Newmont output 1.6m oz by 1990

When a gold mining company has enough reserves in the ground to overtake North America’s largest producers, it can afford to be extravagant.

That’s why New York-based Newmont Gold will spend $404 million (including $51 million for “bits and pieces”) over the next five years to extract some 15 million proven oz gold from its Carlin operations in Nevada.

Scheduled to become North America’s largest gold producer this year, with 930,000 oz, Newmont will accelerate its output to 1.6 million oz by 1990.

That output will come from seven open pit gold mines scattered along the 45-mile stretch of desert known as the Carlin Gold trend. They include the Bootstrap, Post, Genesis, Blue Star, North Star, Rain and Gold Quarry pits from which Newmont will mine 57.4 million tons of waste, to recover 24.7 million tons of ore with a strip ratio of 2.3 to 1 in 1988.

To handle that kind of output, the wholly-owned subsidiary of Newmont Mining is gearing up for a major construction program designed to expand the company’s milling capacity by at least 20,000 tpd. By 1989, Newmont hopes to complete expansion plans on two of its operating mills and build three new facilities.

Newmont is also planning to increase its heap leaching capacity by spending over $100 million on its North, South and Rain area area leach pads. Construction effort

In an effort to simplify the company’s “I-One Plan,” Newmont has streamlined its Carlin area construction effort into three sections. They include:

* The Rain area 20 miles south of Newmont’s Gold Quarry mine where proven reserves stand at 1.1 million oz and where a 2,100-tpd mill and heap leach facility is scheduled for start-up this year.

* The south area around Newmont’s Gold Quarry mine where proven reserves stand at 9.3 million oz.

* The northern area which includes Newmont’s Bootstrap, Capstone, Post and Genesis pits. Proven reserves stand at 4.6 million oz but with some record breaking discoveries at the Post deposits, the potential exists for a substantial reserve increase.

As part of the I-One Plan plan outlined in Newmont’s recent 5-year program, the company is expanding its 22-year-old No 1 mill from 3,500 tpd to 4,600 tpd. Since it opened in 1965, mill No 1 has treated ore from the Carlin, Genesis and Blue Star pits.

At a cost of $16 million, the company will also enlarge its No 2 mill from a 9,000 tpd to 12,300 tpd by October. In addition, Newmont will spend $72 million to put a 4,000- tpd refactory ore treatment facility into production by 1990. Post deposit

In the northern area near the Post deposit, Newmont is planning to have a 4,000-tpd No 4 mill in production by 1989. Built at a cost of $69 million, it will treat ore from Newmont’s Post reserves which now stand at 1.2 million oz.

It is also spending $25 million to increase the size of its northern area leach facilities from three million tons to 4.5 million this year and nine million tons the year after.

To finance the I-One Plan, capital expenditures will be at a rate of $226 million in 1988, $89 million in 1989, $57 million in 1990, $30 million in 1991 and $19 million in 1992.

With cash cost of production peaking this year at $199 per oz, President T. Peter Philip believes his company is protected from fluctuating gold prices. “We can break even at around $270 per oz,” he said.

At a production rate of 930,000 oz this year, operating income is expected to be $205 million in 1988, rising to $315 million in 1989 and around $406 million by 1991.

In making those income predictions, Philip is assuming a corresponding increase of around 200,000 oz annually for each year up to 1990 when output will level out at 1.6 million oz.