Higher-than-expected production from its operations in Peru and Nevada should leave
On the strength of a 60% boost in reserves at the Yanacocha gold mine in northern Peru, the company plans to increase the daily mining rate to 200,000 tons of ore.
In addition, the Denver-based company is anticipating greater production at its Carlin operations in northern Nevada, primarily from the Post open-pit mine.
In the first quarter, Newmont produced 650,000 oz. at its North American operations, little-changed from a year ago. Total cash costs averaged US$220 per oz., up from US$205 in the first quarter of 1999.
Increased high-grade output at Post is expected to kick in during the second half of the year, boosting production to 2.9 million oz., up from 2.7 million oz. in 1999. Total cash costs at Post are pegged at less than US$208 per oz.
Newmont’s overseas production jumped 39% to 417,600 oz. during the first quarter, while cash costs fell to US$101 per oz. Most of the increase occurred at the Yanacocha mine, where production grew by 28% to 433,500 oz. gold. Newmont’s 51.35% share amounted to 222,600 oz. during the recent first quarter at a cash cost of US$88 per oz.
Annual production at Yanacocha is expected to reach 1.9 million oz. in 2000, topping 2.5 million oz. by 2004. In all, the company spent US$47.4 million during the first three months of 2000 on an expansion program. Leach-pad capacity will be increased 20% by expanding two existing pads and constructing a fourth pad for the La Quinua deposit.
At the end of 1999, Yanacocha had proven and probable reserves of 1.3 billion tons grading 0.025 oz. per ton, equivalent to 32.9 million ounces — a jump of 60% over the corresponding period of 1998.
Also, Newmont recently acquired 150,000 acres adjacent to Yanachocha. In return, the vendor,
Newmont is forecasting a growth in production at its newly opened Batu Hijau copper-gold mine in Indonesia. The mine contributed 32,000 oz. gold and 61.9 million lbs. copper during the first quarter. Through 2000, it is expected to crank out 180,000 oz. and 300 million lbs. By the second half of the year, Batu Hijau is scheduled to me operating at full capacity and contributing to Newmont’s earnings.
The company holds a 45% interest in the project; the Japanese major Sumitomo owns 35%, while the remainder is held by Indonesian interests.
Elsewhere in Indonesia, at the 80%-owned Minahasa mine, production grew by 38% to 99,700 oz. in the first quarter. The operation recently made headlines when the Indonesian Department of Mines and Energy brokered a settlement in a dispute concerning the taxing of overburden (T.N.M., Feb. 14-20/00).
The company built the open-pit mine in 1996 at a capital cost of US$230 million.
Increased revenue
In Uzbekistan, Newmont’s half-owned Zarafshan operation boosted equity output by 15% to 63,300 oz. during the first quarter.
Worldwide, the company produced 1.07 million oz. during the 3-month period at a total cash cost of US$176 per oz. and a total production cost of US$230 per oz. Revenue was US$361.3 million (up from US$330.2 million in the corresponding period of 1999), while gold sales topped US$358 million (up 10%). Newmont realized an average gold price of US$288 per oz. Cash flow generated from operations grew 15% (compared with year-ago figures) to US$402 million.
Net earnings for the quarter totalled US$6.6 million (or 4 per share), compared with US$9.9 million (6 per share) in the year-ago period.
In other company news, Newmont has begun milling bio-oxidized low-grade refractory ore from its Carlin operation in Nevada. The material was treated to a 150-day heap-leach cycle and processed through Mill 5. To date, 4,400 oz. have been produced.
The company is also moving ahead with development of the Deep Post mine, in the Carlin trend. During the quarter, development advanced 3,767 ft. Newmont expects to produce 400,000 oz. per year from the deposit, beginning in mid-2001.
Newmont ended the quarter with long-term debt of US$1.12 billion and cash and cash-equivalents of US$90.7 million.
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