Gold major Newmont on Thursday announced that it would pay $275-million for a 50% interest in the Galore Creek project, which with resources of eight-million ounces of gold and nine-billion pounds of copper is one of the world’s largest undeveloped projects of its kind.

Newmont is buying half of the Galore Creek Partnership (GCP) from Novagold Resources, with Teck Resources owning the remaining shareholding.

Newmont president and CEO Gary Goldberg said that forging a partnering with Teck would pool both organisations’ technical, financial and sustainability strength to evaluate and refine development plans for Galore Creek, 160 km from Stewart, in British Columbia.

He said that Newmont and Teck would define the scope, budget, and timeline for prefeasibility studies over the next several months. The GCP, which will be managed by a committee comprising of leaders from both companies, has estimated that $20-million to $30-million a year will be needed for the prefeasibility studies, which should be completed over the next three to four years.

“Galore Creek holds the potential to support decades of profitable copper and gold production in a favourable mining jurisdiction, in line with our strategy to create long-term value for our stakeholders,” said Goldberg.

Newmont will settle the $275-million consideration in stages, with an initial payment of $100-million; a payment of $75-million on the earlier of prefeasibility study completion or three years from closing; and a payment of $25-million on the earlier of completing a feasibility study or five years from closing. A final $75-million payment would be contingent on a final decision to develop the project.   

“Our patience has been rewarded. I’m very pleased that Novagold is receiving fair value for its interest in Galore Creek and believe that Newmont is the right organisation to carry forward the track record of excellence that we have achieved with our partners over the years. Upon completion of this transaction, Novagold will further strengthen its balance sheet to fund activities at its flagship Donlin Gold project in Alaska,” said Novagold president and CEO Greg Lang in a news release.

SECOND-QUARTER RESULTS
Meanwhile, Newmont also on Thursday released its second-quarter results, with net income from continuing operations increasing by $84-million from the prior-year quarter to $274-million, or $0.51 a diluted share. The increase was attributed to lower income taxes, a gain from the sale of the company’s royalty portfolio in June and higher average realised prices, offset by lower production at Cripple Creek & Victor (CC&V), in Colorado, Boddington, in Western Australia, Akyem, in Ghana, and Twin Creek, in Nevada.

Adjusted net income amounted to $144-million, or $0.26 a share, compared with $248-million, or $0.46 a share, in the prior-year quarter, resulting from lower production.

Revenue also fell by 11% to $1.66-billion for the quarter under review.

Attributable gold production decreased 14% to 1.16-million ounces primarily from lower grades at Carlin, Twin Creeks, Boddington and Akyem and a build of CC&V concentrate inventory to be processed in Nevada.

The group maintained its full-year production guidance at between 4.9-million and 5.4-million ounces in 2018 and 2019. Gold costs applicable to sales was reported at $751/oz and no change was made to the company’s full-year guidance.

Newmont said that longer term production would be between 4.6-million and 5.1-million ounces a year through 2022, excluding development projects which have yet to be approved.

North America’s production will be between 2-million and 2.2-million ounces in 2018. Production is forecast to decline slightly next year to between 1.8-million ounces and 2-million ounces, before increasing to between 1.9-million and 2.1-million ounces in 2020 owing to higher grades at Twin Creeks, CC&V and Long Canyon.

South America production will be between 615 000 oz and 675 000 oz in 2018 and between 590 000 oz and 690 000 oz next year, but fall to between 475 000 oz/y and 575 000 oz/y in 2020 as Yanacocha laybacks are mined out and Merian transitions from saprolite to hard rock.

Newmont’s production in Australia will decrease to between 1.4-million and 1.6-million ounces in 2018 driven by the East wall slip at KCGM. Production in 2019 and 2020 may be impacted by the KCGM rock falls and life-of-mine plans are being assessed. The company said it continued to advance studies for a second expansion at Tanami.

At its African operations, Newmont is forecasting production of between 815 000 oz and 875 000 oz in 2018, increasing to between 1.1-million and 1.2-million ounces in 2019 as the Ahafo mill expansion reaches commercial production.