Showing posts with label South America. Show all posts
Showing posts with label South America. Show all posts

Friday, July 20, 2012

Codelco seeks access to "world-class" Ecuadorian copper/moly deposit

Chilean miner Codelco is negotiating with Ecuador for the Junin deposit which contains enough copper and molybdenum to rival the biggest mines in both Chile and Peru, an industry group says.

Codelco, the largest copper producer, is negotiating access to a "world-class" deposit in Ecuador, paving the way for the state-owned company's expansion outside of Chile, according to an industry group.

The Junin deposit in northern Ecuador contains enough copper and molybdenum to rival the biggest mines in Chile and Peru, which include Anglo American Plc (AAL) and Xstrata Plc's Collahuasi and BHP Billiton Ltd.'s Escondida, Santiago Yepez, president of Ecuador's Mining Chamber, said in an interview in Quito. Chile and Peru are the world's top copper producers.

"Junin could be one of the most significant copper deposits in South America," he said yesterday, citing earlier exploration work by Canada's Ascendant Copper Corp. and Mitsubishi Corp. The Mining Chamber represents companies exploring in Ecuador including Kinross Gold Corp. (K) and Tongling Nonferrous Metals Group (000630) Co. Codelco officials are "frequently" in Quito to meet authorities and the chamber, Yepez said.

A deal with Ecuador's state mining company Enami would give Codelco access to a large-scale copper deposit outside of Chile for the first time in its history after spending about a decade exploring in northern Brazil and Mexico. Kinross and Tongling are also in talks with Ecuador's government to start large-scale mining in the South American country for the first time.

Codelco officials declined to comment on talks with the government. Ecuador's Ministry of Non-Renewable Natural Resources didn't respond to telephone and e-mailed requests for comment.

Farmer Opposition

Codelco is focused on spending more than $20 billion to revamp its mines in Chile and may create a unit to expand overseas, Chief Executive Officer Thomas Keller said last month.

Ascendant lost the Junin concession after facing opposition from coffee growers and farmers in the nearby valley of Intag, Yepez said. Codelco faces a "tough task" in convincing locals to accept drilling at the site, he said.

More than 90 percent of Ecuador's terrain is unexplored and offers "gigantic potential" for copper and gold discoveries amid the Andean mountains that run through Chile, Peru, Ecuador and Colombia, Yepez said.

Ecuador's metals deposits, valued by the government at $220 billion, may contain more than 39 million ounces of gold reserves and more than 8 million metric tons of copper, according to the most recent data from the mining chamber.

In 2008, Ecuador annulled more than 4,000 mining concessions including Ascendant's rights to explore Junin, while President Rafael Correa rewrote the country's mining laws the following year to give the state greater control over the country's mineral resources.

Windfall Tax

Correa said yesterday he will revise a windfall tax after talks with Kinross to develop one of the world's biggest gold discoveries stalled.

"We have to make it more reasonable," Correa said. "We have the most demanding contracts in the world but we have to be very demanding because the opportunities are enormous."

The windfall tax gives the state the right to earn 70 percent of mineral profits above a pre-negotiated base price and has deterred investment, Yepez said. Codelco will be able to acquire up to 49 percent of Junin while Enami will retain a controlling 51 percent stake, he said.

Election Season

Ascendant delisted from the Toronto Stock Exchange following the annulments, while Southern Copper Corp. (SCCO) acquired the rights to Ascendant's Chaucha project in the South American country, beginning exploration this year.

Correa may wait until after February presidential elections before signing any mining accords because of opposition from environmentalists and other constituents, Yepez said.

"Without a doubt, the Ecuadorean government wants to support the mining sector and they are doing it," Yepez said. "Sadly, we are in an election season."

Large-scale mining faces resistance from local communities in Ecuador, like neighboring Peru where five people have died in demonstrations against Newmont Mining Corp.'s Minas Conga gold and copper project in Cajamarca. In March, Ecuadorean protesters forced their way into China's embassy in Quito in a failed attempt to stop the government from signing a contract with Tongling's unit, Corriente Resources Inc.

