In the first quarter, Newmont Goldcorp (NEM) produced 1.23 million ounces of gold, an increase of 1.7% YoY and a decline of 14.6% sequentially.
The following factors impacted the company’s production during the quarter:
- the first full quarter of mining at Subika Underground
- higher grades at Merian and Yanacocha
- lower mining and grades at KCGM
Newmont Mining’s total production in 2018 was 5.1 million ounces.
Newmont maintained its guidance for 5.2 million ounces of gold production in 2019 due to the full year of newly completed Subika Underground. It’s expecting production of 4.9 million ounces in 2020 and between 4.4 million and 4.9 million ounces in the longer term. This guidance excludes development projects that have not been approved yet and the volumes from Goldcorp after its merger with NEM.
More upside ahead
Newmont Goldcorp’s CEO, Gary Goldberg, mentioned during the company’s Q1 2019 conference call that the combined portfolio of Newmont and Goldcorp is capable of producing seven million to eight million ounces of gold annually through 2025.
Apart from the combined synergies, Newmont has a robust project pipeline. The company recently approved the funding for Ahafo Mill Expansion and Quecher Main and these projects are currently in execution. All the additional projects for the company will also have to pass the minimum hurdle rate criteria of 15% at a $1,200 per ounce gold price.
Newmont Mining’s peers (GDX) are also trying to increase their profitable production. While Barrick Gold’s (GOLD) 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 Expansion Phase 2, which has been temporarily halted due to its negotiations with the government of Mauritania.