Newmont raises Phoenix, inks Placer JV

Ushering in the new year with a bang, Newmont Mining (NEM-N) has begun developing the Phoenix deposit ahead of schedule and finalized the Turquoise Ridge joint-venture agreement with Placer Dome (PDG-T).

Located in north-central Nevada, Phoenix is now slated to begin production in 2006, a year earlier than anticipated. The mine also is expected to crank out 8% more gold than originally projected, with annual output to top 400,000-450,000 oz., plus 18-20 million lbs. copper.

Phoenix is being developed as an open-pit mine sporting crushing, grinding, flotation and carbon-in-leach circuits. Dor bars will be produced on-site, with recovery rates of 80-84% expected, whereas copper will be concentrated for shipment elsewhere.

Capital costs are pegged at US$205 million, up slightly from previous projections. However, the operation’s life expectancy is now 15 years instead of 13 years.

At steady-state production, total cash costs are expected to vary from US$200 to US$225 per oz., net of copper credits. The estimate is based on a gold price of US$340 per oz.

Newmont also is continuing with its exploration efforts, focusing on known resources. By year-end, the company expects to have spent US$2.8 million.

At last report, Phoenix hosted 174.2 million tons of reserves grading 0.034 oz. per ton and 73.8 million tons of resources grading 0.026 oz. About 156.3 million tons of reserve material also carried 0.16% copper.

Reserves are based on a gold price of US$300 per oz. and a copper price of US95 per lb.

Newmont acquired the Phoenix project in 2001 through its takeover of Battle Mountain Gold. The merger also came with the Golden Giant and Holloway mines in northern Ontario, as well as an 88% interest in the Kori Kollo mine in Bolivia, a half-interest in the Vera-Nancy mine in Australia, and a 9% stake (since sold) in Lihir Gold (LIHRY-Q).

Meanwhile, Newmont has secured a 25% stake in the Turquoise Ridge and neighbouring Getchell deposits of Placer Dome. In return, the major has relinquished a 2% net smelter return royalty and agreed to process 2,000 tons of joint-venture (JV) ore per day at its nearby, wholly owned Twin Creeks mill.

As part of the deal, both companies will cover their pro-rata share of mine-development costs, as well as environmental-closure expenses related to future JV operations. For Placer, this translates into US$40 million less sustaining costs at Turquoise Ridge.

Production at Turquoise Ridge got under way earlier this year and, by year-end, is expected to have reached steady-state output of 300,000 oz. annually. Reserves are sufficient to support nine years of operations.

Life-of-mine cash costs are projected at US$190 per oz., or US$25 less than before the JV was inked, and total costs at US$230 per oz., or US$35 less.