Chavez Ally

Changes in mining laws and the government's inexperience in negotiating large-scale mining contracts have deterred investors, said Xavier Andrade, a partner at Quito-based law firm Andrade Veloz Abogados. Codelco should have an easier time reaching a deal with the government than Junin's previous owners as Correa, an ally of Venezuela's President Hugo Chavez, has said he favors doing business with state-owned companies.

"The government is having a lot of trouble trying to understand how mining laws should be," Andrade, who specializes in the country's mining code, said yesterday in an interview at his offices in Quito. The country's laws give Codelco an advantage over other mining companies interested in developing the deposit, he said.

Saturday, July 7, 2012

China's staggering gold potential - and parallels in South America

Geologist Dr. Noel White* believes there are huge gold discoveries yet to be found within China's borders and unearths parallels in Latin America - Gold Report interview.

The Gold Report: Noel, you're a geologist with about a 40 year history in mineral exploration. These days, public companies pay you for advice on how to run their exploration programs. What are some common mistakes junior mining companies make when it comes to exploration?

Noel White: Junior companies have difficulty developing a clear and realistic strategy.

TGR: You try to temper their enthusiasm?

NW: Not at all. In fact, I try to encourage their enthusiasm. But I try to get what they do aligned with what their objectives are in a realistic way.

TGR: Do they try to drill too quickly? Do they try to drill too much?

NW: Junior companies commonly feel that there is an expectation to drill quickly, but they also need to do their homework properly. If they jump into drilling before doing the appropriate surface techniques, such as geological mapping, geochemical sampling and geophysical surveys, they can completely waste the very expensive drilling work. It is a serious mistake because bad drilling results have a serious negative impact on how investors perceive a project. A company needs the best possible intersections at the start to raise the value of their projects.

TGR: You often deal with technologies that are new to mineral exploration. Can you talk about how they're changing the game?

NW: The fundamentals of mining haven't changed particularly in 40 years-we just use new technologies to achieve the same goals. The major breakthrough in geophysical technology of recent times was the development of airborne gravity. That was one of the Holy Grails.

One of the most basic tools is a magnetic survey. We can get a lot more out of magnetic surveys today than we could in the past. Those surveys provide us with baseline information that's really important.

Technology is producing major breakthroughs in geochemistry. Geochemistry started off just collecting samples of soil or stream sediments and using simple analytical techniques. More and more sensitive analytical methods have been developed. Partial leach techniques extract part of the geochemical sample to maximize the sensitivity. A major recent development relies on the fact that nature has focused particular elements that are associated with ore deposits into particular minerals. It is now possible to actually look at the chemistry of particular minerals to evaluate the proximity to the target based on its chemistry.

TGR: What do all those technologies mean to the investor?

NW: Smart people follow the lead of smart people and greedy people follow the lead of greedy people. If you follow a greedy person you might get lucky and make a lot of money in the short term. Technically smart people who design exploration programs have a much higher probability of being successful in delivering a discovery.

TGR: A few years ago, the World Bank evaluated the mineral potential of China. How would you characterize China's mineral potential?

NW: To appreciate China's potential, you have to understand its history. In the early days of the People's Republic of China, the country followed the Soviet Union approach and started huge state-funded surveys over massive areas, but the Cultural Revolution disrupted the process. Thousands of state-owned companies with exploration teams suddenly found themselves with no funding. However, the government wouldn't allow them to reduce staff or stop operations-a major dilemma for management. They started mining any little thing to make money

TGR: The country is literally dotted with all kinds of artisanal mines.

NW: They were so focused on making money that they were acting as if they were the smallest of junior mining companies where making money was the sole focus, not doing good work.

TGR: But the potential is there.

