THE BOURSE WHISPERER: New York-listed global gold mining concern Newmont Mining Corporation (NYSE: NEM) has flagged its intentions to expand the company’s Tanami operations in Australia by building a second decline in the underground mine and additional plant capacity.
Tanami is located 950 kilometres southwest of Darwin and just over 560km northwest of Alice Springs in the Northern Territory.
Newmont said it expects the expansion project should add incremental gold production of approximately 80,000 ounces per year while bringing down Tanami’s all-in sustaining costs by five to ten percent in the first five years of production.
The second decline will open access to two million ounces of profitable production and extend mine life by three years.
Newmont will also use the project as a launching pad for new exploration drilling to support future growth.
The company has been buoyed by recent exploration results, which it says has demonstrated potential to double current Reserves and Resources by expanding existing Tanami deposits, and developing adjacent discoveries.
“Tanami is a Newmont success story,” Newmont Mining Corporation President and Chief Executive Officer Gary Goldberg said in the company’s New York Stock Exchange announcement.
“Since 2012, the team has more than doubled gold production while cutting costs by about two-thirds and significantly improving resource confidence.
“The expansion project continues this trajectory, offering robust returns of more than 35 percent at current gold prices.”
Newmont said that construction of a second decline at Tanami will step-up mining rates, which it anticipates ramping up to approximately 2.6 million tonnes per year.
Expansion to the processing plant will involve adding a ball mill, thickener and gravity circuit to improve recoveries that will subsequently expand mill capacity from 2.3 to 2.6 million tonnes per year.
When the expansion is complete, Tanami will be capable of producing between 425,000 and 475,000 ounces of gold per year at all-in sustaining costs of between US$700 and US$750 per ounce in the first five years of production.
Newmont will fund the capital investment of between US$100 million and US$120 million through free cash flow and available cash balances.
Of this amount, a quarter will be spent in 2015, half will be spent in 2016, and the remainder will be spent in 2017.
First commercial gold production from Tanami decline two is anticipated in the second half of 2017.
In 2014 Tanami produced approximately 345,000 ounces of gold at all-in sustaining costs of US$1,038 per ounce.
Newmont boasted that it has one of the strongest project pipelines in the gold sector, adding the company remains on track to deliver profitable new production from Leeville in Nevada where the Turf Vent Shaft is due for completion in late 2015; from Cripple Creek & Victor’s expansion projects during 2016; from Merian in Suriname in late 2016; and from Long Canyon Phase 1 in Nevada beginning in 2017.