Newmont Mining updated long-term operating outlook, including All-In Sustaining Costs (AISC) below $1,000/oz and steady cash flow generating production of at least 4.5 million to 5 million oz/y. AISC for gold is expected to improve from between $900/oz and $960/oz in 2016 to between $850/oz and $950/oz in 2017. Longer term, the company expects to sustain savings achieved to date, and maintain AISC below $1,000/oz through 2020. The company’s gold costs applicable to sales (CAS) is expected to be between $650/oz and $700/oz in 2016, and remain stable at between $650/oz and $750/oz.
From 2017 to 2020, the company anticipates further savings while ramping up profitable projects that could lower overall cost. Newmont expects gold production to increase to 5.2 and 5.7 million oz by 2017 as production from the Cripple Creek & Victor (CC&V) mines, Merian and Long Canyon Phase 1 more than offset declines at Batu Hijau, Yanacocha and Twin Creeks. Longer term, the company expects steady and profitable production of between 4.5-5 million oz/y through 2020.
For 2016, sustaining capital is expected to be between $700 and $750 million; longer term sustaining capital is expected to remain stable at between $700 million and $800 million. The primary capital expense for development through 2018 includes capital for the construction of Merian, Long Canyon Phase 1, the CC&V expansion, and the Tanami Expansion project.
“Our 2016 outlook reflects ongoing performance, portfolio and balance sheet improvements,” said Gary Goldberg, president and CEO for Newmont Mining.
“Higher margin ounces will be added with the completion of Merian, Long Canyon and expansions at Cripple Creek & Victor and Tanami. We will also progress the next projects in our pipeline — including expansions at Carlin and Ahafo — to further improve profitability.” The ramp-up of projects that are not yet approved, including Ahafo Mill Expansion, Subika Underground and NW Exodus represent upside of between 250,000 and 400,000 oz of gold production beginning in 2018.
North American gold production is expected to increase from between 1.9 million and 2.1 million oz in 2016 to between 2.1 million and 2.3 million oz in 2017, and return to 2016 levels by 2018. New production from CC&V and higher grades at Leeville related to the Turf Vent Shaft help offset lower production at Twin Creeks due to planned processing of lower grade stockpiles, as well as a slowdown in the development rate at Leeville due to the installation of long term ground support.
In South America, Newmont expects production to increase from between 400,000 and 450,000 oz in 2016 to between 600,000 and 700,000 oz in 2017 and 2018. Lower cost production at Merian is expected to offset the impact of maturing operations at Yanacocha.
Asia Pacific production is expected to improve from between 1.7 million and 1.9 million oz in 2016 to between 1.8 million and 2 million oz in 2017, before decreasing to between 1.4 million and 1.7 million oz in 2018. The next two years, 2016 and 2017, will benefit from higher grades at Batu Hijau and the addition of the Tanami Expansion project in 2017, with 2018 lower due to mine sequencing at Batu Hijau.
Gold production in Africa is expected to decline from between 760,000 and 820,000 oz in 2016 to between 700,000 and 800,000 oz in 2017 and between 650,000 and 750,000 oz in 2018 due primarily to lower grades at Ahafo and Akyem. The Ahafo mill expansion and Subika Underground represent additional upside currently not captured in guidance, and if approved, would increase 2018 production to 2016 and 2017 levels.