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Newmont Waihi says it must compete for funds
Ross Louthean — 9 September 2013
To develop the next mine for longevity Newmont Waihi Gold has told the Waihi community that, being part of the Newmont Mining Corporation global gold business, it must ensure the new Correnso mine project will perform.
Because of mine developments, mill maintenance and repair work, the company has produced very little gold and silver in recent times.
“Our parent company (in Denver) paid our bills. Now, as we refine our plans for Correnso, this proposal must compete for funding capital with a range of projects in the Newmont portfolio and also pay back our 2012 loans,” the company said in its latest Waihi community newsletter.
"The most effective way of performing well will be identifying site-wide efficiencies that will assist in maintaining our margin and profitability."
At last month’s AusIMM NZ Minerals Conference in Nelson, Newmont Waihi Gold general manager Glen Grindlay said that mine development and limitations to milling operations resulted in the NZ operations being one of the highest cost in Newmont Waihi’s operations in five continents.
The newsletter said: “It’s not the gold price that is important, it’s the margin between the total cost of production in Waihi and what we receive for the gold we have produced.
“In simple supply terms, the gold mining business is all about finding ore bearing deposits, determining how much ore we can access, and extracting it in a timely manner to ensure a continuous ‘pipeline’ of ore to the mill.”
Operations at Waihi began in 1987, with only a short break in production of a few months over that time. However, the company said, the gold mining business, just like any business, is not simple.
“If you grow pumpkins for 80c and sell them for a dollar you will have a viable business. But if it costs you a dollar to grow your pumpkins and you still sell them for a dollar it doesn’t matter how many pumpkins you grow and sell, you will not have a profitable business.
“It is the margin between input costs and the price you get for your product that is important.”
Newmont Waihi Gold said "if the gold price drops we must look at our business and identify efficiencies we can make to preserve our margin. Other similar operations around the world are in the same situation."
Mines have been reducing staff, some operations have been closed, and many new projects deferred.
There have been some major staffing and exploration cutbacks in the global gold mining business since the gold price slide several months ago and Newmont Mining has made cuts around the world, and others who have made severe cutbacks, like Barrick Gold who has sold some of its significant gold mines in Western Australia.
Newmont Waihi Gold has cut some of its exploration team as it has slowed down its exploration activity, and also shed a few other jobs.