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Newmont Continues Portfolio Optimization, Sells Valcambi Refinery

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Portfolio optimization continues

Newmont Mining’s (NEM) stated strategy is portfolio optimization. On the one hand, it’s disposing of high-cost, non-core assets. On the other hand, it’s acquiring low-cost assets with long mine lives in safer jurisdictions.

Newmont has taken several steps toward asset optimization this year, including the purchase of the CC&V (Cripple Creek & Victor) mine from AngloGold Ashanti (AU) and the sale of its Waihi operations in New Zealand.

As part of its portfolio optimization approach, Newmont announced on July 27 the sale of its 60.6% stake in the Valcambi gold refinery in Switzerland for $119 million to a subsidiary of Rajesh Exports.

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According to Randy Engel, Newmont’s executive vice president for strategic development, “This sale further strengthens Newmont’s balance sheet and enhances our focus on our core business. Since mid-2013, we have executed $1.6 billion in non-core asset sales, allowing us to further pay down debt, invest in new, profitable production and return capital to shareholders.”

Peripheral activity

Goldcorp (GG) acquired Probe Mines in March 2015. Barrick Gold (ABX) is getting rid of most of its non-core assets to optimize its portfolio and reduce debt.

Barrick forms 5.5% of the VanEck Vectors Gold Miners ETF (GDX). To get exposure to gold prices, investors can also invest in gold-backed ETFs such as the SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU).

About Valcambi

The Valcambi refinery is globally one of the largest gold and silver refineries. It started its operations in 1961 in Switzerland. Newmont acquired interest in this refinery from Credit Suisse in 2004.

This sale should be net positive for Newmont, given the market’s focus on core and leaner operations. Since the proceeds will be applied to repayment of debt, it’s additionally positive, since Newmont’s high debt has been a market concern for a while now.

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