Canadian firms fall behind in bid for AngloGold's Colorado mine
The Globe and Mail
Published Friday, Mar. 13 2015, 6:48 PM EDT
Last updated Friday, Mar. 13 2015, 6:54 PM EDT
theglobeandmail.com
Newmont Mining Corp. has emerged as the lead bidder for AngloGold Ashanti Ltd.’s prized gold mine in Colorado, according to people familiar with the matter, a disappointment for Canadian companies vying for the asset.
The Cripple Creek & Victor mine, which has deep gold reserves, has become a sought-after asset as the gold industry grapples with the prolonged slump in bullion prices.
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Newmont’s Canadian rivals, Kinross Gold Corp., Iamgold Corp., Yamana Gold Inc. also made it into the second round of bidding, but Colorado-based Newmont is currently leading the pack, the sources said. It is unclear whether Newmont will remain in the forefront after this round closes.
South Africa-based AngloGold is trying to raise capital to pay down its $3-billion (U.S.) debt load. The company has told prospective buyers it only wants to sell part of the mine. It has not specified a price, but mining analysts have pegged the value of the entire mine at around $1-billion.
Newmont and the three Canadian gold miners are all facing their own sets of difficulties in the downturn. Newmont may not be able to export copper out of Indonesia if it does not invest in a smelter in the country. Kinross is facing declining production from its best mines in Russia and recently killed plans to expand a mine because of the weak gold price. Its stock has suffered from political tensions between the West and Russia.
Iamgold needs to reduce its production costs, which average around $1,100 per ounce of gold. It recently raised $500-million from the sale of its non-precious metal mine in Quebec.
Yamana bought half of Canadian Malartic last year to improve its portfolio. But its stock has sank 50 per cent since the acquisition was announced.
AngloGold, Iamgold and Yamana did not immediately respond to a request for comment. Kinross said it does not comment on market speculation. Newmont said its policy is not to comment on rumours and speculation regarding mergers and acquisitions.
Bank of Montreal is running the sale. The first round of bidding closed earlier in March.
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