Outlook For Newmont Reflects Increasing Gold Production And Ongoing Investment In Operation And Promising Operations
DENVER, CO - Tom Palmer, President and Chief Executive Officer of Newmont Corporation, reported, "In the second quarter, Newmont delivered $910 million in adjusted EBITDA with a disciplined approach to running a safe and sustainable mining business to generate long-term value. Our business is underpinned by the industry's strongest balance sheet and a global portfolio with the size and scale to make decisions that deliver on our strategy. We remain on track to achieve our full-year guidance, and I am proud of the prudent decisions made during the second quarter to safeguard our workforce, protect long-term value and position Newmont to deliver a strong performance in the second half of the year."
The company is on track to achieve full-year guidance of between 5.7 and 6.3 million ounces of attributable gold production with Gold AISC between $1,150 and $1,250 per ounce; primarily driven by increased production at Ahafo, Tanami, Cerro Negro, Akyem and the two non-managed joint ventures at Nevada Gold Mines and Pueblo Viejo.
The definitive agreement transaction to acquire Newcrest Mining Limited is expected to close in the fourth quarter, subject to customary conditions, including shareholder approval
Progressed portfolio optimization through the deferral of the investment decision for the Yanacocha Sulfides project by at least two years.
In June, Newmont suspended operations at Peñasquito to focus on finding an appropriate and sustainable resolution to the dispute with the leadership of the National Union of Mine and Metal Workers of the Mexican Republic. The Éléonore was evacuated and temporarily shut down in June to protect its workforce from the unprecedented wildfires in Canada. The Cerro Negro paused mining in May to complete important inspections for the safety and wellbeing of its workforce. At Akyem in the second quarter, Newmont processed low-grade stockpiles originally planned for the fourth quarter and optimized the mine plan to safely extract the maximum amount of ore from the pit.
Direct operating costs remained largely consistent with the first quarter as inflation pressures continued to stabilize, with improvements to pricing on energy, fuel and commodities, as well lower direct costs as a result of the suspension of operations at Peñasquito. In addition, AISC was higher due to higher sustaining capital during the second quarter compared to the first quarter, driven by the timing of spend at Boddington, Musselwhite and Ahafo. Peñasquito incurred $23 million of operating costs and $15 million of depreciation and amortization due to the suspension of operations. In addition, Éléonore incurred $6 million of operating costs and $2 million of depreciation and amortization while the site was evacuated due to the wildfires in Canada. These costs have not been adjusted from Newmont's Non-GAAP financial metrics for the second quarter.
Production remains weighted to the second half of the year as previously guided, with improving costs expected through the remainder of the year, driven by the following sites:
1) Ahafo is expected to reach higher grade and tonnes mined from Subika Underground with access to the third mining level and additional draw points, in addition to higher ore tonnes mined and improved grade at the Subika Open Pit. The site is on track to commission the replacement conveyor in the third quarter.
2) Cerro Negro is expected to improve productivity and reach higher grade stopes from the first wave of the Cerro Negro District Expansions. In the second quarter, first ore was mined from San Marcos, the first of six new deposits.
3) Tanami is expected to deliver higher tonnes mined and processed and reach the year’s highest grades during the fourth quarter.
4) Akyem is expected to deliver higher grade tonnes in the second half of the year following the decision to optimize the mine plan for safety and productivity in the second quarter.
5) Nevada Gold Mines and Pueblo Viejo are both expected to be weighted strongly toward the second half of the year.
The Company’s project pipeline supports stable production with improving margins and mine lives1. Newmont's 2023 and longer-term outlook includes current development capital costs and production related to Tanami Expansion 2, Ahafo North, Pamour and Cerro Negro District Expansion 1. Longer-term development capital outlook has been updated to reflect the deferral of the investment decision for the Yanacocha Sulfides project, which has reduced expected capital spend by $300 million in 2024. Additional development capital spend and all metal production for Yanacocha Sulfides has been excluded from longer-term outlook until an investment decision has been reached.
The Tanami Expansion 2 in Australia secures Tanami’s future as a long-life, low-cost producer by extending mine life beyond 2040 through the addition of a 1,460 meter hoisting shaft and supporting infrastructure to process 3.3 million tonnes per year and provide a platform for future growth. The expansion is expected to increase average annual gold production by approximately 150,000 to 200,000 ounces per year for the first five years and reduce operating costs by approximately 10 percent. Commercial production for the project is expected in the second half of 2025.
At the Ahafo North in Africa, has expanded the Company’s existing footprint in Ghana with four open pit mines and a stand-alone mill located approximately 30 kilometers from the Company’s Ahafo South operations. The project is expected to add between 275,000 and 325,000 ounces per year. Ahafo North is the best unmined gold deposit in West Africa with approximately 3.8 million ounces of Reserves and 1.4 million ounces of Measured, Indicated and Inferred Resources2 and significant upside potential to extend beyond Ahafo North’s current 13-year mine life. Commercial production for the project is expected in the second half of 2025.
Pamour in Northe America has extended the life of Porcupine and maintains production beyond 2024. The project will optimize mill capacity, adding volume and supporting high grade ore from Borden and Hoyle Pond, while supporting further exploration in a highly prospective and proven mining district. An investment decision is expected in late 2023 as opportunities have been identified to extend production from current operations, allowing for a deferral of project spending. Formal updates to capital estimates and estimated project completion will be provided closer to the investment decision.
Cerro Negro District Expansion 1 in South America included the simultaneous development of the Marianas and Eastern districts to extend the mine life of Cerro Negro beyond 2030. The project is expected to improve production to above 350,000 ounces beginning in 2024 and provides a platform for further exploration and future growth through additional expansions.
The Yanacocha Sulfides in South America has been deferred for at least two years from the previously planned investment decision date in 2024, representing the first step to Newmont delivering on its portfolio optimization strategy. Yanacocha Sulfides will develop the first phase of sulfide deposits and an integrated processing circuit, including an autoclave to produce 45% gold, 45% copper and 10% silver. The first phase focuses on developing the Yanacocha Verde and Chaquicocha deposits to extend Yanacocha’s operations beyond 2040 with second and third phases having the potential to extend life for multiple decades.
Newmont’s outlook reflects increasing gold production and ongoing investment into its operating assets and most promising growth prospects. Outlook includes development capital, costs and production related to Tanami Expansion 2, Ahafo North, Pamour and Cerro Negro District Expansion 1. Longer-term development capital outlook has been updated to reflect the deferral of the investment decision for the Yanacocha Sulfides project, which has reduced expected capital spend by $300 million in 2024. Additional development capital spend and all metal production for Yanacocha Sulfides has been excluded from longer-term outlook until an investment decision has been reached.