NW: Oh, the potential is staggering. A mineral occurrence map of East Asia shows multiple world-class deposits around the borders of China. However, there are very few inside China. Why did China miss out? It has nothing to do with geology. I has to do with the history of the country and how exploration developed. China is fantastically endowed, but very poorly explored.

TGR: But even the Chinese government is not compelled by its geology. Chinese state-owned companies are spending billions to develop resources beyond its borders. Isn't it difficult to argue for further mineral exploration and development in China when the Chinese themselves seem unconvinced?

NW: A huge amount of money is being channeled by the government into exploration teams in China. Some of them are quite competent, but many of them are not. It's basically pouring good money out after mostly bad.

Then the government asks, "Well, why haven't we found all these deposits in China?" But the "experts" they are asking don't know anything about the economic geology of China. They say, "We've spent a huge amount of money looking for these deposits and haven't found them. Therefore, they mustn't be there." That conclusion is wrong. Most of the money is being used in completely ineffective ways.

TGR: What is the environment for juniors wanting to capitalize on that potential?

NW: The geological potential of China is fantastic. But let's not pretend otherwise-it's a difficult place to work for other reasons. Ten years ago, China was encouraging foreign companies to come in. A lot of juniors went into China. Some did quite well. Many of them did really badly. Subsequently, conditions have become less and less favorable. The policies change almost on a yearly basis. It's more challenging today than it was 10 years ago.

TGR: What's the best way to get started in China?

NW: The best way to work in China is to joint venture with a good state-owned company. Mining law in China is provincial. Having a Chinese partner that can handle government and community relations for you is a major advantage. Many foreign companies don't understand the system, the requirements-they don't have the connections and the relationships that can make things easier. Life is much easier when you have a good local partner.

TGR: Oyu Tolgoi is the mammoth copper-gold porphyry deposit being developed in Mongolia.You're an expert in porphyry deposits. Do you believe further exploration of those geological systems could yield a similar deposit in China?

NW: There are a lot of porphyry prospects in China, but there's been very little effective exploration on them. The situation is changing because more Chinese have familiarity with porphyry deposits. However, in most cases, if they even recognize a porphyry, they will drill a couple of holes and walk away because they didn't get what they wanted. Porphyry deposits are very big, but that doesn't mean they're easy to find. They can't just drill a couple of holes and say, "Oh well, we've done it." In fact, one company is exploring a porphyry system that had never been recognized in southeastern China, down toward the Vietnam border.

TGR: Is that Habo?

NW: Yes. The potential remains in that area. But why wasn't it found before? There were about 10 centimeters of forest soil and dead leaves hiding it. Until the surface was scraped away, it couldn't be seen. It's not that geologists hadn't looked in that area, they just hadn't seen it. That's true all around the world. It takes very little to hide something.

China has great potential for more porphyry systems. In fact, there have been a lot of porphyry systems found in Tibet because it's a well-exposed area and a well-defined belt. There is a need for people to get back into eastern China where there are numerous known porphyry systems that have never been explored properly.

TGR: Do you think that Habo will ever get to the point where it is a major porphyry system that is mined and is economic?

NW: It's at an important stage now. The work that is being done right now will make or break Habo. So far, no sufficiently wide zones of high-grade mineralization have been found. Many narrow zones have been found, but that doesn't make a porphyry deposit because large volumes are needed to bulk mine.

It's still an open question. We still don't know the answer. We're drilling targets that have the potential to be an economic ore body. Time will tell.

TGR: Is the work being done on Habo changing the way Chinese geologists think about geology in China?

NW: The Chinese system is very stratified. The people in the field often don't know what's happening just down the road, let alone in another province. That knowledge would not be widespread.

TGR: You've also acted as a consultant on the Beiya project, which is in northern Yunnan Province. What's exciting about that project?

