Newmont Moves Boddington Into Commercial Production

News that Newmont Mining’s (NMC-T, NEM-N) Boddington operation in Western Australia has achieved commercial production and that it is making headway in Indonesia, helped push the gold major’s shares to a new 52-week high in November.

Boddington, an open-pit mine 130 km southeast of Perth, should reach full production in 2010. At full capacity, Boddington will be Australia’s largest gold mine.

Production is forecast to be about 1 million oz. gold annually for the first full five years, with costs applicable to sales of about US$300 per oz. (including copper credits).

The Boddington deposit lies within the Saddleback greenstone belt, a fault bounded sliver of Archean volcanic and shallow level intrusive rocks, surrounded by granitic and gneissic rocks.

Total reserves were 20.1 million oz. gold in 2008, which should result in a mine life of more than 24 years.

Startup at Boddington began in July 2009, with first concentrate produced in September 2009.

Meanwhile in Indonesia, Newmont and Sumitomo announced last week that they had completed the transfer of 10% of PT Newmont Nusa Tenggara (PTNNT) to a consortium of regional and local governments near the Batu Hijau mine, and to a private Indonesian company.

Newmont has received its pro-rata 56.25% of the US$391 million proceeds and last week reached an agreement with the government of Indonesia to extend the deadline for the sale transfer of the 2008 (7%) and 2009 (7%) divestiture shares until Nov. 23. The extension was made to give the government more time to find buyers.

Following the 10% divestiture (3% for the 2006 divestiture and 7% for the 2007 divestiture), Newmont’s ownership in Batu Hijau’s proven and probable equity reserves of 4.1 million oz. gold and 3.95 billion lbs. copper (as of Dec. 31, 2008) has been cut to 39.37% from 45%.

Equity gold and copper sales during the third quarter at Batu Hijau tallied 93,000 oz. gold and 64 million lbs. copper at costs applicable to sales of US$178 per oz. gold and US50¢ per lb. copper. Equity gold and copper sales were slightly higher than expected due to higher grades. Total costs applicable to sales were lower than expected, largely due to lower diesel costs and a higher build in ore stockpile inventory. Costs applicable to sales allocated to gold were lower than expected due to co-product accounting.

Newmont raked in total revenue of US$2 billion and net cash from operations of US$1.1 billion in the third quarter, resulting in net income of US$388 million or US79¢ per share, up from US$191 million or US42¢ per share in the year-ago quarter.

Newmont also reported that costs applicable to sales for gold were US$404 per oz., down about 13% from US$467 per oz. in the year-earlier quarter.

Newmont shares traded at a new 52-week high of US$54.94 at presstime. The stock has a 12-month low of $26.80.