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India’s Rajesh Exports Acquires Newmont’s Swiss Gold Refiner
by Swansy Afonso & Tatiana Darie
Rajesh Exports Ltd., India’s biggest exporter of gold jewelry, agreed to buy Swiss refiner Valcambi SA from owners including Newmont Mining Corp. for $400 million.
The cash purchase helps ensure gold supplies to India, the largest consumer of the metal after China, Bangalore-based Rajesh Exports said in an exchange filing on Monday. Its stock rose to close at the highest level since at least July 2000, while shares in Newmont, the largest U.S. gold producer, fell.
“On a theoretical basis Valcambi is capable of supplying the entire gold requirement of India,” said Chairman Rajesh Mehta. Credit Suisse Group AG has agreed to fund 30 percent to 35 percent of the acquisition through long-term debt, which Rajesh Exports plans to repay through Valcambi’s future earnings, Mehta said at a news conference in Mumbai.
Valcambi, founded by a group of Swiss entrepreneurs in 1961, has processed and sold an average of 945 metric tons of gold and 325 tons of silver annually during the last three financial years, according to the statement. India imported 891.5 tons of gold in 2014 to meet demand of 811.1 tons, according to the World Gold Council.
For Greenwood Village, Colorado-based Newmont, the sale of its stake in the refinery will generate net proceeds of $119 million, part of an effort to reduce debt and position itself for near five-year low gold prices.
The deal “could prevent more difficult decisions from having to be made down the road,” if gold prices continue to fall, Garrett Nelson, a Virginia-based analyst at BB&T Capital Markets, said in a telephone interview.
Price Tumble
Newmont has raised about $900 million this year, including a stock offering and the sale of the Waihi mine in New Zealand. The funds more than offset a pending $820 million payment for the newly-acquired Cripple Creek & Victor mine in Colorado and give the company more flexibility to reduce debt this year, Farooq Hamed, a Toronto-based analyst at Barclays Capital, wrote in a research note on Monday.
Newmont shares lost 3.3 percent to $17.22 at the close in New York, extending a decline this year to 8.9 percent. That’s in line with gold’s drop amid mounting speculation that U.S. interest rates will climb this year, curbing the metal’s appeal because it doesn’t pay interest like competing assets.
Rajesh Exports and its units used more than 170 tons of gold for its operations during the financial year ended March 31, it said. The company’s net income may increase 40 percent in 2015-16 from 6.5 billion rupees ($102 million) a year earlier because of the Valcambi acquisition and an increase in Indian gold demand during festivals starting in September, Mehta said.
New Markets
“The coming together of Rajesh Exports and Valcambi would ensure that Valcambi improves on its global share of gold business, by opening up new markets in India, Middle East and China,” Michael Mesaric, chief executive officer of Valcambi, said in the statement.
The deal helps cement India’s position in the world gold market, said Harish Galipelli, head of commodities and currencies at Inditrade Derivatives & Commodities Ltd., calling it a positive move for Rajesh Exports.
Shares of Rajesh Exports rose 1.6 percent to 540.85 rupees at the close in Mumbai on Monday. That was the ninth day of gains and the longest winning streak since September 2010.
Source:- India’s Rajesh Exports Acquires Newmont’s Swiss Gold Refiner - Bloomberg Business
Rajesh Exports acquires largest gold refinery firm Valcambi
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