Though far from being the largest mine in Newmont Gold’s (NGC-N) sizable portfolio, the La Herradura mine in northern Mexico has poured its first gold and is expected to produce an average of 150,000 oz. per year at a cash cost of about US$180 per oz.
Newmont owns 44% of the heap-leach mine, with Penoles, Mexico’s largest mining company, holding the remainder and acting as operator. Capital costs for the open-pit operation came in at about US$75 million.
La Herradura hosts proven and probable reserves of 54.4 million tons grading 0.031 oz. gold per ton, plus 48.1 million tons of 0.037 oz. classified as “mineralized material.”
Meanwhile, in Indonesia, construction of the Batu Hijau gold mine is 45% complete. The US$1.9-billion project is scheduled to start up in late 1999. Once completed, it will be one of the world’s largest and lowest-cost copper-gold mines. Annual production over the mine’s 20-year-plus life is estimated to average 450 million lbs. copper and 550,000 oz. gold.
Newmont’s cornerstone continues to be its vast operations in Nevada. The major’s North American operations produced 773,200 oz. gold in the second quarter at total cash costs of US$199 per oz.
Foreign operations contributed 264,500 equity ounces to the company’s total production of 1 million equity ounces for the three months ended June 30. Cash costs from all operations averaged US$182 per oz.
Surprisingly, Newmont’s Minihasa gold mine in Indonesia turned in a particularly stellar performance and proved to be the company’s lowest-cost producer, with total cash costs of US$108 per oz. The mine produced 73,900 oz. during the latest quarter, a 50% increase from a year ago. The improved performance was attributed to the addition of a mercury scruber, which enabled the mine to process higher-grade refractory ore.
Newmont Gold posted earnings of US$27.4 million for its latest quarter, compared with a loss of US$69 million (after Santa Fe merger-related charges of US$157.7 million) in the corresponding period last year.
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