A decrease in gold production for Newmont Mining Corp. is expected for 2018, with a narrowing of production guidance because of a slide that halted operations at a Carlin open pit earlier this month, the company stated in its third-quarter results released Oct. 25.
“In early October, we also experienced a wall slip in our Gold Quarry Pit,” said Gary J. Goldberg, Newmont CEO, in a conference call with investors. “The detection measure put in place identified movement prior to the event, and no one was injured. Mining in this pit is currently suspended, and our teams are working through an assessment of mine plans and next steps to safely restart mining.”
Attributable production guidance has been narrowed to between 4.9 million and 5.2 million ounces for the year, down from between 4.9 million and 5.4 million ounces stated in the second-quarter report. For North America, production is reduced to between 1.9 million and 2.1 million ounces of gold.
Yet company leaders reminded investors during a conference call to discuss third-quarter results that Newmont’s strategy and global portfolio make reduced production from the Carlin operations manageable.
“The overall impact of Gold Quarry, to put it in perspective: Year to date, Gold Quarry has contributed about 100,000 ounces of Carlin’s production,” said Tom Palmer, Newmont’s recently promoted president and chief operating officer in response investor questions. “So there are a number of other things we can do to source ore … while we work through how to best remediate that section of the Gold Quarry pit.”
Palmer described the slide as the movement of alluvial material from the top of the mature open pit. He estimated that a couple million tons of material moved in the event, and explained that the affected area was part of a future layback.
Newmont mines on four continents produced 1.3 million ounces of gold in the third quarter. Overall, Goldberg said, Newmont is on track to achieve its highest production in the fourth quarter because of higher grades.
Financially, Newmont reported revenues of more than $1.7 billion, down 8 percent from last year, and a net loss from continuing operations of $161 million or a loss of 31 cents per diluted share. Adjusted net income was $175 million or 33 cents per diluted share.
Cash from continuing operations was $428 million, down 12 percent from the prior year quarter, primarily due to lower metal prices and changes in working capital. Newmont declared a dividend of 14 cents per share for the fourth consecutive quarter and ended the quarter with $3.1 billion cash on hand.
Also in Nevada, Newmont delivered improved costs and grade after the completion of Twin Creeks Underground in July, and studies for a second phase of Long Canyon continue to advance. The company is also ramping up the processing of concentrate shipped from its Cripple Creek & Victor mine in Colorado at its Carlin facilities.
North American assets make up more than 40 percent of Newmont’s portfolio, with the company’s remaining gold and silver operations in Africa, Australia and South America.
Goldberg described four projects around the globe that should be completed before the end of 2019. The projects’ internal rate of return is estimated at 20 percent.
In Africa, the first commercial production of the Subika underground mine is expected in the fourth quarter. The project is expected to increase average annual gold production by between 150,000 and 200,000 ounces per year for the first five years beginning in 2019 with an initial mine life of approximately 11 years, according to projects update.
Newmont also reported that its Ahafo mill expansion in Africa is designed to maximize the resource by improving production margins and accelerating stockpile processing. The project also supports profitable development of underground resources with commercial production expected in mid-2019, Newmont stated.
At Quecher Main in South America will add oxide production at Yanacocha, leverage existing infrastructure and enable potential future growth at Yanacocha, according to a projects update. First production is expected in late 2018 with commercial production in the second half of 2019.
In Australia, the Tanami power project is expected to reduce power costs by 20 percent beginning in the first quarter of 2019. The project includes a 450 kilometer natural gas pipeline to be constructed connecting the Tanami site to the Amadeus Gas Pipeline, and construction and operation of two on-site power stations.
Newmont’s portfolio improvements over the last quarter include the commissioning of a primary crusher and pouring the 1 millionth ounce of gold at Merian in South America; advancing the Tanami expansion project to definitive feasibility study in Australia; forming a strategic partnership with Evrim Resources in the Cuale gold project in Mexico; and expanding regional exploration activities with an investment in Orosur Mining and an opportunity to participate in Miranda Gold’s Lyra project in Colombia.
“Newmont delivered $636 million in adjusted EBITDA and $154 million in free cash flow in the third quarter on the back of ongoing productivity improvements across the portfolio and higher grades in Africa and South America,” Goldberg said in a statement. “We continued to advance profitable projects as we completed the CC&V concentrates project and commissioned the primary crusher at Merian, safely, on budget and on schedule. And we increased investment in Quecher Main, Subika Underground and the Ahafo Mill expansion during the period while increasing our dividend for the third quarter by 87 percent.”