Newmont Completes Tanami Mine Power Project In Australia
Zacks Investment Research | Mar 18, 2019 08:26AM ET
Newmont Mining Corporation (NYSE:NEM) announced the completion of the Tanami Power Project in Australia as per schedule.
The project involved the installation of two power stations, a natural gas pipeline of 275 mile and a 66kV interconnected power line. The construction of the power stations was completed by Zenith Energy, the operator of the power stations. The pipeline was built and will be maintained by Australian Gas Infrastructure Group. The company expects capital costs at roughly $245 million with annual cash lease payments over a period of 10-year term starting 2019.
The project is expected to provide a safe and reliable energy source to the Tanami gold mine. Also, it will lower power costs and carbon emission by 20%. The company expects the project to generate net cash savings per ounce of $34 from 2019 to 2023, delivering an IRR of more than 50%. Moreover, the company believes that the Tanami Power Project will extend the life of the operation.
Newmont acknowledged that the project’s completion coincided with Tanami yielding 10 million ounces of gold supported by record production of 500,000 ounces last year.
Notably, Tanami is Australia’s second largest underground gold mine. Also, it is one of the most cost competitive gold producing mines globally. The company’s consistent exploration success at Tanami created the potential to extend mine life beyond 2028. Newmont is also expected to make a full funding decision regarding a possible second expansion project in the second half of 2019.
In 2018, the company converted more than 800,000 ounces of gold resources into reserves from the Tanami’s Auron ore body. Over the last 6 years, it successfully built 11 new mines, expansions and projects on four continents. Also, these projects were all completed ahead of schedule and at or below budget. Some of these projects are Akyem, Subika Underground, Merian and Long Canyon. In 2015, the company also completed a value-accretive acquisition of Cripple Creek and Victor. In 2016, the company also delivered a profitable expansion at the mine.
Newmont’s shares have lost 11.6% in the past year, against the Original post
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