Newmont Mining Corporation (NEM - Free Report) said that it has achieved commercial production at the Subika Underground project. The milestone adds lower-cost, higher-grade gold production at the Ahafo mine in Ghana.
Subika Underground is the company’s third profitable expansion in 2018 and marks the 10th completed project since 2013. Newmont stated that the project was delivered per schedule and within budget for roughly $186 million of development capital.
Starting 2019, Subika Underground will add an average gold production of 150,000-200,000 ounces per annum for the first five years. It has an initial mine life of roughly 10 years. Post completion of the Ahafo Mill Expansion project, expected in the second half of 2019, average annual all-in sustaining costs of Ahafo are projected to improve $250-$350 per ounce from 2016 levels. Moreover, the project has an expected internal rate of return of more than 20%.
Per Newmont, Subika Underground leverages the operation’s current infrastructure and workforce to boost mine life along with lowering costs and increasing gold production. The mine also has an underground platform for exploring additional upside potential in the adjacent ore bodies. It includes some of the latest fit-for-purpose technologies to boost productivity, efficiency and safety. Subika Underground features semi-autonomous loading operations, personnel tracking, proximity detection for vehicles and planned installation of ventilation-on-demand systems.
Notably, Newmont successfully built 10 new mines and expanded into four continents in the past five years. These projects include Northwest Exodus and Twin Underground in 2018; the Tanami Expansion in 2017; Long Canyon and Merian in 2016; the Turf Vent Shaft in 2015 and Akyem and the Phoenix Copper Leach in 2013. It also completed the value-accretive acquisition of Cripple Creek and Victor (CC&V) in 2015. Moreover, it delivered a profitable expansion at the CC&V mine in 2016.
Shares of Newmont have lost 12.6% in the past year compared with the industry’s 18.5% decline.
Zacks Rank & Stocks to Consider
Newmont currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the basic materials space include CF Industries Holdings, Inc. (CF - Free Report) , Methanex Corp. (MEOH - Free Report) and The Mosaic Co. (MOS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CF Industries has an expected long-term earnings growth rate of 6%. The company’s shares have gained 20.9% in the past year.
Methanex has an expected long-term earnings growth rate of 15%. Its shares have gained 9.7% in a year’s time.
Mosaic has an expected long-term earnings growth rate of 7%. The company’s shares have surged 48.5% in the past year.
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