North Americans head chase to buy AngloGold mine

North American gold producers are leading the chase to buy an AngloGold Ashanti mine in the US, underlining their desire to retreat to home turf and cut exposure to riskier jurisdictions.

A sale of the Cripple Creek mine in Colorado would be one of the largest of a US gold asset since the price of the precious metal declined sharply in 2013. It could raise up to $1bn to help the South African group cut its debt after a plan for a rights issue failed last year.

Newmont Mining of the US and Canada's Kinross Gold are among a group of miners conducting second-round talks with AngloGold over a deal for part or all of Cripple Creek, according to people familiar with the sale process. Iamgold and Goldcorp, two other Canadian companies, have also shown interest.

A number of North American miners are expected to be keen to strengthen their holdings close to home to counterbalance riskier assets overseas. It would follow the example of Goldcorp, which only operates in the Americas and has become the world's largest miner by market capitalisation.

Kinross has fallen out of favour with investors because of its significant exposure to Russia, source of almost 30 per cent of its output, amid increased tension between President Vladimir Putin and the west.

Colorado-based Newmont was embroiled last year in a dispute with Indonesia's government over its copper and gold mine in the country. It has also run into fierce local opposition to a proposed mine in Peru.

Newmont said this month it would build a mine in Nevada and last year discussed a tie-up with Barrick Gold that would have refocused the merged company on their combined holdings in the US state, although the idea was shelved after extensive talks.

Patrick Chidley, a mining analyst at HSBC in New York, said some miners were willing to pay more for assets in less risky jurisdictions.

"Some companies have shown that they are not managing risks in emerging markets very well and some countries have been guilty of increasing their demands of miners, to the point where companies have started to say 'enough is enough'. So assets in places such as the US or Canada may attract higher valuations," Mr Chidley said.

AngloGold, the world's third-largest gold miner by output, would like to sell part or all of Cripple Creek and may try to retain operational control. Kinross and Newmont declined to comment on their interest in Cripple Creek.

AngloGold's willingness to sell comes after Srinivasan Venkatakrishnan, chief executive, last year abandoned a proposal to restructure the group into two separate companies. Investors were unhappy at the prospect of a $2.1bn rights issue that would have accompanied the restructuring.

Mr Venkatakrishnan has said AngloGold "will not act in haste" as it seeks to cut its $3.1bn of net debt by $1bn within the next three years.

The company is in the final stages of an expansion at Cripple Creek to nearly double annual output. The mine has about 10m oz of gold resources.

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