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Newmont (NEM) Divests Royalty Portfolio to Maverix for $90M

Zacks Equity Research
·3 min read

Newmont Corporation NEM recently inked a definitive agreement with Maverix Metals Inc. to divest a portfolio of 11 royalties for around $90 million. The consideration includes $15 million in cash, 12 million common shares of Maverix and contingent cash payments of up to $15 million that is payable after completion of certain milestones.

These royalties will provide exposure to five gold assets that are owned and operated by growth-oriented mining companies. It includes royalties on Mother Lode and Imperial in the United States, Cerro Blanco in Guatemala as well as Ana Paula and Camino Rojo in Mexico.

The transaction provides Newmont with additional participation in a growing royalty and streaming business. The deal is expected to close in fourth-quarter 2020, which is subject to customary closing conditions. Post completion of the transaction, Newmont’s ownership interest in Maverix will increase to around 32% from 26%. Per Newmont, the deal will also strengthen its strategic partnership with Maverix and generate additional value for the respective shareholders.

Newmont’s shares have surged 57.5% in the past year compared with the industry’s 17.3% rise.

In July, Newmont stated that it expects attributable gold production of around 6 million ounces in 2020. Gold CAS is projected at $760 per ounce for 2020, while AISC is expected to be $1,015 per ounce on higher sustaining capital spending.

The company is progressing with majority of its development and sustaining capital projects, including Tanami Expansion 2 and Subika Underground as well as advancing laybacks at Boddington and Ahafo.

Zacks Rank & Key Picks

Newmont currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Barrick Gold Corporation GOLD, Pretium Resources, Inc. PVG and Yamana Gold Inc. AUY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Barrick has an expected earnings growth rate of 80.4% for 2020. The company’s shares have surged 51.2% in the past year.

Pretium Resources has an expected earnings growth rate of 20% for 2020. Its shares have returned 2.7% in the past year.

Yamana has an expected earnings growth rate of 76.9% for 2020. The company’s shares have gained 62.7% in the past year.  

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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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Pretium Resources, Inc. (PVG) : Free Stock Analysis Report
 
Newmont Corporation (NEM) : Free Stock Analysis Report
 
Barrick Gold Corporation (GOLD) : Free Stock Analysis Report
 
Yamana Gold Inc. (AUY) : Free Stock Analysis Report
 
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Zacks Investment Research