Newmont Mining Corp.(NEM) will divert its gold and copper concentrates of Nusa Tenggara, its Indonesian unit, to five new Japanese smelters. These reserves were usually shipped to Mitsubishi Materials Corp.’s Onahama smelter, north of Tokyo.
According to the company, this diversion has been necessitated by the devastating March 11, 2011, earthquake and tsunami in Japan, which terminated the operations at Onahama.
The company’s Indonesian unit expects gold production in the range of 226,800 ounces to 288,600 ounces and copper production in the range of 247 million pounds to 289 million pounds in fiscal 2011. The targeted production is far below the company’s 2010 production of gold and copper which were 656,000 ounces and 489 million pounds, respectively.
The company’s officials point out that the decrease in production is attributable to the processing of stockpiles as the stripping of Phase-6 goes on.
In addition, the company plans to develop the Elang block in Sumbawa and has already received permission for exploration which is likely to commence in June 2011. The block will be developed at an estimated cost of $3 billion. The block is believed to be potentially larger than Batu Hijau. As remarked by one of the officials, the exploration phase will continue till 2017, following which a one-year feasibility study will be conducted, while construction will start in another two years.
We currently have a Zacks #3 Rank (short-term Hold recommendation) on the stock.
Denver, Colorado-based Newmont Mining Corporation is one of the world’s largest producers of gold with several active mines in Nevada, Peru, Australia/New Zealand, Indonesia and Ghana. The company faces stiff competition from Barrick Gold Corporation (ABX) and AngloGold Ashanti Ltd. (AU).
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