(Kitco News) – Newmont Corporation (NEM:NYSE & NGT:TSX) announced that its board of directors has granted approval for advancing the Ahafo North Project into the execution phase. The project exceeds the Company’s required internal rate of return, adding profitable production from the best-unmined gold deposit in West Africa.
Newmont President and CEO, Tom Palmer “I am pleased to announce the approval of full funding for the Ahafo North Project, expanding our existing footprint in Ghana and adding more than three million ounces of gold production over an initial 13-year mine life,”
He then added “The development of this prolific ore body will leverage our proven operating model and will be supported by our existing world-class Ahafo South operation. The project will be developed and operated in a sustainable and responsible manner to create value for all our stakeholders.”
The project is located around 30 kilometers north of Newmont’s existing Ahafo South operations, the project will include four open-pit mines and the construction of a stand-alone mill. Production from the mine will average approximately 275,000 to 325,000 gold ounces with all-in sustaining costs of $600 to $700 per ounce for the first five years.
The projected capital costs are estimated to be between $750 to $850 million with construction expected to be complete in the second half of 2023. At current gold prices, the project is expected to deliver more than a 30 percent internal rate of return (IRR).
Looking at the company’s weekly price chart it’s easy to see that there has been a big retracement. This is obviously good news for the miner but the cost of the project will have to be priced into its balance sheet. The good news is that the stronger gold price could help prop up the value of the shares. The key level on the downside is the support zone at 54.39. If this breaks it could take the price back to the purple level near 46.00 which was the high back in 2016. On the topside, the next obvious level is the high of 75.31. It is not panic stations just yet as the price is in the middle of the consolidation, but the volume has been heavier on the moves lower recently.
