Newmont taking a bite of Miramar

Vancouver — World’s number one gold producer Newmont Mining (NMC-T, NEM-N) will acquire a significant equity position in aspiring Nunavut gold developer Miramar Mining (MAE-T, MNG-X) through a planned $43.5 million financing.

The agreement will have Newmont purchasing 18.5 million units of Miramar at $2.35 apiece, with each unit comprising one common share and one warrant to purchase an additional share at $2.75 for four years. Upon closing, the senior will hold an immediate 9.9% interest in Miramar, and could increase its position up to 18% upon exercise of all warrants.

Under the deal, Newmont retains participatory rights to future financings (up to 19.9%) and will cooperate on technical, financial and permitting issues. Additionally, the major is not to exceed 19.99% interest in Miramar for four years, barring a public bid for over 50% of Miramar; or alternatively if Newmont proposes a full take-over bid for Miramar.

The inclusion of Newmont, essentially as a “strategic partner”, bodes well for Miramar which has faced challenges in permitting its initial development plans for the Doris North project at Hope Bay. Last summer, the Nunavut Impact Review Board (NIRB) turned down the company’s initial application citing deficiencies in certain information; however a revised application and final environmental impact statement has been submitted to NIRB. Upon review, NIRB will make its recommendation to the federal Ministry of Indian and Northern Affairs as to whether the planned mine should proceed. NIRB’s final public hearings are slated for early 2006 (January 30 to February 3).

Doris North is expected to produce about 150,000 oz. of gold annually over the initial two years of a multi-staged development plan at Hope Bay that would see other deposits brought on-stream in sequence, potentially ramping up to gold output of about 400,000 oz. per year.

Miramar’s latest exploration work on its Hope Bay project continues to focus on resource expansion, particularly at the Naartok deposit.

Besides the Doris deposit’s proven and probable reserve of 458,000 tonnes grading 22 grams gold per tonne, the Hope Bay project (Boston, Doris and Madrid) hosts measured and indicated resources of 6.9 million tonnes grading 9.6 grams gold (contained gold of 2.1 million oz.). There is also an additional inferred resource of 19.2 million tonnes of 7 grams gold (4.3 million oz. of contained gold).

Shares of Miramar were up on the news of Newmont’s pending investment, gaining 30 to close at $2.00 apiece on volume of over 2.2 million shares and setting a new top in its 52-week trading range of 87 to $2.10.