Ownership issue haunts gold play

After years of delay, the sale of Newcrest Mining’s 22.22 per cent holding in the $1 billion-plus Boddington gold prospect could dictate whether the long-delayed project is finally able to proceed.

Newcrest Mining, one of three owners and with the smallest holding of the project,  has put its share up for sale.

The problem is that US-based gold company Newmont, which owns 44.44 per cent, claims three owners of one project makes for difficult decision-making and causes delays.

Newmont Australia managing director Paul Dowd told Diggers and Dealers he thought the ownership structure was problematic.

However, Newmont and 33.33 per cent owner AngloGold Ashanti may have to continue to deal with a third owner at the table if Newcrest can find a buyer.

Newmont and AngloGold told Newcrest to put the asset on the broader market after both refused to buy it for Newcrest’s asking price.

None of the parties has said what Newcrest wanted for the stake but analysts believe the Australian miner would want nothing less than $200 million.

Newcrest general manager of corporate affairs, Peter Reeve, said last week the company was not interested in any project that it could not own outright.

Newcrest is committed to the ramp up of the $1.4 billion Telfer gold project in the Pilbara to production of 800,000 ounces and 55,000 tonnes of copper a year, mining the Cadia East underground deposit near Orange and the high grade Cracow project in Indonesia.

At Boddington it continues to pour money into feasibility studies for the project but has little control of development decisions.

Regardless, Mr Reeve said Newcrest would see out its funding obligations for feasibility studies on the 11 million ounce ore body.

“A final feasibility study for the Boddington project is almost completed and will enable the joint venturers to consider a development decision early in the new year,” Newcrest chief executive Tony Palmer said in a statement earlier in August when the sale decision was made.

The sales process was not expected to delay the decision, Mr Palmer said.

Newcrest has appointed ABN Amro Corporate Finance to conduct the sale, and Mr Reeve said last week interest had been shown from North American and Australian companies.

The stake was indirectly valued in November 2001 at between $155 million and $177 million. That was based on a Grant Samuel valuation of 100 per cent of Boddington at $700 million to $800 million in Normandy Mining’s takeover response to an opening takeover bid from AngloGold.

The bidding war for Normandy was won by Newmont, giving the miner its stake in Boddington. AngloGold’s stake was inherited from its takeover of Acacia.

Other analysts believe Boddington’s value stands at about $500 million and would cost more than $1 billion to develop. That would put a ceiling value on Newcrest’s interest of about $100 million.