Newmont, Barrick Each to Spend More than $1 Billion in 2017 as Prices Recover; Both Eye Nevada for Gold

Researched by Industrial Info Resources (Sugar Land, Texas)--Higher gold and copper prices in first-quarter 2017 gave two leading mining companies, Barrick Gold Corporation (NYSE:ABX) (Toronto, Ontario) and Newmont Mining Corporation (NYSE:NEM) (Greenwood Village, Colorado), some fairly strong results following years of challenging market conditions and deep cost cuts. Each expects to see capital expenditures of more than $1 billion this year, with North American activity frequently centered in Nevada. Industrial Info is tracking $7.58 billion in projects related to Barrick, and $8.19 billion related to Newmont.

Barrick reported $310 million in first-quarter capital expenditures, a 44% increase from the same period in 2016. Among the facilities to see stronger investments is the 999,000-ounce-per-year Cortez Mine in Crescent Valley, Nevada, which is undergoing a $100 million process optimization that is expected to ease the transport of mined ores to surface-processing facilities. The company also is proposing a $153 million addition to Cortez Mine, which would place a 4,500-ton-per-day, long-hole stoping mine below the existing property, adding 300,000 ounces per year of gold over to the mine's current output of 1 million ounces per year. For more information, see Industrial Info's project reports on the process optimization and the stoping mine.

The company also is evaluating the proposed, $1 billion Goldrush Mine in Crescent Valley, an underground cut-and-fill mining operation that currently is designed to produce 440,000 ounces per year of gold over a 21-year mine life. The facility would be built adjacent to the Cortez Mine, to which it would truck oxide ores. For more information, see Industrial Info's project report.

Barrick expects capital expenditures for 2017 to be between $1.3 billion and $1.5 billion, slightly up from $1.12 billion in 2016. But the company has pared back its production outlook for the year to between 5.3 million and 5.6 million ounces of gold, compared with a previous estimate of 5.6 million to 5.9 million ounces, as it prepares to sell 50% its Veladero mine in Argentina.

Newmont saw its capital expenditures drop 36% from first-quarter 2016 to $180 million, as some of its projects began commercial operations. Like Barrick, Newmont also has a slew of projects proposed for Nevada: the $200 million expansion of Long Canyon Gold Mine in Wells, the $100 million restart and expansion of Northumberland Gold Mine in Round Mountain, and the $100 million construction of Sandman Gold Mine in near Winnemucca.

The Long Canyon project would boost output to 300,000 ounces of gold per year and extend the mine life, while the Northumberland project would revive production to 3.2 million ounces of gold and 9 million ounces of silver, and the smaller Sandman project would produce 143,000 ounces of gold. The latter two projects, however, have faced years of delays and could continue to face such challenges, despite recovering market conditions. For more information, see Industrial Info's project reports on the Long Canyon, Northumberland and Sandman projects.

Newmont expects to see between $900 million and $1.1 billion in capital expenditures for 2017, down from 2016's capital expenditures of $1.13 billion. Executives said in a quarterly press release that the company is on track for commercial production from the $90.69 million expansion at the Tanami Granites Gold Processing Plant near Alice Springs, Australia, toward the middle of the year. Additions at the Tanami facility are expected to increase the processing capacity from 2.3 million to 3.5 million tons per year. Newmont also has proposed a $550 million pipeline to transport natural gas from the Amadeus Gas Pipeline to Tanami. For more information, see Industrial Info's project reports on the Tanami expansion and the natural gas pipeline.

Barrick's net earnings for the quarter stood at $679 million, compared with an $83 million loss in first-quarter 2016, while Newmont reported $46 million in net income, an 11.5% decrease from the same period last year. Nonetheless, Newmont's results beat analysts' widely held expectations.

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