NEVADA — Merger with Santa Fe pushes Newmont to top spot — Half of 1997 exploration and development costs earmarked for Nevada projects

With anticipated gold production of 3.7 million oz. in 1997 and 4.1 million oz. in 1998, Newmont Mining (NEM-N) is now North America’s largest producer of the yellow metal. In the world, it is second only to South African-based Anglo American.

The company owes its ranking to its recent merger with Santa Fe Pacific Gold, which has most of its operations in Nevada. As a result, reserves have been boosted to more than 55 million oz. from 37.1 million oz. Overall cash costs are less than US$210 per oz.

Outside of the gaming industry, Newmont Mining is now the largest employer in the Sagebrush State, with more than 3,500 people on its payroll. It also controls 2 million acres, making it the largest landholder in Nevada outside of the federal government.

“Santa Fe brings us a tremendous land package, with good reserves, growing production, excellent technology and talented people,” says Newmont Chairman Ronald Cambre. “Because of the proximity of our operations in Nevada, this is truly a golden marriage.”

As more than 70% of Newmont Mining’s production and reserves are now in Nevada, the company hopes to save between US$70 million and US$80 million per year as a result of the merger. Substantial tax savings are also expected.

Making up the company’s expanded international portfolio are four underground and 17 open-pit mines, as well as six mills and seven leach pads.

.SLower cash costs

In the first quarter (prior to the merger), Newmont’s production totalled 621,800 oz., up from 452,700 oz. in the previous year. Of that total, mines in the Carlin trend accounted for 420,600 oz., which is a 17% increase from the prior year’s 359,300 oz. Total cash costs at Carlin dropped to US$212 from US$255 per oz.

Underground mines contributed 75,100 oz. to first-quarter production, nearly double that of a year ago. Mill production equalled 301,700 oz. gold in the first quarter, compared with 233,600 oz. in the first three months of 1996, with the roaster accounting for all of the gain. Leaching output declined slightly to 118,900 from 125,700 oz.

In the current year, Newmont’s Carlin operations are expected to produce about 1.8 million oz.

Newmont expects to benefit from operating improvements at Santa Fe’s various operations, many of which were under way before the merger was announced.

Santa Fe’s operations include two in Nevada — the Lone Tree gold complex near Battle Mountain, and the Twins Creek mine near Golconda — and the Mesquite mine in southeastern California.

In May, the second of three autoclaves was installed at Twin Creeks, while, at Lone Tree, the flotation mill began operating.

Meanwhile, Santa Fe and partner Hecla Mining (HL-N) recently began production at the Rosebud underground gold mine, near Winnemucca.

During the first quarter of 1997, Santa Fe produced 237,607 oz. gold, compared with 204,839 oz. in the year-Ago period. Production costs rose to US$239 from US$216 per oz.

The Twin Creeks mine produced 109,055 oz. gold at a cash cost of US$241 per oz. during the period, compared with 95,443 oz. at US$200 per oz. in the first three months of 1996. The higher production resulted from the startup of the oxide circuit at the Sage mill last fall, while the higher cash costs were attributed to an increase in the mining ratio.

At the Lone Tree complex, production rose to 68,315 oz. at a cash cost of US$249 per oz. from 54,509 oz. at US$233 per oz.

Newmont plans to close Santa Fe’s headquarters in New Mexico and move personnel to its office in Denver, Colo.

In the current year, the company intends to spend about US$98 million on exploration and development, half of which is earmarked for projects in Nevada. It has also budgeted US$100 million for leach-pad construction in the Carlin trend.