Gold miner Newmont leaps on agreement to sell Musselwhite for up to $850 million

Investing.com – Goldminer Newmont Goldcorp Corp (NYSE:NEM) shares gained on Monday following the sale of its Musselwhite gold mine to Orla Mining Ltd (NYSE:ORLA)in a deal valued at $850 million.

RBC Capital Markets, which has a price target of $47 on Newmont, in a note labelled the transaction a “neutral” move. Newmont shares were up roughly 3% at $42 while U.S.-listed shares of Canadian miner Orla was up 7.5%. 

The deal, which includes $810 million in cash at closing and an additional $40 million contingent on gold prices, is part of Orla Mining’s strategy to more than double its production of the precious metal, Orla said on Monday in a press release

RBC analysts highlighted that the transaction will have no material impact on Newmont’s valuation, as it already factors in the divestiture. They also noted that the sale price, which falls in line with their projections, reflects a 5-10% premium.

The sale is aligned with Newmont’s ongoing strategy to divest non-core assets and fund its share buyback program, RBC added.

RBC’s estimated fair value for Musselwhite ranges from $828 million to $984 million, depending on the prevailing gold price.