American gold mining company, Newmont Corporation (NEM) has agreed to sell its Akyem Gold Mine project in Ghana to China-based Zijin Mining Group (HK:2899) (ZIJMF) for $1 billion cash. Akyem is one of the largest gold mines in the world, with an annual capacity of 8.5 million metric tons. Hong Kong-listed Zijin will buy the 100% interest in Akyem with the scheduled deal closure expected in the fourth quarter of 2024, subject to approvals.
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Further Details on Newmont’s Strategic Repositioning
Newmont is on a strategic transition path to become a copper-focused miner as the world moves toward decarbonization efforts. The miner will receive $900 million upfront on the closing of the deal and a further $100 million on meeting certain conditions. Newmont will utilize the sale proceeds to strengthen its balance sheet and enhance shareholder returns.
Earlier this year, the company also sold its ownership in Australian assets based in Telfer and Havieron for roughly $475 million. The company is strategically offloading non-core assets to focus on its Tier 1 assets.
Copper plays an important role in the manufacturing of electric vehicles (EVs) as well as in solar and wind energy projects. Newmont’s executives have been reportedly examining many mining sites in Canada, the U.S., Australia, and Ghana. At the same time, the company stated that it remains committed to Ghana with its investments of $950 million to $1,050 million of development capital in the Ahafo North gold mining project in the Ahafo region of the country.
Insights from TipRanks’ Bulls Say, Bears Say Tool
Amid Newmont’s ongoing transition, the company draws attention from both Bulls and Bears. According to TipRanks’ Bulls Say, Bears Say tool, some analysts are optimistic about the Akyem sale process along with the broader portfolio optimization, which will ensure fair value for the assets sold.
On the other hand, bears are concerned about the rising costs per ounce at the Nevada Gold Mines, Turquoise Ridge project, and Pueblo Viejo production. Higher costs at these projects stand to impact the company’s bottom line expectations.
Is NEM a Buy Right Now?
Analysts remain divided on Newmont stock. On TipRanks, NEM has a Moderate Buy consensus rating based on eight Buys and three Hold ratings. Also, the average Newmont price target of $58.73 implies 11.4% upside potential from current levels. Meanwhile, NEM shares have gained 29.8% so far this year.
