The final sale price is $US101 million ($A132.5 million) in cash, a $5 million contingent payment and a 1% net smelter royalty on a recent discovery north of current operations capped at 300,000 ounces of gold.

The binding deal comes after the two companies signed a letter of intent in April.

OceanaGold managing director and CEO Mick Wilkes described the deal as a “significant milestone” for the company.

“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 said.

“This proposed acquisition is accretive to shareholders, grows our production profile and importantly will further reduce our industry leading all-in sustaining cost profile.”

Waihi produced 41,000oz gold at AISC of just $512/oz in the March quarter, and 132,000oz last year.

OceanaGold will fund the transaction from existing cash, which stood at $59.6 million at the end of March, and has drawn $77.8 million from its corporate revolving credit facility.

The company has also received final credit approved commitments to increase the facility to $225 million.

OceanaGold will have the economic benefit of the asset from July 1 with the transaction to close during the September quarter.

Newmont said the sale would further strengthen its balance sheet and improve its financial flexibility.