What’s Driving Newmont’s Production Growth?

Production growth drivers

In 1Q18, Newmont Mining (NEM) produced 1.2 million ounces, marking a 1.6% decline year-over-year. The following factors led to this decline:

  • lower leach activity at the Yanacocha mine
  • lower-grade gold and scheduled maintenance at the Boddington mine
  • lower-grade gold and reduced recovery at the Cripple Creek & Victor mine

Improved production at Merian, Tanami, Carlin, and Ahafo partially offset the abovementioned declines. Investors might recall that Newmont’s Merian and Long Canyon mines entered commercial production in 2016 below budget and ahead of schedule.

What’s Driving Newmont’s Production Growth?

Production outlook

Newmont Mining maintained its gold production guidance of 4.9 million–5.4 million ounces in 2018 and 2019. It expects this growth to be driven by its Full Potential mine plan, throughput, and recovery improvements. Newmont also expects its longer-term production to remain stable at 4.6 million–5.1 million ounces per year through 2022. This outlook excludes development projects that have yet to be approved.

More upside ahead

Newmont remains on track to complete its Northwest Exodus, Twin Creeks Underground, and Subika Underground projects in late 2018. There are several other projects in its pipeline that are advancing through different developmental studies. Newmont has not included these projects in its outlook for long-term upside.

Peers (GDX) are also trying to increase their profitable production. While Barrick Gold’s (ABX) production growth has fallen, Agnico-Eagle Mines (AEM) and Goldcorp (GG) have steadily improved their production profiles with their strong project pipelines. The upside to Kinross Gold’s (KGC) production growth lies in its Tasiast Phase 1 and 2 expansion. In the next part of this series, we’ll discuss Newmont Mining’s project pipeline in detail.