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Australian company buys Canadian mine for $1.15 billion

11/03/2019
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Australian gold mining company Newcrest Mining Ltd has announced a $1.15 billion AUD ($806.5 million USD) deal for a 70% joint-venture interest in the Red Chris copper and gold mine, located in British Columbia.


(Image via Imperial)

The majority stake will give the company its first operating mine in the Americas, while allowing a significant scale up of Red Chris.

Sandeep Biswas, Newcrest’s CEO, said the company had been eyeing up the area for several years, but only now had the opportunity to buy. He highlighted the promising exploration potential of mineral tenures in the area as reasons for the investment.

“This is our first operating asset in that time zone, so it’s a big milestone for us. We now have a beach-head and a footprint,” Biswas said.

“We’re well known in North America because the majority of our shareholders are from North America. But being an operator in North America certainly will lift our profile, and hopefully broaden our investor base in the Americas.”

Red Chris is a copper and gold porphyry deposit with an operating open-pit mine and mineral resources of 20 million ounces of gold and 13 billion pounds of copper. It was previously held by Imperial, who acquired the project in 2007 and spent $662 million building the mine. First production was achieved in 2015. 

The site covers 57,200 acres of land, with 77 mineral tenures.

Newcrest have compared the Red Chris site to their Cadia gold mine in NSW, which has a similar geology. They hope to use the knowledge gathered there to employ their “block-cave” technology - a process involving mining under a large ore body to create a controlled, progressive collapse - in the new mine.

“The bulk of the resource is underground, and that’s where the grade increases at depth. So what we do with block caving is we go right down to the bottom and start mining from the bottom up,” explained Biswas.

“So that is one of the key reasons we think we can unlock this ore body and make it a tier one operating mine."

Analyst David Lennox, of equity research firm Fat Prophets, considered the value of the purchase:

“We think it’s a good move. You are looking at a very significant resource. From that perspective, they have not paid through the nose and the gold price is significantly lower than where it has been for the past few years.”

Sandeep Biswas is confident in the move, based on the caliber of the minerals at the site.

“We focus on value. And the quality of the ounces outweighs the size of the ounces. For example, we’re the third-largest gold company in the world by market cap, but we’re about the sixth or seventh largest in terms of ounces.”

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Australian company buys Canadian mine for $1.15 billion - Time to read 3 min
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