OceanaGold Corporation will stump up US$101 million (NZ$132 million) in cash, plus customary adjustments, to acquire the Waihi Gold Mine.

It was announced this week the multinational corporation had signed a non-binding Letter of Intent to acquire the mining operations from the current owner Newmont Mining Corporation.

OceanaGold is looking to purchase Newmont Mining Corporation's Waihi mining operation for US$101 million (NZ$132 million). Photo: File.

Newmont will also retain a one per cent net smelter royalty for gold ounces mined from one specific exploration tenement, capped at 300,000 ounces of production.

The transaction is subject to completion of comprehensive due diligence, execution of a definitive acquisition agreement, Board and regulatory approvals and other customary closing conditions.

CEO and managing director Mick Wilkes says the company have long believed Waihi represents a strong strategic fit within OceanaGold.

'We are excited about the prospect of acquiring it and welcoming its experienced workforce to our team,” says Mike. 'Waihi represents a unique opportunity for us to acquire a high-quality asset that has demonstrated the propensity to extend mine life for more than two decades in what is still a very prospective, high-quality goldfield.”

He adds: 'This proposed acquisition is accretive to shareholders, grows our production profile and importantly will further reduce our industry leading All-In Sustaining Cost profile.”

OceanaGold operates New Zealand's largest gold mining operation at the Macraes goldfield in Otago, which is made up of the Macraes Open Pit and the Frasers Underground mines, plus the Reefton Open Pit mine on the West Coast. It also has mining operations in the Philippines.

In 2015, the company expects to produce 295,000 to 335,000 ounces of gold from its combined New Zealand (excluding Waihi) and Philippine operations.

The Waihi Open Pit mine has been opened since 1988, while the Correnso Underground Mine has been in operation since 2005. It currently employs 340 people.

The geology of the mine features low-sulphidation epithermal gold and silver deposits hosted in quartz veins.

The Correnso Underground Mine is expected to produce on average 100,000 ounces per annum through to 2018.

Proposed transaction highlights:

High-grade and low-cost operation expected to contribute meaningful gold production.

Substantial free cash flow generation anticipated to result in a rapid payback on investment.

Significant opportunities to extend mine life through exploration and development, as demonstrated by the performance over 27 years operating in this highly prospective goldfield.

Synergies with OceanaGold's existing operations and extensive experience in New Zealand.

Highly prospective regional exploration potential.

Accretive to near-term earnings per share and cash flow per share.