TORONTO (miningweekly.com) – Denver, Colorado-based gold and copper miner Newmont on Wednesday announced that it had signed a stock purchase agreement under which TSX-listed Klondex Mines would acquire Newmont’s Midas underground operation and mill complex, in Nevada, for more than $83-million.

Klondex president and CEO Paul Huet billed the acquisition as “transformational” for the company, during a “pivotal point” in Klondex’s development.

“I am confident that Klondex's management team can leverage past experience, with some of the core leadership team having previously worked at Midas, to vastly benefit from the synergies and to unlock continued value in Klondex for shareholders going forward. Our team is extremely pleased to be working alongside Newmont to bring together two excellent epithermal deposits with a high-quality central mill,” he said.

Klondex is mainly engaged in developing and exploring its high-grade Fire Creek gold project, in north-central Nevada.

The purchase price comprised about $55-million in cash, subject to customary adjustments, and replacing Newmont surety arrangements with Nevada and federal regulatory authorities totalling about $28-million.

Further Newmont would receive five-million Klondex common share purchase warrants that have a 15-year term, subject to acceleration in certain circumstances, holding a strike price to be determined on the closing date.

Newmont expected to close the transaction, which was subject to normal closing conditions, including regulatory and third-party approvals, early in 2014.

“We are pleased to have reached agreement with Klondex for the sale of Midas and believe they are well positioned to continue safely and successfully operating the mine. This agreement underscores our ongoing commitment to optimising our portfolio, as we continue to focus on our longer-life and lower-cost core assets,” Newmont executive VP for strategic development Randy Engel said.

Newmont’s Midas underground mine operates through roughly 200 employees and is located in north-central Nevada, between Elko and Reno. The company acquired the mine through its merger with Normandy in 2002.

The Midas operation consists of an underground mine, waste rock area, crushing plant, conventional mill, refinery, cyanide destruction circuit, tailings impoundment, and two settling ponds. The mine also provides ancillary facilities like a maintenance shop, warehouse complex, administration and security building, and facilities for distributing diesel fuel, gasoline and propane.

As at the end of 2011, Midas had a compliant proven reserve of 300 000 oz grading 0.191 g/t.

Klondex had appointed GMP Securities as its exclusive financial adviser, and the firm would also coordinate financing for the acquisition, which was expected to consist of a combination of equity, secured notes and a secured gold loan.