Newmont Mining’s regions
In this series, we’ll talk about the key regions where Newmont Mining (NEM) operates and how these regions impact the company’s overall prospects.
Newmont Mining’s North American operations are located in Nevada and account for nearly a third of its worldwide gold production. Newmont owns or controls approximately 2.8 million acres in Nevada. This huge land position supports conservation and expansion efforts. The region is one of the best mining jurisdictions with low political risk and good infrastructure.
The company’s South America operations are centred in the Yanacocha mining complex in Peru. Most of the mines in this region are near maturity and thus their production profile will likely decline going forward in absence of any mine life extensions.
Newmont had to cope with several difficulties with its Peru operations, mainly related to labor problems, water issues, and environmental concerns. We’ll talk in detail about these in the latter part of our series.
Newmont began operating in Australia and New Zealand in 2002 with the acquisition of Normandy Mining. The company’s presence in the region is comprised of three operations in Australia (Boddington, Tanami, and Kalgoorlie) and one in New Zealand (Waihi). The production profile is stable across this region.
Newmont’s operations in Indonesia are located in the southwest region of the island of Sumbawa in the West Nusa Tenggara province. Batu Hijau primarily produces copper and small amounts of gold and silver.
The Indonesian government has passed new laws banning the export of raw minerals, which impacted Newmont’s operations in the region for a significant part of 2014. The export duty is also likely to increase from its current 25% to 60% by 2016.
In Africa, Newmont operates in two locations in Ghana: the Ahafo and Akyem mines. This region is the lowest cost producer in Newmont’s portfolio, mainly due to cheap and subsidized inputs such as labor and energy.
Newmont’s overall reserves
Overall, Newmont has close to 60% of its gold reserves in safe jurisdictions of the US, Canada, and Australia against Barrick Gold’s (ABX) 47%, Agnico Eagle’s (AEM) 71%, Goldcorp’s (GG) 22%, and Kinross Gold’s (KGC) 9%. Operations in safe jurisdictions provide stability to the overall earnings profile with fewer interruptions.