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Watch for Growth Projects Updates with Newmont’s 4Q16 Results

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Long Canyon ahead of schedule

Newmont Mining (NEM) declared commercial production for Long Canyon in Nevada on November 15, 2016. The project was completed two months ahead of schedule and 18% (or $225 million) below budget. Newmont also completed its Merian project early and below budget. The first phase of Long Canyon is expected to produce between 100,000 and 150,000 ounces of gold per year. The all-in sustaining costs (or AISC) for the project are expected to be $500–$600 per ounce over an eight-year mine life.

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Updates to watch for

It will be interesting to hear about progress updates on Newmont’s other growth projects. Updates on its Tanami and Cripple Creek & Victor expansions are also awaited by investors. The company will soon be providing guidance for production, costs, and capital expenditure for 2017.

Higher impairment charges

On December 13, 2016, Newmont stated that it expects to record an increase in asset retirement obligation (or ARO) at its Yanacocha operation in Peru. Management expects to record an increase in ARO of $400 million–$500 million during 4Q16, which will also lead to a non-cash charge to reclamation expense of $60 million–$90 million.

In the past, Barrick Gold (ABX) has taken huge write-downs for its Pascua Lama and Lumwana projects. Goldcorp (GG) has taken impairments at its Cerro Negro mine, and Kinross Gold (KGC) has taken impairments on several of its assets. The VanEck Vectors Gold Miners ETF (GDX) invests in the stocks mentioned above. The SPDR Gold Trust ETF (GLD) is a physical gold-backed fund.

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