Newmont Rethinks Future in Gold-Rush Era Town After $15 Billion Deal
ADELAIDE, Australia—The world’s biggest gold miner just got bigger. That has left a Colorado mine with its origins in the gold-rush era facing an uncertain future.
Newmont hasn’t NEM 2.79%increase; green up pointing triangle decided whether to sell the Cripple Creek & Victor gold mine following its $15 billion takeover of Australia’s Newcrest Mining NCM -1.27%decrease; red down pointing triangle, the largest transaction in gold-mining history. But Chief Executive Tom Palmer said the mine was smaller than many of the operations that Newmont now owns, and the company wants to raise some $2 billion from selling mines and rescheduling developments.
Cripple Creek “is certainly in that category of operations you debate around their fit,” Palmer said in an interview.
Mining has deep roots in Cripple Creek, located in Teller County, southwest of Pikes Peak. The town’s logo features a speculator with a pick leading a donkey. Residents can pitch up for coffee and food at the Gold Camp café. The local gold deposit, according to Newmont, was created by a volcanic eruption tens of millions of years ago.
Newmont, based in Denver, acquired the Cripple Creek mine from AngloGold Ashanti for $820 million eight years ago. It marked another step on Newmont’s road to building a business that outgrew rivals, including Barrick Gold, in terms of size.
The acquisition of Newcrest, which was completed on Monday and brings the company’s value to around $50 billion, advances that strategy still further. It adds five active mines and two advanced projects to Newmont’s existing global footprint.
But many of the mines that Newmont is getting as part of the Newcrest deal are richer in gold and cheaper to mine than Cripple Creek. Some also come with copious stores of copper, which Newmont increasingly wants to focus on, given its use in manufacturing electric vehicles and renewable-energy infrastructure.
Cripple Creek was once so rich with precious metal that it was nicknamed the world’s greatest gold camp. In the early 1900s, there were more than 500 mines worked by thousands of miners. That activity has left its mark on the area and its identity, but Palmer said it also means that much of the mine’s bounty has been dug up and the operation could struggle to compete inside Newmont with newer mines around the world.
Newmont produced 134,000 troy ounces of gold from Cripple Creek in the nine months through September. While that was 7% higher than a year earlier, the operation was one of the smallest contributors to overall output.
Still, there are reasons to hang on to the mine, said Palmer, a fourth-generation miner from the Australian mining town of Broken Hill.
“It’s literally an hour and a half up the road from headquarters,” Palmer said.
That means it could be a good learning ground for future mine managers and a testbed for new technologies, particularly as the company works to cut emissions from its operations, he said.
Cripple Creek isn’t alone in facing a debate about whether it belongs in the new Newmont.
There are also mines in Canada, Australia and Ghana whose futures will be scrutinized in the months ahead. No decisions have been made about those most likely to be sold, said Palmer.
“You may find that Newmont keeps a number of those in our portfolio over the long term because they’re generating good cash” and offer other benefits, Palmer said.
Part of the rationale for buying Newcrest was to strengthen Newmont’s footprint in favorable mining jurisdictions, he said, as a resurgence in resource nationalism becomes a problem again for the industry.
Executives will need to determine which operations can maintain sufficiently attractive profit margins, he said.
Already buyers are circling for some assets. Palmer said deal interest has been logged by Newmont’s corporate-development team of about 10 employees. That team managed a string of sales in-house after Newmont bought Goldcorp in 2019—bringing in close to $2 billion—and again might run deal negotiations without appointing an investment bank, he said.
“That team has a fairly full inbox,” said Palmer. “But they’re not under any pressure to be trying to get a quick sale out the door.”