Future growth visibility boosts stocks. For miners, project pipelines and past execution are key factors in determining future production. Newmont Mining (NEM) has one of the best project pipelines in the sector (GDX)(GDXJ)—it may be stronger than Kinross Gold’s (KGC), Barrick Gold’s (ABX), and AngloGold Ashanti’s (AU). Newmont is poised to overtake Barrick as the world’s largest gold producer in 2018. For more on this, read Barrick Gold versus Newmont Mining: Comparing Miners in 2018 and Beyond.
The eight projects NEM has approved since mid-2014 are expected to add annual gold production of up to 1.2 million ounces at all-in sustaining costs of $750 per ounce.
Projects providing short- to medium-term returns
The company remains on track to reach commercial production at its Subika Underground, Northwest Exodus, and Twin Underground projects later this year. It has also started shipping concentrates from the Cripple Creek & Victor mine to its Nevada mills for processing.
In South America, its Quecher Main project to extend oxide production is underway. In Australia, it is progressing with its Tanami Power project, which will lower costs and emissions and facilitate future growth. The abovementioned projects are expected to generate an average internal rate of return above 20%.
Other projects included in the outlook
Among its longer-term projects, Newmont has started advancing Long Canyon Phase 2 to a pre-feasibility study. It is also pursuing multiple underground expansions at Carlin. In South America, the company is seeing favorable drilling and process test results in Peru at the Yanacocha sulfide projects. In Africa, it is advancing studies to develop underground deposits at its Ahafo and Akyem mines.
As shown in the above graph, all sustaining and current projects are included in Newmont’s outlook, while mid- and long-term projects are excluded. In the next part of this series, we’ll discuss Newmont’s cost improvement strategy.