Newcrest Mining has signed an agreement to sell its majority interest in the Bonikro operation in Côte d’Ivoire to a consortium of F&M Gold Resources and Africa Finance following a strategic review.

Under the agreement, Newcrest will sell its 89.89% interest in the operation in exchange a or cash payment of $72m to be payable on completion of the transaction.

A portion of the payment is subject to the successful progression of the Akissi-so pit extension at Bonikro.

In addition, Newcrest will retain net smelter royalty on future ore mined at the Bonikro lease, which will accrue an estimated value of $9m.

Newcrest Mining managing director and CEO Sandeep Biswas said: “Following this extensive review, we are pleased to be able to announce the sale of Bonikro to a consortium having the operating experience of the Forbes & Manhattan Group and the financial backing of the Africa Finance.

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“The royalty is applicable to the first 560,000oz of gold production.”

“This outcome delivers value for Newcrest shareholders and provides a clear future path for the Bonikro mine for the benefit of its employees, the community and all our Côte d’Ivoire stakeholders.”

The royalty is applicable to the first 560,000oz of gold production from the next pushback of the Bonikro pit at a rate of 2.5% for gold prices above $1,251 an ounce.

The agreement provides for an increase in royalty by 0.5% for every $50 rise in gold prices up to 4.5% at $1,450 an ounce or above.

The transaction is expected to be completed in the March 2018 quarter, subject to certain conditions, including Côte d’Ivoire Government approval, renewal of the Bonikro Mining Investment Convention, and no material adverse change in the business.

Following the proposed sale, Newcrest will continue to operate in Côte d’Ivoire through its exploration tenements outside of the Bonikro / Hiré area, including the Séguéla project where drilling is underway.