Newmont takes $1.6b hit on struggling Australian gold mines
US goldminer Newmont has made heavy writeoffs against its Australian mines - Boddington and Tanami - totalling $US1.5 billion ($1.63 billion) due to the slump in the gold price.
The group is in the process of cutting its global workforce by a third as it seeks to ensure it can survive the downturn. Thirty-eight jobs were cut at the regional head office in Perth in June, 29 at the Tanami mine since the end of June and 27 at Boddington over the past fortnight.
A further 80 jobs are to be cut at Boddington by the end of September, a company spokesman said.
The mine is the largest goldmine in Australia and one of the newest. The job losses do not include further cuts by contractors.
The writeoffs, totalling $US1.8 billion, come as other global miners such as Goldcorp have also made heavy writeoffs and provisions against some of their higher-cost mines amid pessimism over the near-term outlook for the gold price.
Earlier this month, Australian goldminer Newcrest disclosed $6 billion of writeoffs due to the gold price downturn - it fell 25 per cent in the June quarter alone - with $3.6 billion of this made against its Lihir mine in Papua New Guinea.
In the June quarter, the Boddington mine, in Western Australia, produced 171,000 ounces of gold at $US1307 an ounce and 16 million pounds of copper.
Gold and copper production declined by 5 per cent and 11 per cent respectively, Newmont said, due to lower mill throughput partially offset by higher gold mill grade.
The outlook for the Boddington mine is poor unless there is a significant reduction in costs since all-in sustaining costs at the mine totalled $US1534 an ounce in the quarter.
Excluding the impact of the stockpile write-down, costs were $US1088 per ounce, it said.
For this year, the mine is expected to produce between 700,000 and 750,000 ounces of gold and 70 million to 80 million pounds of copper.
"All our operations are actively reviewing costs in response to a lower gold price/higher cost environment," Newmont said. "This may result in a reduced scope of work in some areas and a possible reduction in employees and contractors."
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free