Twin Underground And Northwest Exodus Will Provide Lower Production Cost
DENVER, CO - Newmont Mining Corporation President and CEO, Gary J. Goldberg said, “Newmont delivered $545 million in adjusted EBITDA and $143 million in free cash flow in the second quarter, as strong operational performance helped offset the impacts of geotechnical challenges and back-half weighted results. We continued to add lower cost production by completing our Twin Underground and Northwest Exodus projects in Nevada safely, on budget and ahead of schedule. And we invested in future value-creation by forging a partnership with Teck to advance pre-feasibility studies on Galore Creek in British Colombia, one of the world’s largest undeveloped copper-gold deposits, and with Sumitomo to develop Yanacocha Sulfides in Peru.”
North America production remains unchanged at between 2.0 and 2.2 million ounces in 2018. Production declines slightly in 2019 to between 1.8 and 2.0 million ounces due to planned stripping at Carlin and then increases to between 1.9 and 2.1 million ounces in 2020 due to higher grades at Twin Creeks, Cripple Creek & Victor and Long Canyon. The Company continues to pursue profitable growth opportunities at Carlin and Long Canyon. In South America production remains unchanged at between 615,000 and 675,000 ounces in 2018. Production is expected to be between 590,000 and 690,000 ounces in 2019 with the addition of Quecher Main and between 475,000 and 575,000 ounces per year in 2020 as Yanacocha laybacks are mined out and Merian transitions from saprolite to hard rock. The Company continues to advance near-mine growth opportunities at Merian and both oxide and sulfide potential at Yanacocha. Australia production decreases to between 1.4 and 1.6 million ounces in 2018 driven by the East wall slip at KCGM. Production in 2019 and 2020 may be impacted by the KCGM rock falls and life of mine plans are being assessed. The Company continues to advance studies for a second expansion at Tanami. The company also reported that Africa production remains unchanged at between 815,000 and 875,000 ounces in 2018. Production is expected to be between 1.1 and 1.2 million ounces in 2019 as the Ahafo Mill expansion reaches commercial production and between 880,000 and 980,000 ounces in 2020 as both Ahafo and Akyem reach lower open pit grade. The company continues to advance the Ahafo North project and other prospective surface and underground opportunities.
The attributable old production decreased 14 percent to 1.16 million ounces primarily from lower grades at Carlin, Twin Creeks, Boddington and Akyem and a build of CC&V concentrate inventory to be processed in Nevada. The gold CAS rose 13 percent to $751 per ounce for the quarter due to lower production, higher stockpile and leach pad inventory adjustments, the impact of KCGM rock falls, and higher oil prices. Gold AISC rose 16 percent to $1,024 per ounce for the quarter on higher CAS, sustaining capital and advanced project and exploration expense.
The Phoenix and Boddington attributable copper production decreased 7 percent to 14,000 tonnes for the quarter. Copper CAS totaled $46 million for the quarter. Copper CAS was $1.70 per pound for the quarter due to higher volume driven allocation of costs to copper. Copper AISC increased 21 percent to $2.05 per pound for the quarter due to higher unit CAS and higher sustaining capital spend.
The Company’s capital-efficient project pipeline supports stable production with improving margins and mine life. Near-term development capital projects are presented below. Funding for Subika Underground, Ahafo Mill Expansion, Quecher Main and Tanami Power projects has been approved and these projects are in execution. Additional projects represent incremental improvements to production and cost guidance.
Newmont’s outlook reflects stable gold production and ongoing investment in its operating assets and most promising growth prospects. Not included are development projects that have not yet been funded or reached execution stage in its outlook, which represents upside to production and cost guidance. Attributable gold production remains unchanged at between 4.9 and 5.4 million ounces in 2018 and 2019. Longer term production is expected to remain stable at between 4.6 and 5.1 million ounces per year through 2022 excluding development projects which have yet to be approved.