Newmont Corporation (NYSE: NEM, TSX: NGT) (Newmont or The Company) and Kirkland Lake Gold Ltd. (NYSE: KL, TSX: KL, ASK: KLA) (Kirkland Lake Gold or Kirkland) have signed a Strategic Alliance Agreement to jointly assess regional exploration opportunities around Newmont’s Timmins properties and Kirkland’s Holt Complex in Ontario, Canada.
As part of the Strategic Alliance, Newmont has acquired an option (the Option) from Kirkland on the mining and mineral rights subject to a royalty payable by Newmont to Royal Gold, Inc. (the Holt Royalty) in exchange for a $75 million payment to Kirkland Lake Gold. Newmont can exercise the Option only in the event Kirkland intends to restart operations at the Holt Mine and process material subject to the Holt Royalty. Kirkland has the right to assume Newmont’s obligations under the Holt Royalty at any time, in which case the Option would terminate. The effect of the Option structure is that Newmont will have no additional liability exposure in relation to the Holt Royalty.
As a result of the Strategic Alliance Agreement and the Option, Newmont expects to remove the approximately $350 million liability for the Holt Royalty on its balance sheet at June 30, 2020 and record a gain of approximately $275 million in Net income (loss) from discontinued operations in its results for the third quarter of 2020.
The formation of the Strategic Alliance provides Kirkland Lake Gold with capital to evaluate strategic alternatives for the future of the Holt mining complex, explore on its existing properties, and evaluate other regional opportunities where Kirkland and Newmont may cooperate in the future. Kirkland Lake Gold will act as manager of Strategic Alliance activities.
About Newmont
Newmont is the world’s leading gold company and a producer of copper, silver, zinc and lead. The Company’s world-class portfolio of assets, prospects and talent is anchored in favorable mining jurisdictions in North America, South America, Australia and Africa. Newmont is the only gold producer listed in the S&P 500 Index and is widely recognized for its principled environmental, social and governance practices. The Company is an industry leader in value creation, supported by robust safety standards, superior execution and technical expertise. Newmont was founded in 1921 and has been publicly traded since 1925.
About Kirkland Lake Gold Ltd.
Kirkland Lake Gold Ltd. is a growing gold producer operating in Canada and Australia that produced 974,615 ounces in 2019. The production profile of the Company is anchored by three high-quality operations, including the Macassa Mine and Detour Lake Mine, both located in Northern Ontario, and the Fosterville Mine located in the state of Victoria, Australia. Kirkland Lake Gold's solid base of quality assets is complemented by district scale exploration potential, supported by a strong financial position with extensive management expertise.
Cautionary Statement:
This news release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws. Where a forward-looking statement expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the forward-looking statements. Forward-looking statements may include management’s expectations related to future results of the strategic alliance, exploration plans and results of exploration, future operations (including, without limitation, future operations at the Holt mine), and expectations regarding the anticipated accounting treatment and financial impacts for the third quarter related to the liability for the Holt royalty and Strategic Alliance Agreement. For a discussion of risk and other factors that might impact Newmont’s business and future looking statements, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the U.S. Securities and Exchange Commission (the “SEC”), under the heading “Risk Factors”, as well as the Company’s subsequent Quarterly Reports on Form 10-Q, available on the SEC website or www.newmont.com. The Company does not undertake any obligation to release publicly revisions to any “forward-looking statement,” including, without limitation, outlook, to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.
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