DENVER (Yosefardi) – Newmont Mining Corporation said copper production levels in 2015 and 2016 are expected to be significantly higher and costs significantly lower than 2014 at Batu Hijau, Indonesia, as the planned Phase 6 stripping campaign is projected to be completed in the fourth quarter of 2014, providing access to high-grade ore.
This is subject to potential operating plan modifications based on recent export regulations issued by the Indonesian government in mid-January.
In January 2014, the Indonesian government issued new regulations pertaining to the export of copper concentrate that contain potentially restrictive conditions in respect of obtaining an export permit and a significant export duty.
While the 2009 mining law preserves the validity of PT Newmont Nusa Tenggara’s (PTNNT, the entity operating the Batu Hijau mine) Contract of Work (the investment agreement entered into by PTNNT and the Indonesian government in 1986, which includes the right to export copper concentrates and a prohibition against new taxes, duties, and levies), the Indonesia government has stated its intention to apply the new regulations to PTNNT’s operations and has not yet recognized PTNNT’s rights to export copper concentrate and pay taxes, duties, and levies only in accordance with the Contract of Work.
The Company believes that these new 2014 regulations conflict with the Contract of Work. PTNNT is continuing to engage with government officials in Indonesia in an effort to resolve this issue and gain clarity regarding the new regulations, while also considering other remedies, including possible legal action.
In connection with that process, Newmont is evaluating potential impacts to its operating plans at Batu Hijau.
Newmont only produced 6 Koz of gold in fourth quarter of 2013 from Batu Hijau operation, Indonesian, declined 14% from 7 Koz in the same period of 2012. In 2013, its gold production from Indonesian operation totaled 23 Koz, dropped 30% from 33 Koz in 2012.
While copper production increased 38% to 22 Mlbs in fourth quarter of 2013, compared to 16 Mlbs in the same period of 2012. In 2013, Newmont’s copper production from Batu Hijau totaled 78 Mbls, inched up 3% from 76 Mbls in 2012.
Fourth quarter attributable gold and copper production was due to lower ore grade for gold and higher ore grade for copper, as well as higher copper metal recovery.
Costs applicable to sales (CAS) increased 51 percent per ounce and 57 percent per pound, respectively, due to stockpile write-downs.
Gold CAS is expected to remain essentially flat over the three-year period compared to 2013 levels while copper CAS is expected to improve as the Batu Hijau mine plan progresses, reaching higher grade ore.