TOM BRADY Newmont has reported a positive free cash flow in the past ten quarters, despite difficult market conditions
Having responded swiftly to the downturn in commodity prices over the past three years by lowering costs and optimising its portfolios, US-headquartered gold producer Newmont Mining is well positioned to outperform its competitors as the gold price recovers.
This is according to Newmont chief economist Tom Brady, who will present the key fundamentals of the gold market and their effects on mining operations at this year’s Investing in African Mining Indaba, in Cape Town, from February 6 to 9. His discussion will focus on supply and demand trends in the gold market and the potential impacts of notable macroeconomic and political events on these dynamics, including the forces that led to a ten-month low of the gold price of $1 158.60 in December.
With the gold price steadily improving for most of 2016, Newmont delivered $666-million in adjusted earnings before interest, taxes, depreciation and amortisation, and $240-million in free cash flow for the third quarter of the year. This marks the eighth quarter in which the company has reported positive free cash flow in the past ten quarters.
In November, Mining Weekly reported that commercial production had, moreover, been declared at the company’s new Long Canyon mine, in Nevada. It is the fourth profitable new operation the company has added to its stable portfolio of profitable mines in the past three years, including Merian, in Suriname, in 2016; the Cripple Creek & Victor mine, in Colorado, in 2015; and Akyem, in Ghana, in late 2013.
Newmont CEO Gary Goldberg points out that the company has also completed various growth projects at its operations on or ahead of schedule, and within or below budget, including an expansion at Cripple Creek & Victor last year. The company is, further, on track to complete profit-enhancing expansions at the Tanami mine, in Australia, this year and at its Carlin mine, 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 keep investing in profitable growth, retiring debt and returning cash to shareholders,” he says.
Success in Difficult Market
Proving the success of Newmont’s business strategy, the company was named the Mining Company of the Year for 2015 by the Ghana Chamber of Mines for showing exceptional performance in innovation, local-content support and occupational health and safety, as well as environmental and social performance at its Ahafo mine.
Newmont beat ten other mining companies to take top honours at the second Ghana Mining Industry Awards, held in Accra on November 25.
Ahafo celebrated the tenth anniversary of its first gold pour last year, as well as production of its five-millionth ounce of gold. It was also ranked the Best Safe Mine for 2016 by the inspectorate division of the Ghana Chamber of Mines.
At the same awards ceremony, Newmont’s Akyem mine was the best performer in the environmental management category and the second-best performer in the innovation category.
“We have worked hard to survive the headwinds that have confronted the mining industry for the past three years. “Over this period, we’ve had to take tough decisions and resort to innovation to keep our heads above water. “Although we are not yet out of the woods, we are excited that the dedication of our employees with regard to driving superior performance and advancing our purpose of creating value and improving lives through sustainable and responsible mining has won us such recognition,” says Newmont Africa regional senior VP Alwyn Pretorius.
The Association of Ghana Industries also honoured Newmont Ghana last year for its leadership role and commitment to local-content development in the country, while, globally, the Dow Jones Sustainability World Index named Newmont the mining industry’s overall leader in sustainability for the second year running.
Brady highlights that these accolades are the result of the company’s continuous pursuit of business improvement initiatives and strong commitment to operational excellence and sustainability.
“I am happy things are turning out well . . . With the continuous support of government and stakeholders, I am confident we will continue to build a strong and sustainable business that will continue to create value for all our stakeholders. “I congratulate all employees and stakeholders for supporting our business strategy and collaborating to create value for the government and people of Ghana,” Pretorius concludes.