As it integrates the Cripple Creek & Victor (CC&V) operations and progresses with the Tanami Expansion, U.S. gold miner Newmont Mining reduced its all-in sustaining costs (AISC) to $835/oz from $995/oz in the prior-year quarter, and the company’s AISC for copper dropped to $1.54/lb compared to $6.61/lb in the prior-year quarter. During the third quarter, the company delivered 1.34 million oz of gold and 48,000 metric tons (mt) of gold (attributable), compared to 1.15 million oz and 13,000 mt, respectively, in the prior-year quarter.
“We delivered a 16% reduction in AISC and generated $758 million in adjusted EBITDA and $478 million in free cash flow — despite lower metal prices — through a sustained focus on improving costs and efficiency,” said Gary Goldberg, president and CEO, Newmont Mining. “The Cripple Creek & Victor integration process is under way and we are moving forward with our Tanami Expansion project in Australia, which is expected to generate an IRR of more than 35% in the current metal price environment. The project involves building a second decline in the underground mine and incremental capacity in the plant to increase profitable production and extend mine life.”
The Turf Vent Shaft is expected to achieve commercial production in the fourth quarter of 2015, adding approximately 100,000 to 150,000 oz of annual production to Carlin’s Leeville underground mine. The shaft provides ventilation required to increase production and decrease mine costs over the 11-year mine life at Leeville. Total development costs for the project are estimated at between $300 and $350 million with approximately $60 to $70 million spent in 2015.
Newmont is investing approximately $200 million, with between $50 and $60 million to be spent in 2015, to expand operations at CC&V. Gold production is expected to average between 350,000 and 400,000 oz in 2016 and 2017.
Merian is progressing on schedule and below budget. It will give Newmont a foothold in a prospective new district in Suriname. Gold production is expected to average between 400,000 and 500,000 oz during the first five years at an AISC of between $650/oz and $750/oz. Capital costs for the project are estimated at between $600 and $650 million for Newmont’s 75% share. Newmont’s capital expenditure is expected to be between $290 million and $330 million in 2015 and between $170 million and $210 million in 2016. The project is scheduled for start up in the second half of 2016.
Long Canyon Phase 1 is expected to achieve commercial production in the first half of 2017. This first phase of development consists of an open-pit mine and heap-leach operation with production of between 100,000 and 150,000 oz/y over an eight-year mine life. AISC are estimated between $500/oz and $600/oz over the life of the mine. Total capital costs for the project are estimated at between $250 and $300 million allocated roughly evenly in 2015 and 2016 with minimal spending in 2017.
The Tanami Expansion includes constructing a second decline in the mine and building incremental capacity in the plant to increase profitable production and serve as a platform for exploration drilling to support future expansion. The expansion improves Tanami gold production to between 425,000 and 475,000 oz/y at AISC of between $700/oz and $750/oz (for the first five years of the expansion) and increases mine life by three years. Capital costs for the project are estimated at between $100 and $120 million with about half of the capital spent in 2016 with the remaining allocated between 2015 and 2017. Additional production is expected to come on line in 2017.
