A gold loan of one million ounces, worth about $448 million(US), has been arranged by Newmont Mining of New York, the proceeds to be applied against the company’s $1.6-billion debt load.
The loan, arranged through a consortium headed by the Bank of Nova Scotia, will be repaid over five years. The company will be charged a 2.5% interest rate initially, with that rate to fall as the company’s debt total declines.
Gold loans, growing in popularity, allow mining companies to borrow an amount of gold and sell it forward for an immediate cash gain. The loans, made at fairly low rates of interest, obligate the companies to replace all gold borrowed. Newmont Mining is to start repaying the loan, in quarterly instalments, in 1989.
Newmont Mining has a 90% interest in Newmont Gold, which is forecasting production of 1.6 million oz gold by 1990. Newmont Gold is the dominant property owner along the exciting Carlin trend in Nevada.
Shearson Lehman reports Consolidated Gold Fields, which has a 49.7% interest in Newmont Mining, may also be considering a gold loan to help reduce its debt.
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