Newmont adds fourth mine in three years to profit stable

VANCOUVER (miningweekly.com) – US gold major Newmont Mining has declared commercial production at its Long Canyon mine, in Nevada, the first phase of which will bolster company output by between 100 000 oz/y and 150 000 oz/y of gold over an eight-year mine life.

It is the fourth profitable new operation the company has added to its stable of profitable mines in the last three years, including Merian, in Suriname, last month; Cripple Creek & Victor mine, in Colorado, last year; as well as Akyem, in Ghana, in late 2013.

President and CEO Gary Goldberg points out that Newmont has completed each of these organic growth projects on or ahead of schedule, at or below budget. These included an expansion at Cripple Creek & Victor earlier this year; while it is also on track to complete profit-enhancing expansions at Tanami mine, in Australia, by 2017; and at Carlin mine, also in Nevada, by 2018.

“These portfolio improvements set the stage for Newmont to continue generating superior free cash flow, which gives us the means to continue investing in profitable growth, retiring debt and returning cash to shareholders,” Goldberg said in a news release.

Newmont has set the bar for projects at a minimum internal rate of return of 15%; a hurdle that all four of its recent projects passed.

LOWER COST PROFILE
Newmont has lowered its all-in sustaining costs (AISC) by 22% since 2012, bringing AISC (excluding Batu Hijau ine, in Indonesia) down from $1 170/oz to $910/oz so far this year, and well within range of its guidance of between $870/oz and $930/oz.

The Long Canyon mine is expected to further this trend, producing gold at costs estimated at between $400/oz and $500/oz sold, as well as an AISC of between $500/oz and $600/oz.

Billed as the most significant oxide ore discovery in Nevada in a decade, the operation successfully sustained plant availability benchmarks of more than 85%, and achieved 70% of modelled leach recovery. The project was completed two months ahead of schedule for an investment of just under $225-million, which is about $50-million, or 18%, below budget, the Denver, Colorado-based company stated.

Newmont had produced 3.6-million ounces of gold up to the September quarter this year, placing it on track to meet guidance of 4.8-million to 5-million ounces of yellow metal.

Newmont also earlier this year agreed to sell its stake in Batu Hijau for $1.3-billion, citing its strategic priorities to lower debt and fund its highest-margin projects. The deal is expected to close in the current quarter.