In a Sept. 25 research report, Andrew Kaip, an analyst with BMO Capital Markets, provided an update on some of Newmont Mining Corp.'s (NEM:NYSE) Nevada operations.
For Long Canyon, production of 77 Koz as of mid-2017 was at the mid-range of guidance (130–170 Koz), Kaip noted. "All-in sustaining costs of $351/ounce are tracking well below guidance ($405–455/oz)" and "benefitting from faster leach rates, lower consumables and mining costs."
Regarding the overall operation, Kaip wrote, "We were impressed by Long Canyon, a high-quality mine with a great future ahead of it, in our view."
Work currently underway for phase 2 at Long Canyon includes permitting, a three-year process according to Newmont, and a scoping study. Phase 2 "will include deepening of the phase 1 open pit and the addition of an underground and oxide mill (3–5 Ktpd)," reported Kaip. "Open pit grades in phase 2 are expected to be higher grade but offset by higher waste stripping versus phase 1."
As for the Carlin complex of mines, Newmont has successfully implemented a number of "full potential initiatives," the analyst indicated, "including the $20M annual savings by reducing contract mining and improving owner productivity." At the Leeville mine, for instance, the company "designed longer life bolts that will lower underground rehabilitation costs over the long term."
Additionally, Newmont transformed the Leeville underground mine to "semi-autonomous mining," which should result in "productivity, cost and safety gains," Kaip explained. Such a switch, however, requires time, capital and careful planning and design.
With two working semiautonomous loaders in place at Leeville and two more slated for delivery this year, "the plan is to reach fully autonomous loading by Q3/18," he wrote. The company also is preparing to institute autonomous stope drilling there, "which will be rolled out in stages through 2018."
Newmont has designed its Exodus mine to be semiautonomous as well and plans to commission it early next year.
BMO Capital Markets has an Outperform rating and $40 per share target price on Newmont, whose stock is currently trading at around $37.89 per share.
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Disclosures from BMO Capital Markets, Newmont Mining, Sept. 25, 2017
Analyst's Certification: I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures
Disclosure 2: BMO Capital Markets has provided investment banking services with respect to Newmont Mining within the past 12 months.
Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from Newmont Mining within the past 12 months.
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from Newmont Mining.
Disclosure 6A: Newmont Mining is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services
Disclosure 6C: Newmont Mining is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services.
Disclosure 9: BMO Capital Markets makes a market in Newmont Mining.
Disclosure 16: A BMO Nesbitt Burns Inc. research analyst has extensively viewed the material operations of Newmont Mining.
Disclosure 17: Newmont Mining has paid or reimbursed some or all of the BMO Nesbitt Burns Inc. analysts travel expenses.
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