The combined NEM/BMG: No accelerated sales (hedging) so the gold goes straight into spot market. Produced 5.7 million in 2000. Per annual report, production will drop 300K in 2001 to 5.4 million. Mgt. has their heads screwed on right, seem to use return on capital models, and not be concerned with ounces for the sake of ounces. However writing's on the wall: from first quarter report, "closed seven exploration offices around the world and reduced annual expl. budget from 65 to 45 million." Uses 300 POG for reserves, and claims 275 would reduce only 8%, 250 would reduce 18%. Billion buck debt load.
The Good:
Yanacocha will produce 1,000,000 for NEM's account in 2001. C.C is anticipated at 120. There is a long life ahead with 19 million reserve for NEM (balance Buenavetura), and good exploration potential. Plans to go to 1.25 million oz.
In normal times NEM's core Nevada asset (3,116 sq. mile land position) would be easily put in with the "the good". But, at 265 POG, even this is problematic. Will produce 2.7 million @ 215 c.c this year. Reserves are 26.2 so NEM will hit the wall at end of decade without some stellar exploration results. No capital being spent in 2001 on Phoenix a six million oz reserve. Energy costs are a big issue now as NEM is the largest power consumer in the state.
Zarafsahan: 250K: c.c-129, 12 year reserve.
Vera/Nancy: 125K @ c.c 100: 480K reserve, depleted in 2004.
La Herradurra: 50K @ c.c 131. Interesting that NEM doesn't back away from small low cost operations.
The Bad and the Ugly:
Kori Kollo: 250K @ c.c 200, 1.0 million reserve, depleted 2004. 26,250 foot drill program declared "promising" results.
Mesquite: 60K @ 200 c.c., depleted with residual heap leaching continuing to 2003.
Bata Hijau: produces 240K as a credit towards copper (high cost at 57 cent/lb c.c). 6.6 million reserve.
Minhasa: 320K @ c.c-150. Mining finished this year and closure for 2003. Social and labor problems may do it early.
Hollaway: 90K @ c.c 215: 758K reserve, late 00's depletion.
Golden Giant: 300K @ c.c 165, 1.4 million, depleted 2004.
Conclusion: Five mines depleted by 2004 totaling 1,055,000 or 20% of NEM's output. 250K offset by increase at Yanacocha. Nevada very problematic, world of hurt late decade if market (energy down and gold up) doesn't improve, or they get damn lucky on scaled down exploration budget. |
