Newmont forecasts ‘growing margins and reserves’

Newmont Mining (NYSE: NEM) expects its attributable gold production will reach 5.2 million ounces in 2019 and 4.9 million ounces in 2020, while attributable copper production will be 45,000 tonnes in both years.

All-in sustaining costs for gold will come in at US$935 per oz. in 2019 and US$975 per oz. in 2020, while AISCs for copper will reach $2.45 per lb. next year and $2.55 per lb. in 2020.

Longer term, attributable gold production will range between 4.4 million and 4.9 million ounces through 2023 at AISCs of US$875 and US$975 per oz., while copper production increases to between 45,000 tonnes and 65,000 tonnes through 2023 due largely to higher grades at its Boddington mine in Western Australia.

“We began transforming our business six years ago,” Gary Goldberg, Newmont’s CEO, told analysts and investors on a conference call this morning about the updated guidance, noting the company had monetized non-core assets; advanced profitable growth in four regions; added more than 2 million ounces of gold at AISCs of about US$750 per oz.; invested in exploration; and restored its balance sheet.

Goldberg also noted that 70% of Newmont’s production and reserves are in the United States and Australia.

“We built our two newest mines, Merian [South America] and Long Canyon [Nevada], on time and 20% below budget,” he said. “In 2017, we reached commercial production at our Tanami expansion [Australia] and this year we completed three profitable expansions, including Twin Underground and Northwest Exodus, where both projects extended mine life and added lower-cost production in the prolific Carlin district in Nevada, and, most recently, Subika underground, which was completed on schedule and within budget, adding higher grade, lower cost gold production at the Ahafo mine in Ghana.”

Looking ahead, he continued, the company is executing three projects that will be completed before the end of 2019 — the Ahafo mill expansion in Africa, where first production and commercial production are expected in the second half of 2019; Quecher Main in Peru, where commercial production is also expected in the second half of 2019 and will add oxide production at its Yanacocha mine; and Tanami Power in Australia’s Tanami Desert, Australia, which is expected to lower power costs by about 20% starting in the first quarter of 2019.

Goldberg also notes that the company’s pipeline “is among the best in the gold sector in terms of depth and capital efficiency,” and gives Newmont “the means to maintain steady production while growing margins and reserves.”

In addition, Newmont invests in advancing its longer-term projects, with newly added projects including the Cripple Creek and Victor and Saddle Underground projects in North America, Golden Mile in Australia, and the Apensu underground in Africa.

The company estimates total consolidated capital will come to US$1.07 billion in 2019 and US$730 million in 2020. Of that,US$390 million will be used as development capital in 2019 and US$70 million in 2020.

At press time in New York, Newmont was trading at US$32.67 per share.

David Haugton of CIBC has a 12-18 month target price on the stock of US$42.50 and an outperform rating.

“Newmont remains one of our preferred senior gold stocks with best-in-class long-term production visibility, a solid record of delivering operating results and timely project developments.”