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Newmont Mining: Upside to Its Project Pipeline

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Feb. 26 2019, Updated 1:05 p.m. ET

Project pipeline

The future visibility on growth 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). Newmont Mining might even be stronger than Kinross Gold (KGC), Barrick Gold (GOLD), and AngloGold Ashanti’s (AU) project pipelines.

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Projects providing short to medium-term returns

As we discussed, Newmont Mining has already declared commercial production for three projects this year. The latest project is Subika Underground. Newmont Mining reached commercial production at Subika Underground in November—on schedule and within the budget. The company executing on three projects that will be completed before the end of 2019.

The work at Newmont Mining’s Ahafo Mill Expansion is ramping up. The project is expected to reach commercial production in the second half of 2019. Together with Subika Underground, the project will extend Newmont Mining’s profitable production until at least 2029.

In South America, the Quecher Main project will extend the oxide production. Newmont Mining reached the first gold in December. The mining is still on schedule. The project will help extend the oxide production at Yanacocha.

Newmont Mining’s Tanami Power project in Australia, which is expected to reduce costs and emissions and facilitate future growth, is also progressing well. The three completed projects and three near-term projects are expected to generate an average internal rate of return of over 20.0%.

Other projects included in the outlook

Among Newmont Mining’s longer-term projects, the company is advancing Long Canyon Phase 2 to a pre-feasibility study. The company has also formed a partnership with Teck Resources (TECK), which owns the other half. All of the sustaining and current projects are included in Newmont Mining’s outlook. The mid and long-term projects aren’t included in the company’s outlook.

Next, we’ll discuss Newmont Mining’s reserves and resource progression.

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