Newmont Mining Corporation (NEM - Free Report) is laying off 56 employees in Nevada owing to increasing costs and rising prices of gold, according to Associated Press. The company had to take this stand to remain competitive in the current business environment.
The employees affected by the move will be granted severance packages and will also be provided access to services which will aid other job placement. Initially, Newmont thought of reducing its workforce through attrition that averages 10% a year. The company, however, decided to let go a number of employees as relying only on attrition would not enable it to reduce labor costs.
Newmont, a prominent player in the gold mining industry along with Barrick Gold Corp. (ABX - Free Report) , Goldcorp Inc. (GG - Free Report) and Kinross Gold Corporation (KGC - Free Report) , is also considering selling its underground Midas mine in Nevada so that it can focus more on its core businesses by disposing its non-core assets. In this process, Newmont is working consistently in line with its strategy to deliver value to the shareholders.
Newmont’s Midas underground mine operates through roughly 200 employees and is located in north central Nevada, between Elko and Reno. The company acquired the mine through its merger with Normandy Mining in 2002.
A few days ago, Newmont signed a Letter of Intent to divest its Midas operation in Nevada to Waterton Global Resource Management, Inc. The proposed deal is subject to necessary regulatory and third party approvals along with execution and delivery of an acquisition agreement and completion of confirmatory due diligence.
During the second quarter of 2013, gold production at the Nevada mine increased 1% year-over-year to 383,000 ounces, attributable to higher grade and throughput at Phoenix and new production from Emigrant. However, the positives were partially offset by lower tons and grade at Midas.
Newmont currently maintains a Zacks Rank #3 (Hold).