Australia was the major weak point in the three months to September for Newmont, the world’s top gold producer.
The well-publicised Covid outbreak at the Granites (or Tanami) gold mine in the Northern Territory, then problems at its Boddington gold mine in WA with wet weather and delays to introducing new autonomous mining equipment saw the miner reveal a 500,000-ounce cut to 2021’s production guidance.
That cut will impact to overall Australian production figures for 2021 when they are computed early next year. It is a big fall.
Newmont now expects annual global attributable gold production of about 6 million ounces, compared with 6.5 million ounces forecast earlier in the year.
There were also problems elsewhere and the company, like so many others, have had to battle rising energy costs, higher wages, labour shortages and delays to the delivery of key equipment and machinery.
At current gold prices (around $US1,785 an ounce), that’s a loss of nearly $US900 million in revenue this year which is going to mean a sharp drop in earnings.
Newmont said its Tanami mine was placed under care and maintenance due to covid-19 restrictions, while Canadian mine sites saw pandemic-related staffing problems and a tightening of labour markets – in the end all of this pushed production lower in both countries.
Newmont also said its Boddington mine was hit by severe weather (a very wet spring in southwest WA) and operational delays as the new autonomous truck system was bedded down. As well, production at its Nevada gold mines in the US is tracking at the lower end of its annual forecast ranges.
The loss of half a million ounces will mean higher mining costs and Newmont raised its forecast for all-in sustaining costs (AISC) to $US1,050 an ounce, $US80 higher than its previous outlook, citing lower production and increased royalties and taxes.
The company’s third-quarter adjusted profit fell 30% to $US483 million as gold prices and sales fell.
Average price for Newmont’s gold was $US1,778, down $US135 an ounce from a year earlier, while attributable gold production fell 6% to 1.45 million ounces.
Gold AISC for the quarter rose 10% to $US1,120 per ounce, due to lower sales, higher diesel costs and increased capital spend.
There was a bit of good news for Newmont. It says it now expects an investment decision on its Yanacocha Sulfides project to expand gold production in Peru in the second half of 2022, a month after the company said the project had been delayed.
