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Newmont to Ramp Down Yanacocha Amid Virus Restrictions

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Newmont Corporation NEM has announced that mining operations at Yanacocha will be required to safely ramp down in accordance with the coronavirus-related government restrictions in Peru. However, gold production from leach pads as well as management of critical safety and environmental activities will continue as usual.

Notably, Yanacocha has been operating normally since the start of 2020. It represents around 3% of Newmont’s 2020 attributable gold production outlook. Given that the situation is dynamic and duration of the restrictions are uncertain, the company is unable to establish the eventual impact on Yanacocha’s production and costs for 2020.

As of Mar 17, there were no confirmed COVID-19 cases among Newmont’s workforce. Also, there were no major disruptions to production at other facilities. The company is working proactively to protect people and ensure the continuity of its business during this global pandemic.

Newmont has established a global supply chain task force to ensure that all potential risks are assessed. The company is also developing viable contingency plans, which will enable it to stay ahead of any potential disruptions to its supply base as well as minimize the associated risks to its production and projects.

Newmont’s shares have gained 37.6% in the past year against the industry’s decline of 35.7%.

During fourth-quarter 2019 earnings call, the company stated that it expects attributable gold production of 6.4 million ounces for 2020.

For 2020, all-in sustaining cost for gold is projected at $975 per ounce and the cost applicable to sales expectation for gold is pegged at $750 per ounce.

Zacks Rank & Other Key Picks

Newmont currently sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked stocks in the basic materials space are Air Liquide AIQUY, Franco-Nevada Corporation (FNV - Free Report) and Impala Platinum Holdings Limited IMPUY, all currently sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Air Liquide has an expected earnings growth rate of 8.4% for 2020. The company’s shares have inched up 1.8% in the past year.

Franco-Nevada has an expected earnings growth rate of 24.2% for 2020. Its shares have returned 39.9% in the past year.    

Impala Platinum has an expected earnings growth rate of 424.1% for fiscal 2020. The company’s shares have inched up 1.3% in the past year.

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