NW: We discovered an ore body at Beiya. It's taken quite a period to achieve that success largely because of the character of the geology. The potential was very clear from the earlier stages. There was a known deposit, which has grown and grown to be the biggest gold mine in Yunnan. Production at the moment is about 200,000 ounces per year from an open pit, but it was a very small underground mine when we started.

The mine was controlled by a state-owned company, now partly privatized. The state-owned company was so focused on drilling and testing that deposit that it wasn't interested in the surrounding ground.

TGR: You have talked about the mineral potential of Ollachea in Peru and Don Nicolas in Argentina as being significantly greater than what's being looked at currently. What supports that view?

NW: Ollachea has mineralization exposed in a belt of small workings. The deposit has a fairly shallow dip of about 30 degrees in very dissected country. Very often those sorts of deposits are steeply dipping, which limits the depth at which you can explore them. Here, the host structure extends a long way away from where it's currently being drilled.

The amount of blue sky attached to that deposit is startling. There's plenty more potential. It's the tip of the iceberg. Nobody knows how much more there is, but definitely one of the things you want with any project, apart from having a good resource, is the potential to grow. There's extraordinarily good potential to grow there.

TGR: Is there significant potential in the Don Nicolas deposit as well?

NW: I didn't review Don Nicolas itself. I was supposed to look a lot more closely at that on my last visit, but a little heart attack got in the way.

TGR: Oh, my goodness!

NW: That cut the visit short. However, Don Nicolas is one of many exploration targets within that region. I was startled, to be honest. It's quite an amazing region. There's a whole series of other deposits that are known. For a geologist in exploration, it's the sort of thing that makes your heart beat faster.

TGR: You spoke earlier about how mining rules vary among Chinese provinces. It's much the same in the different provinces of Argentina. Are the particular provinces in the Don Nicolas region considered mining-friendly jurisdictions?

NW: Yes, very much so. It's the best in Argentina. To be honest, there's not a lot more going for this province apart from mining. It's mostly flat. It's arid. It's quite a difficult environment for any other sources of income. The people there recognize that the best opportunity they have to develop is through the mining industry. Consequently, they're very positive about it. They want to see the mining industry grow.

TGR: There is an economic malaise in this particular sector, but projects are still being found and developed despite lagging share prices. Some of them even look robust. Is that enough to keep investors hopeful about this sector?

NW: Investors are holding onto their money and not investing in anything that's perceived to have risk. But there still are investors who have a taste for something with big upside potential. Now is the time to be investing in the very good exploration companies-the ones that have very good projects and very good management. Investors get in cheaply and the upside is fantastic. There's every reason to be optimistic about the mining industry and exploration. Exploration is the future of mining and mining is essential to civilization.

TGR: Do you have any other thoughts you want to share with us?

NW: There will be discoveries that generate interest. In exploration, we benefit greatly from the power of greed because the discovery that excites the market generates a lot more exploration activity. I remember during my BHP Minerals days the young geologists would say, "Isn't it a pity that we didn't find that deposit?" I'd say, "Don't knock it because we benefit from the fact someone else found a deposit that's got the market excited." It benefits everyone's budget.

TGR: Indeed.

*Dr. Noel White is a geologist with more than 40 years of experience in mineral exploration, operations and project generation worldwide. He was the chief geologist for former BHP Minerals and has visited over 350 ore deposits/mines in 50 countries, including China, where the first foreign joint venture in its mining industry was built up by BHP. White was a consultant to the World Bank Group on its evaluation of Asian mineral potential. He has a strong involvement with professional societies and universities worldwide, such as serving as international exchange lecturer in 1999 and Thayer Lindsley Lecturer in 2008 for the Society of Economic Geologists and served as the vice president of regional affairs for the Society of Economic Geologists. He has authored and co-authored various publications since 1972. White received a Bachelor of Science degree from the University of Newcastle and a Ph.D. from the University of Tasmania.

