Canadian exploration halted by Newmont

Representatives from Newmont Exploration of Canada were informed at a meeting in Denver recently that Newmont will shut down its four Canadian exploration offices in February.

A wholly-owned Newmont Mining subsidiary, Newmont Exploration, spent $10 million last year on exploration programs which were directed from offices in Toronto, Timmins, Thunder Bay and Vancouver.

“The $4.5 million which Newmont had planned to spend in Canada this year will be used instead to finance major programs in Nevada, the Pacific Rim and Australia,” Newmont Mining’s Senior Vice- president John Parry told The Northern Miner.

“Basically we are having to watch where we are putting our exploration dollars,” he said.

Financially bruised after an unsuccessful takeover bid by corporate raider T. Boone Pickens, Newmont has been selling off non- core assets in a bid to cut its $1.2 billion debt load.

Newmont is expected to cut its worldwide exploration budget this year to $46 million(US) from $50.1 million in 1988. But the debt wouldn’t have prevented Newmont from remaining in Canada if its portfolio of Canadian exploration projects had been considered strong enough, according to Parry.

Priority has shifted to the Carlin gold trend in Nevada where Newmont is spending $15 million on development and exploration drilling. Last year the company spent $450-million on a program designed to increase its Carlin gold production to 1.6 million oz from last year’s 830,000 oz. The development program will be directed from new corporate head offices in Denver, Colo.

Nevertheless, the decision to pull out of Canada caught some of Newmont’s Canadian personnel unawares.

“The announcement came as a real surprise,” said Hugh Squair, Newmont Canada’s exploration manager, eastern division, who attributed it to the Pickens takeover bid.

Newmont Mining recently reported third quarter losses of $8.8 million compared to $21.4 million profit a year earlier. Nine month earnings also dropped considerably to $125 million from $336.9 million a year ago.

In an effort to reduce its huge debt load, Newmont recently sold a number of assets including a 34% stake in Sherritt Gordon Mines (TSE) and 82% of Foote Mineral Co. Newmont also agreed last January to sell its Similkameen copper mine near Princeton, B.C., to Cassiar Mining Corp. (TSE) of Vancouver for $10 million.

The Similkameen sale, which left Newmont without any mining operations in Canada, is regarded as something of a strategic error by industry watchers. Increased output from the mine and strong copper prices have since combined to boost Cassiar’s bottom line.

Parry said the decision to suspend Newmont’s Canadian operations is a temporary measure and the company may be back in two or three years when it has more financial flexibility. “The decision was made internally and had nothing to do with recent changes in Canadian taxation policies,” he said.

Meanwhile, Parry said he must take care of staff concerns before making any decisions on the company’s Canadian assets.

They include a joint venture with Claude Resources (TSE) on the Ithingo Lake property in Saskatchewan where an 8,000-ft drill program will go ahead despite Newmont’s decision to pull out of Canada.

The joint venture in which Newmont holds a 70% interest and Claude 30% is still in good standing,” said Byron Henderson, Claude’s vice-president corporate affairs.

Newmont also has land holdings in the Casa Berardi region of northwestern Quebec, the Queen Charlotte Islands in British Columbia and Harker-Holloway in Ontario.

Newmont Canada personnel are being offered severance packages based on seniority and length of service.

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