Newmont draws on Goldcorp integration lessons as it nears closing of Newcrest deal

20th September 2023 By: Mariaan Webb - Creamer Media Senior Deputy Editor Online

Newmont draws on Goldcorp integration lessons as it nears closing of Newcrest deal

Newmont CEO Tom Palmer

Leading gold mining company Newmont is confident it will achieve yearly synergies worth $500-million within the first two years of closing its acquisition of Australian miner Newcrest, CEO Tom Palmer affirmed on Tuesday.

During his address at the Denver Gold Forum, Palmer highlighted how Newmont is leveraging valuable insights gained from successfully integrating Goldcorp just over four years ago.

When Newmont acquired Goldcorp in 2019, the group committed to delivering yearly synergies of $165-million through its ‘full potential’ programme, which improves costs and productivity through the rapid replication of leading processes and advanced technology.

At Peñasquito in Mexico, Newmont had “blown that target out of the water”, Palmer said, noting that the group had delivered more than $700-million in yearly synergies, with over 80% of this value coming from mining and processing improvements

He explained that in the processing plant, Newmont had ironed-out bottlenecks in crushing, grinding and floating to deliver more than $300-million in synergies. In the two openpits, the average payload on its fleet of 85 Komatsu 930E has been increased by 10%, translating to an additional 12-million tonnes a year of material moved at “next to zero cost”.

Combined with other load and haul improvements, Newmont has increased the total material moved by more than 20% compared with 2020, with no additional equipment.

Palmer also referenced the turnaround of Tanami, in Australia’s Northern Territory. The mine joined the Newmont portfolio through the acquisition of Normandy in 2002.

“We have transformed the operation from being on the divestment table in 2013 to a core member of Newmont’s portfolio and one of Australia’s great gold mines. It is a prime example of how we apply our full potential programme to deliver value and earn the right to grow,” he said.

The Normandy acquisition also added the Ahafo operation to Newmont's portfolio. The Ghana operations had little value assigned to them in 2002, but over the last decade, the Ahafo district has been massively expanded. Once the new Ahafo North mine is completed, combined with the underground potential of Subika, Apensu and Awonsu, the district will be capable of producing 850 000 oz/y beyond 2050.

Newmont expects the implementation of its full-potential programme to deliver at least $200-million of the targeted $500-million a year in synergies from the Newcrest transaction. The balance will be derived from general and administrative synergies ($100-million a year) and supply chain synergies ($200-million a year).

Newmont aims to close the Newcrest transaction in the fourth quarter. Earlier this week, it received clearance from Australia's Foreign Investment Review Board to proceed with its takeover of Newcrest. It also received a clearance from Japan's Fair Trade Commission last week, allowing the transaction to be closed anytime post September-end.

The deal still awaits the Newcrest shareholder vote, scheduled for October 13, as well as nods from regulators in the Philippines and Papua New Guinea.

If the deal goes through, Newcrest shareholders would receive 0.400 of a Newmont share for each share, with an implied value of A$29.27 a share.