Tuesday, May 8, 2012

Not a gold bull or bear, but a gold agnostic: Eric Coffin

As a contrarian, all the doom and gloom tells Eric Coffin the market is about to pull out of its tailspin and he talks about why the Yukon is an area play he still believes in. Gold Report interview

The Gold Report: Eric, the gold bears recently outnumbered the gold bulls in Bloomberg's weekly Gold Bull/Gold Bear Sentiment Survey for the fourth time in a year. Are you a bull or a bear?

Eric Coffin: I think the gold price is going to end the year higher, so I guess that makes me bullish, but I think of myself as agnostic.

There needs to be a return of calm to Europe for the gold price to move much higher. The currency pair trade between the euro and the dollar is going to be a big determinant to the gold price. There's been more noise about the EU providing stimulus funds to offset all the government budget cuts in Europe. All of those countries have to deal with their debt loads. But it's not realistic to think that they can cut their deficit and 3% off their gross domestic product year after year and realistically get any net growth.

The other side of that equation is that the U.S. has slowed down. That'll help the gold price because a lot of goldbugs are riding on there being another round of quantitative easing. I'm not sure it's going to happen. But as long as Federal Reserve Chairman Ben Bernanke keeps saying it might happen, that's good enough.

TGR: Stagnant gold prices are translating to equities. Canaccord reports that "sector weakness in the gold equities over the last six years has typically ended with 'V'-shaped corrections to the upside." Do you believe that's what will happen this time?

EC: I sure hope so because I'm on the buy side, not the sell side. I'm going to feel pretty dumb if it doesn't happen. We're still in a bull market for gold. In a secular bull market, generally speaking, coming out of a dip tends to be an impressive move.

TGR: Many Yukon junior mining companies are starting their 2012 exploration programs after completing off-season financing on buyers' terms. What types of companies are getting financing?

EC: The only financings I've seen in the past five months are either relatively new deals where investors have a lot of respect for management-which is a roundabout way of saying that investors figure management will figure out a way to make money regardless-or companies that have something pretty definitive with a bunch of drill holes. Companies that didn't take the opportunity to raise money last year are going to have to pull a rabbit out of their hat. The Yukon is an expensive place. There's no getting around it.

Outside of companies with discoveries, nobody's really done large financings and that's going to be tough. About 60% of the companies are going to have a hard time undertaking any significant programs this year. If the market gets better, which I think is going to happen, they still have a shot, but it's at buyers' terms.

I suspect a lot of companies are going to say, "Let's just wait and see if next year is better." You haven't seen many announcements. Quite a few of those companies that were talking last year about doing $4, $6, $8 million exploration programs-many of those programs aren't going to happen.

TGR: Desjardins Capital reports that 26 mergers and acquisitions worth a combined $30 billion (B) took place during 2010 and 2011. There are about 120 more companies operating in the Yukon. Are other junior explorers going to be forced to merge?

EC: I think there will be merger activity at the junior level. There are a lot of companies with decent but not spectacular projects where they haven't done enough work and are not in a position to raise money. A merger is one way out for them.

TGR: Is it still fair to call the Yukon an area play when the shares of most of the juniors operating there have declined considerably, often by more than half? Even good results often don't tangibly move share prices.

EC: It still is an area play. This is a fairly common path even for a successful area play. The easy money has been made or, as is the case here, the market's just lousy and there is a lot of consolidation. The Yukon is getting to that point. The few companies that have done well will have the ability to pick up a lot of projects. In any area play, anywhere from a third to a half of the companies involved are piggybacking on the play to help raise money. Those companies tend to disappear quickly if they don't find something large right away or if the financing environment gets difficult. The bad market has exacerbated things but a large number of drop outs from an area play at this stage is not an unexpected development.

TGR: What are your thoughts on what's happening in Peru?

EC: The political landscape has shifted a lot in Peru. It's made it very difficult for anybody outside of Peru-and maybe even inside Peru-to get a handle on what's a good spot and what isn't. There are a lot of South American countries where mining companies just shouldn't go because they're bound to face a political or indigenous population problem and they won't get permitting. Now no one seems to know what the good areas and the bad areas are. That's going to make it tough for everybody in Peru until this stuff gets clarified.

