Newmont has announced that the Tanami Power Project in Australia was completed safely and on schedule. It is expected to provide the Tanami gold mine a safe and reliable energy source while lowering power costs and carbon emission by 20%.
The project is expected to generate net cash savings of $34 per ounce from 2019 to 2023, delivering an Internal Rate of Return of greater than 50%. The project included the installation of two power stations, a 66kV interconnected power line, and a 275 mile (450km) natural gas pipeline.
The pipeline was built and will be maintained by Australian Gas Infrastructure Group, while the power stations were constructed and will be operated by Zenith Energy. Capital costs are estimated at approximately $245 million with annual cash lease payments over a 10-year term beginning in 2019.
Newmont’s CEO Gary Goldberg commented: “In addition to lowering costs and carbon emissions, the completed Tanami Power Project will pave the way to further extend the life of the operation. Consistent execution and delivery remain the hallmark of our ability to generate free cash flow and create long-term value for our shareholders and other stakeholders.
“Completion of the project coincides with Tanami pouring its 10 millionth ounce of gold on the back of record production of 500,000 ounces last year. This achievement is a testament to the skill of our team as well as our valued partnership with the Warlpiri people, the Traditional Owners of the land.”
Tanami is Australia’s second largest underground gold mine and one of the most cost competitive gold producers in the world. Newmont’s continued exploration success at Tanami has created the potential to extend mine life beyond 2028, with additional upside through a possible second expansion project that the Company expects to make a full funding decision on in the second half of 2019. Last year, more than 800,000 ounces of gold Resources were converted into Reserves from Tanami’s Auron ore body.
Over the last six years, Newmont has successfully built 11 new mines, expansions and projects on four continents – on or ahead of schedule and at or below budget. These projects include Akyem and the Phoenix Copper Leach in 2013, the Turf Vent Shaft in 2015, Merian and Long Canyon in 2016, the Tanami Expansion in 2017, and Twin Underground, Northwest Exodus and Subika Underground in 2018. The Company also completed a value-accretive acquisition of Cripple Creek and Victor in 2015 and delivered a profitable expansion at the mine in 2016.