Newmont Mining Corporation (NYSE: NEM) have announced plans to expand its Tanami operations in Australia by building a second decline in the underground mine and additional plant capacity.
The expansion project is expected to add incremental gold production of approximately 80,000 ounces per year and decrease Tanami’s all-in sustaining costs by five to ten percent in the first five years of production. It will open access to two million ounces of profitable production and extend mine life by three years. The project will also create a platform for exploration drilling to support future growth. Recent exploration results demonstrate the potential to double current Reserves and Resources by expanding existing Tanami deposits, and developing adjacent discoveries.
“Tanami is a Newmont success story. Since 2012, the team has more than doubled gold production while cutting costs by about two-thirds and significantly improving resource confidence. The expansion project continues this trajectory, offering robust returns of more than 35 percent at current gold prices,” said Gary Goldberg, President and Chief Executive Officer.
Building a second decline at Tanami will support a step change in mining rates, which will ramp up to approximately 2.6 million tonnes per year. The processing plant expansion includes adding a ball mill, thickener and gravity circuit to improve recoveries and expand mill capacity from 2.3 to 2.6 million tonnes per year. When the expansion is complete, Tanami will produce between 425,000 and 475,000 ounces of gold per year at all-in sustaining costs of between $700 and $750 per ounce in the first five years of production.
Capital investment of between $100 million and $120 million has been funded through free cash flow and available cash balances. Of this amount, a quarter was spent in 2015, half will be spent in 2016, and the remainder will be spent in 2017. First commercial production is anticipated in the second half of 2017.
Newmont has one of the strongest project pipelines in the gold sector, and remains on track to deliver profitable new production from Leeville in Nevada as the Turf Vent Shaft is completed in late 2015; from Cripple Creek & Victor’s expansion projects during 2016; from Merian in Suriname in late 2016; and from Long Canyon Phase 1 in Nevada beginning in 2017.
Tanami is located 590 miles southwest of Darwin and 350 miles northwest of Alice Springs in Australia’s Northern Territory. The expansion project falls within the existing Tanami operating footprint on the Granites and Dead Bullock Soak mineral leases. Newmont acquired its interest in 2002 through its merger with Normandy. In 2014 Tanami produced approximately 345,000 ounces of gold at all-in sustaining costs of $1,038 per ounce.