Newmont Mining Corp. announced an improved 2018 outlook, increasing attributable gold production guidance to between 4.9 million ounces (oz) and 5.4 million oz compared to previous 2018 guidance of between 4.7 million oz and 5.2 million oz. Production is expected to remain between 4.9 million oz and 5.4 million oz in 2019 and longer-term production is expected to remain stable at between 4.6 million oz/y and 5.1 million oz/y through 2022.
The leading U.S. gold producer narrowed its range for all-in sustaining costs (AISC) to between $965/oz and $1,025/oz, compared to previous 2018 guidance of between $950/oz and $1,050/oz. AISC is expected to be between $870/oz and $970/oz in 2019 and longer-term through 2022. Gold costs applicable to sales (CAS): CAS guidance for 2018 is improved to between $700 and $750 per ounce, compared to previous 2018 guidance of between $700/oz and $800/oz. CAS is expected to be between $620/oz and $720/oz for 2019 and between $650/oz and $750/oz longer term through 2022.
Newmont’s total capital guidance for 2018 remains unchanged between $900 million and $1 billion. Capital investments are expected to be between $730 and $830 million in 2019 and between $580 million and $680 million longer term through 2022. Sustaining capital guidance for 2018 remains unchanged between $600 and $700 million. Sustaining capital is expected to be between $600 and $700 million for 2019 and between $550 million and $650 million longer term through 2022. The primary capital projects include Northwest Exodus, Subika Underground and Twin Underground, which will reach commercial production in 2018, and the Ahafo Mill Expansion and Quecher Main, which will reach commercial production in 2019.
“Our five-year guidance reflects steady performance, portfolio and balance sheet improvements, and gives us the means and confidence to target a dividend increase of at least 50% in 2018,” said Gary J. Goldberg, president and CEO, Newmont Mining. “We expect to deliver steady gold production at competitive costs over the next five years, and to continue investing in margin and Reserve growth. This commitment is backed by our proven strategy and track record and our differentiated technical and operating talent, project pipeline and global footprint.”
North America gold production is expected to be between 2 million oz and 2.2 million oz in 2018 with production from Northwest Exodus, Twin Underground and the Silverstar pit offsetting higher stripping ratios at Carlin and Twin Creeks and lower grade ore at the Cripple Creek and Victor mines (CC&V). Production declines slightly in 2019 to between 1.8 million oz and 2 million oz due to planned stripping at Carlin and then increases to between 1.9 million oz and 2.1 million oz in 2020 due to higher grades at Twin Creeks, CC&V and Long Canyon.
South America production is expected to be between 615,000 oz and 675,000 oz in 2018 as Merian delivers mine and mill productivity improvements that partially offset Yanacocha’s lower production resulting from lower grades and recoveries from deep transitional ore. Production is expected to be between 590,000 oz and 690,000 oz in 2019 with the addition of Quecher Main and between 475,000 oz/y and 575,000 oz/y in 2020 as Yanacocha laybacks are mined out and Merian transitions from saprolite to hard rock.
Gold production in Australia is expected to be between 1.5 million oz and 1.7 million oz in 2018 due to higher grade, recovery and throughput improvements at Tanami and KCGM, which offset increased stripping at Boddington. Production is expected to be between 1.4 million oz and 1.6 million oz in 2019 and 2020. In 2020, Boddington completes stripping and accesses higher grade ore which offsets the impact of processing lower grade stockpiles at KCGM.
Primary development capital includes expenditure on the Ahafo Mill and Subika Underground expansions in Africa, Twin Underground in North America and Quecher Main in South America. Subika Underground leverages existing infrastructure and an optimized approach to develop Ahafo’s most promising underground resource. First production was achieved in June 2017 with commercial production expected in the second half of 2018. The project is expected to increase average annual gold production by between 150,000 and 200,000 oz/y for the first five years beginning in 2019 with an initial mine life of approximately 11 years. Capital costs for the project are estimated at between $160 and $200 million with expenditure of between $80 and $90 million in 2018.
Ahafo Mill Expansion is designed to maximize resource value by improving production margins and accelerating stockpile processing. First production is expected in the first half of 2019 with commercial production expected in the second half of 2019. The expansion is expected to increase average annual gold production by between 75,000 oz/y and 100,000 oz/y for the first five years beginning in 2020. Capital costs for the project are estimated at between $140 million and $180 million with expenditure of approximately $75 million to $85 million in 2018.
Together the Ahafo expansion projects (Ahafo Mill Expansion and Subika Underground) improve Ahafo’s production to between 550,000 oz/y and 650,000 oz/y for the first five full years of production (2020-2024). Both of these African projects individually have a rate of return of more than 20% at a $1,200/oz gold.
Twin Underground (North America) is a portal mine beneath Twin Creek’s Vista surface mine with similar mineralization. First production was achieved in August 2017 with commercial production expected mid-2018. The expansion is expected to average between 30,000 oz/y and 40,000 oz/y for the first five years (2018 to 2022). Twin Underground has a rate of return of more than 20% at a $1,200/oz of gold.
Quecher Main (South America) will add oxide production at Yanacocha, leverage existing infrastructure and enable potential future growth at Yanacocha. First production is expected in early 2019 with commercial production in the fourth quarter of 2019. Quecher Main extends the life of the Yanacocha operation to 2027 with average annual gold production of approximately 200,000 oz/y between 2020 and 2025. The rate of return for this project is expected to be greater than 10% at a $1,200 gold price.
