SOUTHEAST ASIA SPECIAL — Decade of work pays off for Newmont

A decade of exploration and development work has enabled Newmont Gold (NYSE) to open its first mine in Southeast Asia, and have a second waiting in the wings.

During the first quarter of this year, the gold giant completed on schedule its 80%-owned Minahasa operation on the north end of the island of Sulawesi, 1,500 miles northeast of Jakarta.

As part of the commissioning process, Minahasa poured its first gold on March 30. The US$135-million project is expected to turn out 90,000 oz. of the yellow metal this year.

Mining at Mesel, the largest of three deposits, began last July and by year-end, a 2-stage grinding mill, roaster and carbon-in-pulp gold recovery circuit were in the final phase of completion.

Once up and running at full capacity, the operation is expected to produce 140,000 oz. gold annually over a 13-year mine life. Proven and probable reserves total 2.1 million oz., and potential for new discoveries is considered excellent.

The ore averaged 0.2 oz. gold per ton, and the stripping ratio is 3.8-to-1 waste-to-ore. Most of the ore is refractory and requires roasting prior to gold recovery. Total cash costs are expected to be about US$210 per oz.

A second deposit, Leons, will be mined this year, to be followed by a third, Nibong, later on.

Minahasa employs Indonesia’s first deep-sea tailings disposal system.

Following gold extraction, the crushed rock remaining is detoxified and piped from the mine to the ocean floor, at a depth of 250-400 ft. (well below the level at which aquatic creatures live). This method is viewed as the most environmentally sound because the mine is in a area of earthquakes, active volcanoes and heavy rainfall.

Elsewhere in the country, Newmont and Japanese partner Sumitomo are working towards a definitive agreement to develop jointly the Batu Hijau project. If all goes as planned, Newmont will own 45% of the project, Sumitomo will hold 35%, and the remainder will be held by an Indonesian company.

Newmont discovered Batu Hijau in 1990, four years after starting a grassroots exploration program on the sparsely populated island of Sumbawa, 1,000 miles southwest of Minahasa.

One of the largest copper-gold deposits in the world, Batu Hijau hosts a measured and indicated mineralized resource of 920 million tons, containing an estimated 11.2 billion lb. copper and 14.7 million oz. gold.

The project will involve a US$1.5-billion investment for an open-pit mine, mill and related infrastructure, including housing, electrical generation and a port.

Newmont is active in other parts of Indonesia and Southeast Asia. In particular, it regards the Philippines, Laos, China and Myanmar as prospective for large gold discoveries.

The company spent US$11 million exploring in Southeast Asia last year, and plans to step up its efforts in 1996.