Newmont Mining Corporation (NEM, Financial) announced third quarter revenue of $1.7 billion compared to $2.0 billion during the same period last year. It also reported third-quarter adjusted net income from continuing operations and attributable to shareholders of $249 million, or $0.50 per basic share compared to $217 million, or $0.44 per basic share, for third quarter of 2013.
Better times ahead
Batu Hijau's mine and mill of Newmont are running on full capacity and it has exported approximately 75,000 tons of copper concentrates post receipt of the export permit. The mine is estimated to have produced between 25,000 and 35,000 ounces of gold during 2014, and Newmont is on the right track to achieve superior grade Phase 6 ore during the first half of 2015.
Newmont declared the sale of its stake in La Herradura, making the net proceeds from asset sales to approximately $1.3 billion since mid-2013.
The mining major further added to the success by generating $51 million in free cash flow and creating superior shareholder value while reducing its capital expenditures by 30% compared to the previous year’s quarter.
In North America, Newmont’s production declined from the last year quarter primarily owing to planned stripping campaigns at Twin Creeks, Carlin and the sale of Midas. The production for South America also declined slightly compared to last year quarter, resulting from the planned processing of poor grade stockpiled ore.
In New Zealand and Australia, production declined nearly 20% compared to the last year quarter and aligning with the plans to reduce grade ore at Tanami and Boddington, coupled with the sale of Jundee.
Lastly, in Africa, gold production expanded 48% compared to concurrent quarter last year with solid ongoing production at Akyem, its least cost operation. Newmont lately achieved the production milestone of a half a million ounces of gold produced at its Akyem site since its start last year.
Lowering costs
Newmont has successfully lowered the all-in sustaining cost for gold production and expects to move on this lower cost trajectory with a steady production. Newmont has also lowered its outlook for gold cost linked to sales in $710 to $750 per ounce range for the year.
Newmont plans to mine near-surface saprolite ore for the next five to six years and expects the average annual production in 400,000 to 500,000 ounces of gold range with all-in sustaining cost in $750 to $850 per ounce range.
In Nevada, Newmont expects the Turf Vent Shaft to attain full depth of 2050 feet during the first quarter of 2015, and gain the overall commercial production by the fourth quarter.
The shaft is estimated to support the region by increasing the high grade ore to mill 6, producing an additional 100,000 to 150,000 ounces yearly, coupled with enhancing efficiency and cost.
In New Zealand, Newmont is advancing the life of its Waihi operations by using its new Correnso mine. Newmont is uniquely and distinctly developing Long Canyon with the first phase estimated to produce nearly 150,000 ounces per year at competitive price.
In Africa, Newmont is extending the Ahafo mill, which is expected to cover the impacts of poor grade ore. The development of Ahafo Subika underground mine is believed to give it access to ore with superior grades, likely four times greater than the surface mine, and produce additional 200,000 ounces annually.
In Australia, Newmont is expanding its Tanami project which is believed to be an outcome of its full potential program and comprises of building a second decline in the mine.
In South America, Newmont expects to continually explore its options with Conga. The options for extending the mine life in Yanacocha comprises of Chaqui sulfides and Ynacocha sulfides projects coupled with Quecher which is a prospective oxide mine near the active pit.
Conclusion
Hence, by focusing on improving its operations across the world, Newmont is progressing in the right direction.
