Australia’s largest gold miner, Newcrest Mining (NCM), is to sell its 70% interest in a Queensland gold mine for $200 million.
The 70% interest in the Cracow Mining Joint Venture will be bought by Beadell Resources’ wholly owned subsidiary Beadell (Cracow) Pty Ltd, which expects the orebody to produce a “life of mine plan of more than 5 years that will generate significant net cash flows”.
Newcrest chief executive officer Ian Smith said, “The sale is in line with our strategy of primarily focusing on high volume, low cost gold assets and will free up further cash to support our acquisition activities.”
“While Cracow is a strong performer, with exploration upside, its scale relative to Newcrest’s other operations does not afford it the recognition it would receive as part of a smaller company,” he said.
The sale is expected to be completed by the end of June and depends on a number of conditions including Beadell obtaining shareholder approval and successfully completing an equity raising.
The remaining 30% interest is held by Lion Selection Ltd, which has pre-emptive rights to acquire the Newcrest interest.
Cracow is a high-quality, low cost, underground gold operation with further exploration potential. It has produced over 100,000 ounces of gold a year, in every full year since commissioning in November 2004.
Beadell is an Australian-listed exploration company, with interest in Australia and Brazil, including exploration tenements in Western Australia. Beadell was established by a group of former Agincourt Resources Ltd executives, following the $415 million takeover of Agincourt by Oxiana Ltd in April 2007.
Using a gold price of A$1000 per ounce, Beadell estimates that approximately $110 million of free cash flow will be generated within the first two years of ownership.
Shares in Beadell were unchanged at 27.5 cents, whilst Newcrest rose 55 cents to $33.99.
