Orla Mining has announced its acquisition of the Musselwhite Gold Mine in Ontario from Newmont for $850 million, a move that is set to more than double Orla’s gold production.
Transaction Details:
The deal will enable Newmont to generate up to $2.9 billion from non-core asset divestitures, part of its strategy following the $17 billion acquisition of Newcrest. Newmont had aimed for over $2 billion in such sales.
Orla will pay $810 million in cash, with the remaining amount contingent on gold prices exceeding $2,900 and $3,000 per ounce in the first and second years post-acquisition, respectively.
Market Reaction:
Following the announcement, Newmont’s shares fell by 3.6%, while Orla Mining’s shares rose by 8% as of 11:15 AM ET (1615 GMT).
Production and Financial Outlook:
Orla’s gold production is expected to exceed 300,000 ounces annually after the acquisition, enhancing its exposure to current record gold prices. The Musselwhite mine is projected to generate over $150 million in average annual free cash flow over the next six years.
Strategic Insights:
Jason Simpson, CEO of Orla Mining, highlighted the company’s strategy of acquiring assets that may be undervalued by larger firms and emphasized the potential for significant value creation.
Simpson also noted that the new U.S. administration under Donald Trump could benefit the mining industry by potentially reducing the time required to develop new mines.
Gold Market Context:
Gold prices have surged to new highs this year, driven by the U.S. Federal Reserve’s unexpected interest rate cuts and increased demand for gold as a safe-haven asset. As of Monday, spot gold was trading 1.2% higher at $2,591.43 per ounce.
Background on Musselwhite Mine:
The Musselwhite mine, along with the Eleonore project in Quebec, was one of the Canadian assets Newmont sought to divest.