Newmont funds Zarafshan expansion

Denver — Having inked a US$30-million financing agreement with the European Bank for Reconstruction and Development, Newmont Mining (NEM-N) is expanding the Zarafshan joint venture in Uzbekistan.

Since 1995, Newmont has produced more than 2.1 million oz. gold from low-grade stockpiles at the giant Muruntau mine in a joint venture with the Uzbekistani government.

The financing will be used to expand leach pad capacity and add a conveyor to the operation, 250 miles west of Tashkent.

Newmont has also amended its ore supply agreement, extending the life of the joint venture to at least 2013 with the option to buy an additional 150 million tonnes of stockpiled material averaging 1.44 grams gold per tonne (representing 6.9 million oz.). Falling gold prices over the past four years had reduced the operation’s projected life span of 17 years.

Newmont began the US$225-million joint venture with 220 million tonnes of stockpiled ore, and poured its first gold in May 1995. So far, the company has paid most of its original loan, and it distributed the first dividend to its partners in 2000.

Leach pads can handle 100 million tonnes of crushed ore, and the joint venture had loaded about 75 million tonnes through to the third quarter of 2000. The expansion will allow room for an additional 60 million tonnes.

Muruntau, which began operations in 1958, accounted for 30% of annual gold production in what was then the U.S.S.R. In 1967, the operation began stockpiling non-mill-grade material adjacent to the open pit. In 1990, the visitation of a Newmont geologist marked the first stage in the process of bringing heap-leaching technology to the former Soviet republic.

In related news, shareholders of Battle Mountain Gold (BMG-N) have approved that company’s merger with Newmont. Each share of Battle Mountain will be exchanged for 0.105 share of Newmont. The transaction closed Jan. 10.

Newmont acquired Battle Mountain largely for the large, open-pit Phoenix project in northern Nevada. Under the deal, Newmont also picks up its Canadian mines — Golden Giant and Holloway, both of which are in Ontario. The transaction also includes an 88% interest in the Kori Kollo mine in Bolivia, a half-interest in the Vera-Nancy mine in Australia, and a 9% stake in Lihir Gold (LIHRY-Q).

As a result of the merger, Newmont’s annual gold production should grow to more than 5 million oz. in 2001. The company will have reserves of 66.5 million oz. gold and 6.1 billion lbs. copper.