Newmont: Batu Hijau gold output up 17%, copper down 5% in Q2
Wednesday, July 30 2014 - 01:58 AM WIB
US-based Newmont Mining Corp said that attributable gold production at its Batu Hijau mine in mine in Sumbawa, West Nusa Tenggara Province increased 17 percent in the second quarter of this year compared to the same period of last year primarily due to higher grade and higher metal recovery, and was partially offset by lower throughput as a result of the export restriction introduced by the government of Indonesia earlier in the year.
Attributable copper production decreased five percent due to lower throughput related to the ramp down and was partially offset by higher ore grade milled and higher recovery, the company said in a statement Tuesday.
On June 5, 2014, PT Newmont Nusa Tenggara (PTNNT), a local subsidiary of American mining giant Newmont Corp., the entity operating the Batu Hijau mine, invoked the force majeure clause of its Contract of Work (CoW), the investment agreement entered into by PTNNT and the Indonesian government in 1986 and valid through 2030, due to the inability to export preventing continued production.
On July 1, 2014, PTNNT and Nusa Tenggara Partnership B.V. (NTPBV), a Dutch entity and PTNNT?s majority shareholder, announced filing for international arbitration against the Government of Indonesia to seek relief from export restrictions that have halted production at Batu Hijau.
?As a result, we have modified Indonesian guidance for 2014 and updated our outlook for 2015 and 2016. In the meantime, the company remains committed to seeking opportunities to resolve outstanding issues with the Government of Indonesia to resume normal operations,? Newmont said.
Elsewhere, Newmont said gold CAS per ounce and copper CAS per pound decreased 80 percent and 75 percent, respectively, from the prior year quarter, primarily due to lower inventory adjustments, partially offset by the abnormal production costs related to the suspension of operations. CAS includes $16 million of abnormal costs related to the suspended operation, which equates to $267 per ounce and $0.70 per pound this quarter.
Gold AISC in Indonesia was $1,556 per ounce, a decrease of 74 percent, and copper AISC was $4.32per pound, a decrease of 66 percent over the prior year quarter due to lower inventory adjustments than the prior year quarter.
?The timing and outcome of a resolution in Indonesia is difficult to predict; however, for illustrative purposes guidance reflects the receipt of export permits for Batu Hijau, by January 1, 2015. The Batu Hijau mine is in care and maintenance pending receipt of export permits, with PTNNT expected to incur approximately $20 to $25 million per month in holding costs,? Newmont said.
For the second half of 2014, the company said PTNNT plans to ship approximately 58,400 tons of concentrate containing approximately 14,400 tons of copper and approximately 11,000 ounces of gold from inventory to PT Smelting, the only copper smelter in Indonesia.
?PTNNT?s ability to export will impact these expectations and assumptions and Newmont?s ability to achieve outlook,? it said.
| Summary Production Table (Attributable production, Koz and kt) | |||
| Batu Hijau | Q2 2014 | Q2 2013 | Change |
| Gold | 7 | 6 | 17% |
| Cooper | 7.5 | 7.9 | -5% |
| Summary CAS Table (Consolidated $/oz and $/lb) | |||
| Batu Hijau | Q2 2014 | Q2 2013 | Change |
| Gold | $1,071 | $5,299 | -80% |
| Cooper | $2.82 | $11.23 | -75% |
Summary All-in Sustaining Costs Table (Consolidated $/oz and $/lb) |
|||
| Batu Hijau | Q2 2014 | Q2 2013 | Change |
| Gold | $1,556 | $5,917 | -74% |
| Cooper | $4.32 | $12.59 | -66% |