Newmont, Kirkland reach agreement for strategic alliance and Holt Royalty Liability


Newmont  and Kirkland Lake Gold Ltd. (NYSE: KL, TSX: KL, ASK: KLA) (Kirkland Lake Gold or Kirkland) have signed a Strategic Alliance Agreement to jointly assess regional exploration opportunities around Newmont’s Timmins properties and Kirkland’s Holt Complex in Ontario, Canada.

As part of the Strategic Alliance, Newmont has acquired an option (the Option) from Kirkland on the mining and mineral rights subject to a royalty payable by Newmont to Royal Gold, Inc. (the Holt Royalty) in exchange for a $75 million payment to Kirkland Lake Gold. Newmont can exercise the Option only in the event Kirkland intends to restart operations at the Holt Mine and process material subject to the Holt Royalty. Kirkland has the right to assume Newmont’s obligations under the Holt Royalty at any time, in which case the Option would terminate. The effect of the Option structure is that Newmont will have no additional liability exposure in relation to the Holt Royalty.

As a result of the Strategic Alliance Agreement and the Option, Newmont expects to remove the approximately $350 million liability for the Holt Royalty on its balance sheet at June 30, 2020 and record a gain of approximately $275 million in Net income (loss) from discontinued operations in its results for the third quarter of 2020.

The formation of the Strategic Alliance provides Kirkland Lake Gold with capital to evaluate strategic alternatives for the future of the Holt mining complex, explore on its existing properties, and evaluate other regional opportunities where Kirkland and Newmont may cooperate in the future. Kirkland Lake Gold will act as manager of Strategic Alliance activities.



Please enter your comment!
Please enter your name here