 2005
Mission: Stronger ties with Canada
Officials want more money going north
By Steve Raabe
Denver Post Staff Writer
Gov. Bill Owens and Denver Mayor John Hickenlooper were to leave today on a mission to Alberta with the aim of increasing cross-border investment.
Canada, already Colorado's No. 1 trade partner, is a significant foreign investor in Colorado. Large Canadian companies in energy and technology have spent nearly $6 billion in the state over the past two years.
Officials on both sides of the border would like to see more Colorado money reaching Canada to strengthen economic ties.
Research shows Colorado companies - led by Denver gold giant Newmont Mining - have done 40 deals in Canadian energy, precious metals, telecommunications and technology over the past five years.
Just three years ago, Newmont became the world's largest gold miner after it acquired Toronto's Franco- Nevada Mining Corp. and Australia's Normandy Mining in a combined $4.3 billion transaction.
Since then, Newmont has continued to capitalize on Canada.
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It has spent more than a quarter- billion dollars on a series of Canadian transactions, including the purchase of a 6.6 percent stake in a fund that invests in several of Canada's fast- growing oil-sands operations.
"That's been a spectacular investment for us," said David Harquail, managing director of Newmont's investment subsidiary, Newmont Capital. The investment has more than doubled in value to $453 million, he said.
International Royalty Corp., an Arapahoe County company that invests in mining companies, used most of the proceeds of its $158 million February initial public offering to buy stakes in Canadian nickel, copper, diamond and gold mines.
"Canada is a wonderful place to invest," said Douglas Silver, chairman and chief executive of the startup royalty company. "Unlike the U.S., natural resources are a huge part of their economy. There is a national psyche that embraces that sector."
The bulk of International Royalty's investment was spent on the Voisey's Bay nickel, copper and cobalt mine in Labrador.
Other recent Canadian investments by Colorado firms include:
IHS Energy's acquisition of Calgary-based Ensight Information Services, a firm that provides software and data to the oil and gas industry. The price was not disclosed.
Level 3's purchase of fiber- optic lines from 360Networks Inc. for an estimated $5 million. Although the lines are in the United States, the deal is considered a Canadian investment because 360networks is based in Vancouver.
This year's merger of Molson Inc., and Adolph Coors Co., perhaps the best-known example of cross-border commerce.
Newmont's $200 million investment last year in the Canadian Oil Sands Trust serves as an oil-price hedge for the company, allowing it to purchase oil- sands-derived synthetic crude for $27 a barrel over 50 years. Oil trades now for about $53.
Newmont doesn't take delivery of the oil but is able to sell its share at current market prices. Revenue from the sales helps offset the costs Newmont incurs from buying fuel for mining production.
But that's only part of the story.
Newmont is preparing to launch its own Canadian oil- sands project and has investments in Canadian diamond- mining and natural gas.
"For a mining company such as Newmont, the (provincial and federal) governments in Canada are knowledgeable and proactive in supporting the mining industry," the company's Harquail said.
That's particularly true in Alberta, which he called "one of the most receptive, pro-business environments in the world."
Owens and Hickenlooper are among nearly 80 Colorado business executives and government officials traveling to Alberta.
Hickenlooper said the trip is similar to one he and Owens took to Silicon Valley in 2003 - an investment of time and effort in order to reap benefits later. But on this trip, Denver politicians and investors will be getting the pitch rather than giving it.
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