TORONTO (miningweekly.com) – US gold producer Newmont Mining is proceeding with its plans to expand its Tanami operations, in Australia, by building a second decline in the underground mine and expanding plant capacity.
The NYSE-listed miner said on Wednesday that it would add about 80 000 oz/y of capacity, decreasing Tanami’s all-in sustaining costs (AISC) by 5% to 10% in the first five years of production.
The second decline would also open access to two-million ounces of potentially profitable production and extend the mine life by three years, creating a platform for exploration drilling to support future growth. Recent exploration results had demonstrated the potential to double current reserves and resources by expanding existing Tanami deposits and developing neighbouring discoveries.
“Tanami is a Newmont success story. Since 2012, the team has more than doubled gold production while cutting costs by about two-thirds and significantly improving resource confidence. The expansion project continues this trajectory, offering robust returns of more than 35% at current gold prices,” president and CEO Gary Goldberg stated.
Building a second decline at Tanami would support a step change in mining rates, which would ramp up to about 2.6-million tonnes a year, Newmont explained. The processing plant expansion included adding a ball mill, thickener and gravity circuit to improve recoveries and expand mill capacity from 2.3-million tonnes to 2.6-million tonnes a year. When the expansion was complete, Tanami would produce between 425 000 oz/y and 475 000 oz/y of gold at AISC of between $700/oz and $750/oz in the first five years of production.
Denver, Colorado-based Newmont would invest between $100-million and $120-million of free cash flow and available cash balances to implement the project. Of this amount, one-quarter would be spent in 2015, half would be spent in 2016 and the remainder would be spent in 2017. First commercial production was pencilled-in for the second half of 2017.
Newmont had one of the strongest project pipelines in the gold sector and remained on track to deliver new production from Leeville, in Nevada, as the Turf vent shaft was being completed, in late 2015; Colorado-based Cripple Creek & Victor’s expansion projects during 2016; Merian, in Suriname, in late 2016; and Long Canyon Phase 1, in Nevada, starting in 2017.
Tanami was located about 950 km south-west of Darwin, in Australia’s Northern Territory. The expansion project fell within the existing Tanami operating footprint on the Granites and Dead Bullock Soak mineral leases. Newmont acquired its interest in 2002 through its merger with Normandy. In 2014, Tanami produced about 345 000 oz of gold at AISC of $1 038/oz.
Q3 RESULTS
For the quarter ended September, Newmont reported net income attributable to shareholders from continuing operations of $202-million, or $0.38 a share, compared with $210-million, or $0.42 a share, a year earlier. Excluding special items, adjusted net income was $126-million, or $0.23 a share, down from $249-million, or $0.50 a share.
Newmont beat average analyst expectations of posting adjusted earnings of $0.17 a share, based on revenue of $1.93-billion.
Revenue was $2-billion, compared with $1.7-billion in the third quarter of 2014, as higher output and sales volumes at Batu Hijau, in Indonesia, Boddington, in Western Australia and Tanami more than offset lower metal prices. Batu Hijau mined higher-grade ore and operated and shipped at full capacity during the period, after being impacted by a temporary export ban in the comparable quarter of 2014.
The average net realised gold price was $1 104/oz of gold, compared with $1 270/oz a year earlier. The average realised price for copper fell from $2.71/lb to $1.95/lb.
Attributable gold output was 1.34-million ounces, up 16% from the previous-year quarter, boosted by higher output at Batu Hijau, Tanami and Boddington, and the addition of Cripple Creek & Victor.
Attributable copper output was 48 000 t, compared with 13 000 t in the comparable quarter a year earlier, mainly as a result of higher-grade ore at Batu Hijau.