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Newmont’s gold reserves declined due to divestments

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Gold reserves

Attributable gold reserves at year-end 2014 totaled 82.2 million ounces—compared to 88.4 million ounces at the end of 2013. Both of these assume a gold price of $1,300 per ounce. Depletion of 5.5 million ounces and divestments of 2.5 million ounces were partly offset by net additions from new ounces.

For the year, notable gold reserve additions included 0.7 million ounces at Tanami, 0.2 million ounces at Long Canyon, and 0.4 million equity ounces at Merian.

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Divestments are related to the sales of Midas, Jundee, and La Herradura. They’re also related to decreased interest during the year. Newmont Mining (NEM) reduced its interest in Regis Resources Ltd. from 19.52% in 2013 to 19.45% in 2014. It also decreased its interest in Merian from 80% in 2013 to 75% in 2014.

The average reserve grade of 0.03 ounce per ton didn’t change from the prior year. At a gold price of $1,200 per ounce, reserves would have fallen 12% to 72 million ounces. At a gold price of $1,400 per ounce, they would have increased by 5% to 86 million ounces.

Gold resources

Gold resources were 26.7 million ounces of attributable measured and indicated gold resources and 16 million ounces of attributable inferred gold resources. Attributable gold reserves were reduced by a net 6.2 million ounces, or 7%, from the prior year. It’s important to note that 2.5 million ounces, or nearly 40%, of the reduction was due to asset divestitures. Depletion of 5.5 million ounces was partially offset by additions of 3.3 million ounces. The gold price assumption for resources remained at $1,400 per ounce.

Barrick Gold (ABX) uses a $1,110 per ounce gold price assumption to calculate reserves. This didn’t change from 2013. In comparison, Goldcorp (GG) and Newmont use gold price assumptions of $1,300 per ounce.

The VanEck Vectors Gold Miners ETF (GDX) invests in senior and intermediate gold producers. The SPDR Gold Trust (GLD) provides exposure to spot gold prices. Newmont forms 7.2% of GDX’s holdings.

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