TGR: Do you have some parting thoughts for us on the market and how it translates to the retail investor?

EC: I'm fairly comfortable that the U.S. is going to do OK over the next couple of years. It's going to have another political fight at the end of the year when tax cuts die. Europe has the capability to pull itself out of its problems. In a large measure, it's political decision-making. I certainly appreciate northern Europeans and Germans that don't really see why they should be footing the bill, but they can afford to foot the bill.

We're not particularly worried about China. It's trying to rebalance its economy. China's in a different boat from Europe or the U.S. in that it's got $3 trillion in reserves and can open the taps anytime it wants. China will increase the growth rate when it feels it's the right time to do it.

The world economy will do OK as well. I know it feels like the end of the world for investors that own a lot of resource stocks as I do. The secular bull market hasn't ended. Ironically, all the political problems in different producing regions are going to extend that secular bull market in metals because it's that much harder to grow production to a point that knocks metal prices down.

I'll just leave you with a contrarian thought: Everybody's so negative right now because this is what bottoms look like. Everybody thinks the world is coming to an end. Everybody thinks it's the worst market they've ever been in. Everybody thinks nothing is ever going to go up. That's what a bottom looks like. It's not fun to go through. There's so much negativity everywhere that it's telling me as a contrarian that there's probably not a lot more pain to go through before things start getting better.

If readers would like to download HRA's new company report on Precipitate Gold Corp., HRA has set up a special free report offer for a limited time. Simply click here and they will send you the report.

Eric Coffin is the editor of the HRA (Hard Rock Analyst) family of publications. Responsible for the "financial analysis" side of HRA, Coffin has a degree in corporate and investment finance. He has extensive experience in merger and acquisitions and small-company financing and promotion. For many years, he tracked the financial performance and funding of all exchange-listed Canadian mining companies and has helped with the formation of several successful exploration ventures. Coffin was one of the first analysts to point out the disastrous effects of gold hedging and gold loan-capital financing in 1997. He also predicted the start of the current secular bull market in commodities based on the movement of the U.S. dollar in 2001 and the acceleration of growth in Asia and India. Coffin can be reached at hra@publishers-mgmt.com or the website www.hraadvisory.com.

Source: The Gold Report

Thursday, April 26, 2012

Newmont Announces First Quarter Net Income from Continuing Operations Up 9% to $1.13 per Share

