8-KMaterial Agreements

NEWMONT Corp /DE/ 8-K Report, Material Agreement (Oct 1, 2004)

Filed October 1, 2004For Securities:NEMNEMCL

Summary

Newmont Mining Corporation, through its wholly-owned subsidiary Newmont Australia Limited (NAL), has entered into a term sheet for a significant transaction involving Australian Magnesium Corporation Limited (AMC) and its subsidiaries. This agreement, signed on September 27, 2004, outlines a plan where Resource Capital Fund III L.P. (RCF) will acquire the Queensland magnesia project (QMAG) and the Kunwarara magnesite deposit from AMC. As part of this deal, NAL will forgive existing loans and guarantee fees totaling approximately A$7.8 million owed by AMC and QMAG. Additionally, RCF will assume a guaranteed loan facility of approximately A$58 million, for which NAL is a guarantor, and cover foreign exchange hedge closeout costs. Newmont will also provide a new A$30 million subordinated loan to a newly formed QMAG entity. This transaction is expected to result in a non-cash, pre-tax gain for Newmont, estimated between $10 million and $15 million, primarily due to the reversal of a previously recorded loss contingency related to the A$58 million loan facility.

Key Highlights

  • 1Newmont's subsidiary, NAL, has entered into a term sheet for a material definitive agreement concerning the sale of the Queensland magnesia project (QMAG) and Kunwarara magnesite deposit.
  • 2Resource Capital Fund III L.P. (RCF) is set to acquire these magnesia assets from AMC.
  • 3NAL will forgive A$5 million in loans and A$2.8 million in loan guarantee fees owed by AMC and QMAG.
  • 4RCF will assume an A$58 million loan facility guaranteed by Newmont, as well as closeout costs for foreign exchange hedges.
  • 5Newmont will provide a new A$30 million subordinated loan to a QMAG entity, with a 10-year term.
  • 6The transaction is anticipated to close in the fourth quarter of 2004, subject to various conditions including shareholder and regulatory approvals.
  • 7Newmont expects to recognize a non-cash, pre-tax gain of $10 million to $15 million upon closing, driven by the reversal of a loss contingency.

Frequently Asked Questions

This 8-K filing announces that Newmont's subsidiary, Newmont Australia Limited (NAL), has entered into a term sheet for a significant transaction involving Australian Magnesium Corporation Limited (AMC) and its magnesia assets. The filing details the key terms of this anticipated agreement, including the sale of assets, debt forgiveness, loan assumption, and a new loan to be provided by Newmont.

Newmont expects to record a non-cash, pre-tax gain of approximately $10 million to $15 million upon the closing of this transaction. This gain is primarily due to the reversal of a $30 million loss contingency that was previously accrued related to its guarantee of the A$58 million loan facility, net of other transaction effects.

The transaction is expected to close in the fourth quarter of 2004. However, the closing is contingent upon the satisfaction of several conditions, including approval by AMC shareholders, certain regulatory approvals, the entry into a senior debt facility by QMAG, and the completion of definitive transaction documentation.

NAL is a key party in this transaction. It is agreeing to forgive existing loans and guarantee fees owed by AMC and QMAG, totaling approximately A$7.8 million. NAL will also provide a new subordinated loan of A$30 million to a newly-formed QMAG entity and has provided a short-term working capital loan of A$1.25 million pending the closing.