US gold miner Newmont has announced it will defer its $300m full funds investment decision into Peru’s Yanacocha gold project for a minimum of two years.
Newmont made the decision with the aim of advancing its portfolio in the meantime in order to improve stockholder value.
The targeted cash flow improvements come as a result of the company’s impending takeover of Australian miner Newcrest. The $19bn buyout will create a further $2bn in cash flow from portfolio optimisation activities. It is these that Newmont seeks to capitalise on before continuing its Peru investment.
“We are targeting at least $2 billion in near-term cash flow improvements through portfolio optimization within the first two years. The deferral of the Yanacocha Sulfides project represents the first step in delivering on this target,” stated Tom Palmer, president and CEO of Newmont, in a press statement.
The company’s chief development officer for Peru, Dean Gehring, had been in charge of the project’s economic maximisation and led the analysis on which the decision to postpone the mine was based. Gehring will now instead be involved in the integration of Newcrest assets into Newmont.
Palmer continued: “Yanacocha is core to Newmont’s portfolio and long-term strategy. […] We will continue to work closely with government stakeholders, business partners and local communities in Peru as we prepare for a future investment decision on the Sulfides Project.”
Parker believes that Yanacocha has the potential to become a “Tier 1” gold and copper project. This means the mine could produce more than 500,000oz of gold equivalent per year consolidated. It would also mean the mine has an all-in sustaining cost per ounce below the halfway mark of the industry’s cost curve. The mine already has a mine life exceeding 2040, exceeding the necessary ten years required for it to be a Tier 1 project in a country with a B or above credit rating.
