INTERVIEW/Newmont: Other Purposes For Equity Raising By Stephen...

INTERVIEW/Newmont: Other Purposes For Equity Raising


By Stephen Bell
Of DOW JONES NEWSWIRES

PERTH (Dow Jones)--Newmont Mining Corp.'s (NEM) Australian chief Wednesday dismissed talk of a possible takeover bid for Newcrest Mining Ltd. (NCM.AU) as "ill-informed" speculation.



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Newcrest shares have surged in recent weeks, partly on firmer U.S. dollar gold prices but also on renewed talk of a bid from Newmont, the world's biggest gold producer.

The U.S. group is currently raising nearly US$1 billion in fresh equity, prompting speculation that it may be hatching a takeover of Newcrest, one of Australia's biggest independent gold producers with a market value of A$4.3 billion.

But John Dow, managing director of Newmont's Australian unit, told Dow Jones Newswires that the speculation was "ignorant and ill-informed."

"Newmont is not spending its cash money on something like that," he said in an interview.

"Every time we raise money the same silly story comes up, it's such a nonsense," Dow said.

Newmont said last week that it expects to raise around US$986 million from a placement of 24 million shares to investors. The proceeds will be used for "general corporate purposes", which may include the funding of new project developments, other capital expenditures and repayment of debt.

"That is a pretty clear indication of what Newmont plans to do," Dow said.

Newcrest is one of the few major Australian gold companies to emerge from a recent gold takeover binge by foreign companies. That influx included Newmont, which acquired Normandy Mining in 2002.

Newcrest is currently developing the A$1.2 billion Telfer project, seen as a major lure for overseas predators. Conversely, some analysts say that Newcrest's hedge book, totaling around eight million ounces of gold, may be a disincentive to a group such as Newmont, which has a strong anti-hedging policy.

Newcrest is a partner in Newmont's Boddington gold project in Western Australia, where an update of a previous feasibility study is on track to finish by mid-2004.

The A$5 million study, run by a small technical team out of Perth, is updating capital and operating cost forecasts for the giant gold project, Dow said.

He said that all three Boddington joint venturers Newmont owning 44.4%, South Africa's AngloGold Ltd. (AU) 33.3%, and Newmont 22.2%, are participating in the study.

According to Newmont's web site, a mine costing around US$450 million could start operations in 2006, producing up to 770,000 ounces per year.

At that rate, Boddington would be one of Australia's biggest gold mines, alongside the Kalgoorlie Super Pit (owned by Barrick Gold (ABX) and Newmont), and Telfer.

Newcrest shares were 9 cents higher at A$13.07 in late afternoon trade.