With the Russian invasion of Ukraine having pushed nickel, tin, zinc, gold and copper prices higher (some to all-time highs this last week), Newmont will be hoping its two Australian gold mines – Boddington and Tanami – will do their part in the company’s goal of expanding global production this year and get its ambitions back on track.
The surge in global prices past $US2,000 an ounce last week which is up more than 6% since the start of the year – means there is a very big financial imperative for Newmont to get it right in 2022 after 2021’s hiccups.
Rising copper prices have surged more than 6% and at one stage hit a record level above the unheard-of price of $US5 a pound before easing last week before coming back to around $US4.60-$US4.70 a pound while silver prices are up as well in the wake of the rise in gold prices.
But for Newmont gold and copper are its targets and to help meet a higher production target (after last year’s hit from the loss of 500,000 ounces) it wants more of both metals from its two big Australian mines this year.
Lower production from both mines in the final months of 2021 played a major part in Newmont cutting its output target for last year from 6.5 million ounces to 6 million.
Newmont ended up producing 5.971 million ounces of gold in 2021 more than 7% under the 2021 target after problems at the Boddington mine in WA with wet weather and difficulties installing a new haulage system piled on top of the impact of Covid in other mines, including its Tanami mine in the Northern Territory.
The company’s 2022 production target this year of 6.2 million ounces is higher but still remains at the bottom of the ambitious 6.2 million to 6.7 million range announced at the start of 2021.
Newmont will be relying on higher production from Boddington and Tanami to help drive the recovery in output which is already under pressure with the company warning output could fall 150,000 ounces in the early months of this year because of the impact of Covid Omicron in some mines in Canada and the US.
Tanami will be a part of the planned lift in output from 2024 onwards when the $US950 million second stage of the mine is due to start producing ore.
“The expansion is expected to increase average annual gold production by approximately 150,000 to 200,000 ounces per year for the first five years and is expected to reduce operating costs by approximately 10 percent,” Newmont said in its annual report last week.
Despite the lost production at Boddington because of the wet weather and problems with the first attempt to install a new autonomous truck system, plus Covid problems at Tanami, Newmont said gold production from the duo rose 1% in 2021 to 1.181 million ounces.
At the same time production of by-product metals (in gold equivalent ounces) rose 27% to 163,000 ounces in 2021. Boddington is forecast to produce 110,000 pounds of copper this year.
Newmont says it is looking to boost gold output at both mines to 1.4 million ounces this year – that’s 900,000 ounces at Boddington and 500,000 ounces from Tanami.
Boddington is by far the largest directly owned of all of Newmont’s mines and with Tanami, Australia is the single most important area of operations for the company.
It is looking for 1.250 million ounces from the Nevada Gold Mines joint venture, 38.5% owned with big rival Barrick owning the rest.
