Acquisition speculation rife as Newmont says it will raise $2 billion

With gold trading around $1,000 and the Denver Gold Forum as the backdrop, Newmont Mining Corporation, the world's second largest gold miner, couldn't have chosen a better time to announce it is to raise around $2 billion through the sale of Senior Notes.

Author: Lawrence Williams
Posted: Wednesday , 16 Sep 2009

DENVER -

Speculation was rife at the Denver Gold Forum as to the reasons for Newmont Mining Corporation's (NYSE: NEM) announcement it is to make a public offering of $2.0 billion of Senior Notes. Newmont reckons the net proceeds will amount to around $1,966 million, after deducting estimated discounts and expenses. With the gold price at around the $1,000 level this is a particularly opportune time to make the offering given the strong investor interest in gold.

Newmont said that it intends to use the net proceeds of this offering for working capital and for general corporate purposes, including costs of exploration, development of its project pipeline and acquisition initiatives that may become available, although no specific acquisitions were identified. Pending those uses, Newmont says it intends to use the money raised to repay a portion of its senior revolving credit facility and place the remaining proceeds in short-term liquid investments.

The offering will be in two parts - 5.125% Senior Notes due 2019 in the principal amount of $900 million, and 6.250% Senior Notes due 2039 in the principal amount of $1.1 billion. The offering is expected to close on September 18th. The joint book-runners for the offer are Deutsche Bank Securities and UBS Investment Bank.

With this announcement coinciding with the big Denver Gold Forum meeting, packed with mining company corporate delegates as well as analysts and financiers there was naturally considerable speculation as to the reasons with the consensus being that the company almost certainly had a major acquisition target in its sights, but which company this might be, and when news of any offer might emerge, was not immediately apparent.

With Newmont's CEO, Richard O'Brien down to make a presentation on the company to the delegates this afternoon, it is hoped that more news may be forthcoming, but given the SEC restrictions placed on what speakers can say in terms of future predictions, unless a bid is already under way it would seem unlikely that anything concrete will emerge.