Denver’s Newmont Mining Corp. has agreed to buy a stake in one of Canada’s largest undeveloped gold fields by investing $36.4 million in a Vancouver, British Columbia-based mining company.
The deal will give Newmont ownership of 9.9 percent of the stock of Miramar Mining Corp., making it the company’s second-largest shareholder. If Newmont exercises warrants included with the transaction, it could increase its ownership to 18 percent. Newmont is the world’s largest gold producer.
Newmont’s shares surged 7 percent Wednesday as gold prices climbed. Gold soared $10.10 an ounce to $479.10, the biggest daily gain since the day trading resumed after the Sept. 11, 2001, terrorist attacks in the U.S., as investors sought a hedge against rising consumer prices.
Miramar’s sole asset is the Hope Bay gold field in northern Canada’s Nunavut region, a now-autonomous territory that formerly was part of the Northwest Territories.
Miramar has estimated that its property may contain 6.4 million ounces of gold. Of that total, about 2.1 million ounces is classified as potentially recoverable at current gold prices, with a value of about $1 billion.
“We consider Miramar’s Hope Bay project to be a premier, advanced-exploration play,” Newmont president Pierre Lassonde said. “What appeals to Newmont is Hope Bay’s size potential and its location in Canada.”
Miramar is seeking regulatory approval to begin extracting gold from Doris North, the first phase of development at Hope Bay, by late 2007. The Hope Bay project covers 386 square miles.
“This is a big stamp of approval for Hope Bay from the world’s biggest gold company,” Tony Walsh, Miramar’s chief executive, said in an interview.
Newmont’s investment may allow “a bigger production model at Hope Bay sooner rather than later,” Walsh said.
Bloomberg News contributed to this report.
Staff writer Steve Raabe can be reached at 303-820-1948 or sraabe@denverpost.com.
