Newmont beat expectations in 2014 – will focus on development (Part 12 of 14)
Near-term growth projects
Newmont Mining (NEM) is pursuing projects to improve its near-term production profile. Its three near-term growth projects are:
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Turf Vent Shaft in Nevada
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Merian in Suriname
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Waihi in New Zealand
Turf Vent Shaft, Nevada
The Turf No. 3 Vent Shaft project is in the construction phase. It plans to achieve commercial production in late 2015. It’s expected to add 100,000–150,000 ounces of production annually. The project’s capital costs are estimated at ~$400 million. The Turf No. 3 Vent Shaft project provides the ventilation required to increase production. It will decrease mine costs over the 11-year mine life at Leeville.
Merian, Suriname
Construction on the Merian project in Suriname began in August 2014. The Government of the Republic of Suriname opted for a 25% equity ownership in the Merian project. The government made the earn-in payments at the end of 2014. The project allows Newmont to pursue a new district with upside potential. It gives it the opportunity to grow and extend the operating life of the South American region. Once Merian comes into production in late 2016, the average life of mine estimated gold production—on a 100% basis—of 300,000–400,000 ounces per year is expected. Total capital spend on the project is expected to be $600–$700 million on an attributable basis.
Waihi, New Zealand
Waihi Correnso is in the construction phase. It plans to achieve commercial production in 2015. The project’s total capital costs are estimated at ~$30–$35 million. The project is an extension of the operating Favona, Moonlight, and Trio underground mines. It will leverage the existing surface and processing infrastructure.
These projects are included in Newmont’s 2015–2017 outlook. Now, we’ll discuss longer-term projects for Newmont. The projects aren’t included in its outlook. An investment decision on these projects is expected in 2015.
Goldcorp (GG) has better production growth than Newmont. Barrick Gold’s (ABX) production profile is more or less flat for going forward a few years.
The Market Vectors Gold Miners ETF (GDX) invests in the above stocks. The SPDR Gold Trust (GLD) is a physical gold-backed ETF. Goldcorp, Barrick Gold, and Newmont form 10.3%, 8.8%, and 7.2%, respectively, of GDX’s overall holdings.
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