Vancouver – On a reserve replacement mandate Newmont Mining (NMC-T, NEM-N) has placed Miramar Mining (MAE-T, MNG-X) in its take-over sights to acquire the large Hope Bay gold project in Nunavut.
The move comes on a $6.25 per share take-over offer by the senior valuing Miramar at about $1.5 billion on a fully diluted basis — a 29% premium over the 20-day volume weighted average trading price prior to the bid.
Miramars board fully supports the offer and recommends shareholders tender to it.
“We believe Newmont’s offer takes into account the value of the existing resources at Hope Bay along with the significant upside potential,” states Miramar president and CEO Tony Walsh in the announcement of the bid.
Newmont already has an 8.4% stake in Miramar, acquired in 2005, which rises to 15% on a fully diluted basis.
The prize is Miramars Hope Bay gold deposits located near Bathurst Inlet on Nunavuts Arctic coast where a trio of separate mineralized areas has been identified containing in excess of 10 million oz. gold.
Total indicated resources of 36 million tonnes grading 4.5 grams gold per tonne have been tabled in the three Hope Bay deposits (Boston, Doris and Madrid) for just over 5.2 million contained oz. gold. Doris contains 1.2 million tonnes of 19.3 grams gold including reserves calculated at Doris North while Boston has 2.3 million tonnes of 10.7 grams gold. Most of the resource is at Madrid with 32.5 million tonnes of 3.5 grams gold.
Additional inferred resources of 46.6 million tonnes at 2.9 grams gold was also reviewed at Hope Bay.
Miramar acquired Hope Bay in late-1999 from BHP Billiton (BHP-N, BHP-A, BLT-L) predecessor BHP Minerals for $25 million after the senior spent about $90 million exploring the region.
The land position covers the entire 80-km long by about 20-km wide Hope Bay Greenstone Belt, offering significant additional exploration potential.
Miramar had production aspirations through phased development of its Hope Bay deposits. An initial starter phase targeting high-grade ore at Doris was modeled producing about 150,000 oz. gold annually over the first four years, transitioning to a second phase with output growing to the 500,000 oz. per year level as the Madrid and Boston orebodies are brought on-stream.
Longer term goals had output potentially rising to the one million oz. per year level with successful expansion of resources coupled with further discoveries.
The Hope Bay project recently received a positive water licence decision from the Nunavut Water Board, for the Doris North mine, recommending a 5-year Type A water licence be issued.
Besides the usual regulatory approvals, Newmonts offer is conditional on acquiring two-thirds of Miramars fully diluted common shares.
Newmont forecasts 2007 equity gold sales of about 5.4 million oz., a drop from the 5.9 million oz. lodged in 2006, as it moves to cycle new mines in Nevada, Ghana and Australia to production in 2008.
Shares of Miramar leapt more than 20% on the Newmont bid news, closing up $1.09 at $6.28 apiece on trading volume of over 113 million.