DENVER, April 26, 2012 /PRNewswire/ – Newmont Mining Corporation (NEM) (“Newmont” or the “Company”) today reported attributable net income from continuing operations of $561 million or $1.13 per basic share ($1.11 per share on a fully diluted basis), up 9% from $514 million, or $1.04 per basic share in the first quarter 2011. Adjusted net income[1] was $578 million or $1.17 per basic share in first quarter 2012, compared with $513 million, or $1.04 per share for the prior year quarter.
First Quarter Highlights:
  • Consolidated revenue of $2.7 billion, an increase of 9% from the prior year quarter;
  • Average realized gold and copper price of $1,684 per ounce and $4.01 per pound, up 22% and no change, respectively, from the prior year quarter;
  • Attributable gold and copper production of 1.3 million ounces and 35 million pounds, down 2% and 35%, respectively, from the prior year quarter;
  • Gold and copper costs applicable to sales (“CAS”) of $620 per ounce and $1.98 per pound, up 11% and up 78%, respectively, from the prior year quarter;
  • Cash flow from continuing operations of $613 million, down 38% from the prior year quarter;
  • Second quarter gold price-linked dividend of $0.35 per share, an increase of 75% from the prior year quarter; and
  • Maintaining 2012 Company-wide outlook for production, CAS and capital expenditures.
“We are pleased to announce another quarterly increase in our net income from continuing operations, up 9% over the prior year quarter to $561 million, or $1.13 per share. We also saw gold operating margin expansion of 29%, which outpaced the 22% increase in the average realized gold price from the prior year,” said Richard O’Brien, President and CEO. “During the first quarter, we continued to invest in the development of our Akyem project in Ghana, which remains on schedule for initial production in 2014. Regarding Conga in Peru, the project continues to be suspended pending further analysis of the economic and technical impacts from the recently released report from the independent panel,” added Mr. O’Brien.
[1] Non-GAAP measure. See page 10 for reconciliation.
Newmont is maintaining its previously announced 2012 outlook for attributable gold and copper production of 5.0 to 5.2 million ounces and 150 to 170 million pounds at CAS of between $625 and $675 per ounce (on a co-product basis) and $1.80 and $2.20 per pound, respectively.
Newmont is also maintaining its 2012 attributable capital expenditure outlook of $3.0 to $3.3 billion, or $4.0 to $4.3 billion on a consolidated basis. However, this estimate assumes the development of the Conga project in Peru proceeds as anticipated in connection with our original 2012 outlook provided in January 2012. As previously disclosed, development of the Conga project was temporarily suspended in November 2011 and recommencement and future development remains subject to certain risks, including political and social risks, and uncertainties, including those relating to the Environmental Impact Assessment (“EIA”) review. The Conga project’s EIA, which was previously approved by the central government of Peru in October 2010 after an extensive public engagement process, was subject to a review by independent experts during the first quarter at the request of the central government. The results of the independent review were released last week and confirmed that the reviewed sections of the EIA met Peruvian and international standards. The Company is currently in the process of evaluating the recommendations contained in the independent report, and additional recommendations from the central government related to the report, to assess the impact on the project economics. The Company will reevaluate its capital expenditure outlook after completing that evaluation process and when the development schedule of Conga is more clearly defined. Should the Company be unable to continue with the development of Conga, the Company may reprioritize and reallocate capital to other development alternatives in Nevada, Australia, Ghana and Indonesia.

As previously announced, Newmont’s Board of Directors approved a second quarter 2012 gold price-linked dividend of $0.35 per share[2] based on the Company’s average realized gold price of $1,684 per ounce for the first quarter of 2012, an increase of 75% over the $0.20 per share dividend paid in the second quarter of 2011.
Operations

North America
Nevada – Attributable gold production in Nevada was 435,000 ounces at CAS of $617 per ounce during the first quarter. Gold production was consistent with the prior year quarter due to higher grade ore mined as Gold Quarry resumed production, offset by lower underground ore grade mined at Leeville and Midas.
Costs applicable to sales per ounce decreased 4% as higher underground mining and milling costs were more than offset by an inventory build in 2012 compared to a drawdown of inventory in 2011.
The Company continues to expect 2012 attributable gold production from Nevada of approximately 1.725 to 1.8 million ounces at CAS of between $575 and $625 per ounce.
La Herradura – Attributable gold production at La Herradura in Mexico was 54,000 ounces at CAS of $581 per ounce during the first quarter. Gold production increased 10% due to higher leach placement at Soledad-Dipolos and first production from the Noche Buena pit. CAS increased 49% from the prior year quarter due to higher employee profit sharing costs and Noche Buena commencing production.
The Company continues to expect 2012 attributable gold production from La Herradura of approximately 200,000 to 240,000 ounces at CAS of between $460 and $510 per ounce.

