NEW YORK (TheStreet) -- Newmont Mining (NEM) announced that it has agreed to acquire the Cripple Creek & Victor (CC&V) gold mine in Colorado from fellow gold producer AngloGold Ashanti (AU) for $820 million in cash.
Shares of Newmont Mining are down by 1.49% to $25.43 in mid-morning trading on Tuesday.
The company said by acquiring the mine it will create a value-accretive opportunity for Newmont that will improve its mine life and costs in a favorable jurisdiction.
"Consistent with what we've achieved elsewhere, we believe we can lower direct mining costs by up to 10% through improved productivity and optimization," Newmont CEO Gary Goldberg said in a statement.
The company expects the purchase to support its strategy of leading the gold sector in value by creating strong earnings and cash flow, adding between 350,000 and 400,000 ounces of gold per year in 2016 and 2017, and strengthening its reserve base.
The transaction is expected to close in the third quarter of 2015.
Shares of AngloGold Ashanti are higher by 8.37% to $9.45 in mid-morning trading on Tuesday.
Separately, TheStreet Ratings team rates NEWMONT MINING CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate NEWMONT MINING CORP (NEM) a HOLD. The primary factors that have impacted our rating are mixed-some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."