UPDATE 2-Fresnillo to buy out Mexican gold mines partner Newmont for $450 mln

Fri Sep 12, 2014 6:29am EDT
 
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* Post-acquisition expects annual output of 750k oz by 2018

* Technical issues to shave gold output target for 2014

* Fresnillo says it may hedge some gold output (Adds details, quotes from analyst and chief executive)

By Esha Vaish and Silvia Antonioli

BANGALORE/LONDON Sept 12 (Reuters) - Silver miner Fresnillo Plc has agreed buy Newmont Mining Corp's 44 percent stake in Penmont, their Mexican gold mining joint venture for $450 million in cash.

As well as three mines, the deal gives the London-listed miner complete control of exploration projects and other prospects in and around the Herradura corridor in northern Mexico.

Fresnillo, which currently makes the bulk of its profits from silver mining, expects gold will represent about half of its earnings by 2018 as a result of the Newmont deal.

"The acquisition ... would significantly enhance our gold production and be central to our growth," Chief Executive Octavio Alvídrez said.

"In line with our disciplined growth strategy, the acquisition is earnings accretive, and provides Fresnillo with significant exploration and development potential in a region where we are experienced operators."   Continued...