Gold miner Newmont has reached an agreement to sell its Musselwhite mine to TSX-listed Orla Mining for up to $850-million. The transaction, announced on Monday, marks the first sale of several Canadian assets that the US-based gold miner has identified for divestment.

Other Canadian assets still on the market include the Éléonore and Porcupine mines, as well as the Coffee project, while the CC&V mine in the US is also up for sale.

To date, Newmont has sold two Australian assets for up to $475-million and reached an agreement to sell its Akyem mine in Ghana for up to $1-billion.

For Orla, which currently operates the Camino Rojo mine, in Mexico, the Musselwhite transaction is transformative. It will turn the company from a single-asset producer to a multi-asset miner, more than doubling its gold output to 300 000 oz/y.

Through the development of the South Railroad project, in Nevada, Orla now has a pathway to 500 000 oz/y.

“We intend to not only continue to operate Musselwhite, but to seek optimisation opportunities and to invest in its future, grow its reserves and resources, and extend its mine life. The mine has a proven history of successful production, cash generation, and reserve replacement, having consistently added to mine life,” said Orla president and CEO Jason Simpson.

Musselwhite, located on the shore of Opapimiskan Lake in north-western Ontario, is expected to generate more than $150-million in average yearly free cash flow over the next six years. This strong cash flow, combined with the revenue from Camino Rojo, will enable Orla to self-fund its growth initiatives, including continued investment in Musselwhite’s development, the South Railroad project, the Camino Rojo sulphides project, and exploration in Canada, Mexico, and the US.

Orla will finance the transaction through a combination of cash, existing undrawn debt capacity, new indebtedness, a gold pre-pay facility, and convertible notes.