Newmont sells Ontario mine to Orla for $850 million

Canada’s Orla Mining (TSX: OLA) is buying Newmont’s (NYSE: NEM) Musselwhite gold mine in Ontario for $850 million, enabling it to more than double production of the precious metal, at times when prices are hovering near record highs. 

Orla said it will pay Newmont $810 million in cash, with additional installments contingent on gold prices. Two tranches will be due if gold exceeds $2,900/ounce and $3,000/ounce during the first and second full-year periods, following the deal's expected closure in the first quarter of 2025.

Musselwhite, an underground gold mine in northwestern Ontario, has been operational for over 25 years. It had 1.5 million ounces of proven and probable gold reserves as of Dec. 31, 2023.

For Orla, which currently operates the Camino Rojo mine in Mexico, acquiring Musselwhite is a transformative step. The deal will elevate Orla from a single-asset producer to a multi-asset miner, more than doubling its gold output to 300,000 ounces per year. 

This acquisition also boosts Orla’s exposure to record gold prices, which have surged this year due to actions by the US Federal Reserve. Musselwhite is expected to generate more than $150 million in average annual free cash flow over the next six years, the company said.

Eyes on growth

Orla’s growth trajectory doesn’t stop there. Through the development of the South Railroad project in Nevada, the company aims to increase its output to 500,000 ounces per year. 

“We intend to not only continue to operate Musselwhite, but to seek optimization opportunities and to invest in its future, grow its reserves and resources, and extend its mine life. The mine has a proven history of successful production, cash generation, and reserve replacement, having consistently added to mine life,” Orla’s president and chief executive, Jason Simpson, said in the statement.

The transaction is the first in a series of planned divestments by Newmont. The Denver, Colorado-based gold miner aims to raise up to $2.9 billion from selling non-core assets following its $17 billion acquisition of Newcrest.

Other Canadian assets currently on the market include the Éléonore and Porcupine mines and the Coffee project. Additionally, Newmont plans to sell its Cripple Creek & Victor mine (CC&V) in the US.

So far, the gold giant has sold two Australian assets for up to $475 million and has agreed to sell its Akyem mine in Ghana to China’s Zijin Mining Group for up to $1 billion.