Gold Producer Newmont Selling Stake in Canadian Oil Sands
iNVEZZ.com, Wednesday, July 10th: Newmont Mining Corp (NYSE:NEM), the biggest US gold producer, has agreed to sell its stake in oil and gas exploration and production company Canadian Oil Sands (TSE:COS), Bloomberg reported today. Newmont’s share price rose marginally in after-hours trading yesterday on the NYSE whereas Canadian Oil Sands’ share price plunged to close more than four percent lower in Toronto.
**Newmont Selling Stake in Canadian Energy Producer**
Bloomberg quoted Omar Jabara, a spokesman for Colorado-based Newmont, as saying in an e-mail that the gold producer had agreed to sell its stake in Calgary-based Canadian Oil Sands to a banking syndicate for about C$608 million (£388 million). The syndicate will then offer the shares to various buyers.
“Our investment in Canadian Oil Sands has returned a lot of value for Newmont and its shareholders and this stake sale also will help streamline and rationalise our portfolio of assets,” Jabara said. Newmont owns approximately 6.5 percent of the Canadian energy producer.
Canadian Oil Sands’ net income for the first quarter of 2013 declined to C$177 million (£113 million) or C$0.37 per share, down from $318 million (£203 million) or C$0.66 per share in the first quarter of 2012.
The sale of Newmont’s stake in the Canadian energy company comes in the context of falling gold prices and rising costs for gold producers. Newmont is among gold companies which spent $195 billion (£131 billion) on acquisitions during a decade-long bull market and are now looking to dispose of assets as gold prices decline. Last month, Canadian oil and natural gas producer Whitecap Resources Inc said that it had agreed to buy energy assets from the world’s largest gold miner Barrick Gold Corp.
Newmont has been suffering alongside peers from this year’s slump in the gold price. Gold, which rallied for 12 straight years through 2012, slid into a bear market in mid-April. Last month, Newmont announced that it was planning to axe its workforce in Colorado by at least 33 percent over the next three months.
!m[Newmont’s Share Price Rises in New York](/uploads/story/3836/thumbs/pic1_inline.jpg)
“Ongoing price volatility and steadily rising costs create intense pressure for Newmont to continuously improve its efficiency and effectiveness,” Gary Goldberg, Newmont’s President and CEO said in a statement. “Ultimately, we cannot postpone the work we need to accomplish now to create sustainable
value for our stakeholders into the future.”
In April, the company lowered its capex guidance for 2013 by $100 million (£67.1 million) and reported that its first quarter adjusted net income slid to $354 million (£237.6 million) or $0.71 per basic share, as compared with $578 million (£388 million) or $1.17 per basic share for the prior year quarter. Newmont is scheduled to release its second-quarter results on July 25.
**Newmont’s share price closed 0.19 percent higher at $27.07 in New York on 9 July 2013, and rose 0.07 percent in after-hours trading to $27.09. Canadian Oil Sands’ share price closed 4.67 percent lower in Toronto at C$19.81.**
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