South America
Yanacocha – Attributable gold production at Yanacocha in Peru was 188,000 ounces at CAS of $458 per ounce during the first quarter. Gold production increased 27% from the prior year quarter due to higher mill throughput, recovery and grade, partly offset by lower leach production from La Quinua, Carachugo and Yanacocha. CAS per ounce decreased 21% from the prior year quarter due to higher production, partially offset by higher labor, diesel, and workers’ participation and lower by-product credits.
[2] Payable on June 28, 2012 to shareholders of record as of June 12, 2012.
The Company continues to expect 2012 attributable gold production from Yanacocha of approximately 650,000 to 700,000 ounces at CAS of between $480 and $530 per ounce.
La Zanja – Attributable gold production during the first quarter at La Zanja in Peru was approximately 13,000 ounces.
The Company continues to expect 2012 attributable gold production from La Zanja of approximately 40,000 to 50,000 ounces.

Asia Pacific
Boddington – Attributable gold and copper production during the first quarter at Boddington in Australia was 162,000 ounces and 14 million pounds, respectively, at CAS of $782 per ounce and $1.94 per pound, respectively. Gold ounces and copper pounds produced were consistent with the prior year quarter as 17% higher throughput was offset by 15% lower grade and 2% lower recovery. Gold CAS increased 31% due to processing lower grade ore, higher milling and mining costs, a higher proportion of costs allocated to gold, and a stronger Australian dollar. Costs applicable to sales per pound decreased 11% mainly due to lower costs allocated to copper.
The Company continues to expect 2012 attributable gold production of approximately 750,000 to 800,000 ounces at CAS of between $800 and $850 per ounce and attributable copper production of 70 to 80 million pounds at CAS of between $2.00 and $2.25 per pound.
Batu Hijau – Attributable gold ounces and copper pounds produced during the first quarter at Batu Hijau in Indonesia were 11,000 ounces and 21 million pounds, respectively, at costs applicable to sales of $913 per ounce and $2.00 per pound, respectively. Gold and copper production decreased 76% and 49%, respectively, due to lower throughput, grade and recovery as a result of processing lower grade stockpiled material as Phase 6 waste stripping continues. Costs applicable to sales per ounce and per pound increased 184% and 108%, respectively, due to lower production, higher labor and diesel costs, and increased waste stripping costs.
 The Company continues to expect 2012 attributable gold production of approximately 45,000 to 55,000 ounces at CAS of between $800 and $850 per ounce and attributable copper production to be approximately 80 to 90 million pounds at CAS of between $1.80 and $2.20 per pound.
Other Australia/New Zealand – Attributable gold production during the first quarter was 265,000 ounces at costs applicable to sales of $757 per ounce. Attributable gold ounces produced decreased 11% due to a planned mill shutdown at Waihi, mill maintenance at Kalgoorlie and a build-up of in-process inventory at Jundee and Kalgoorlie, partly offset by higher grade at Tanami. Costs applicable to sales per ounce increased 35% primarily due to lower production, a stronger Australian dollar, lower by-product credits, and higher diesel and royalty costs.
The Company continues to expect 2012 attributable gold production of approximately 980 to 1.03 million ounces at CAS of between $810 and $860 per ounce.

Africa
Ahafo – Attributable gold production during the first quarter at Ahafo in Ghana was 175,000 ounces at CAS of $568 per ounce. Gold production decreased 6% from the prior year quarter due to lower mill throughput and grade, partially offset by a reduction of in-process inventory and higher recovery. CAS per ounce increased 26% from the prior year quarter due to lower production and higher labor, diesel, and royalty costs.
The Company continues to expect 2012 attributable gold production of approximately 570,000 to 600,000 ounces at CAS of between $500 and $550 per ounce.

Capital Update
Consolidated capital expenditures were $720 million during the first quarter. Newmont is maintaining its 2012 attributable capital expenditure outlook of $3.0 to $3.3 billion, or $4.0 to $4.3 billion on a consolidated basis. Capital spending through the first quarter of 2012 has been lower than expected across the portfolio, due to temporary suspension of development at Conga, but is expected to increase throughout the year. For the remainder of the year, 60% of 2012 consolidated capital expenditures are expected to be associated with major project initiatives, assuming the development of the Conga project in Peru proceeds as originally anticipated, while the remaining 40% is expected to be sustaining capital.