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Newmont (NEM) Approves Ahafo North Project, Boosts Portfolio

Newmont Corporation’s NEM board recently approved the advancement of the Ahafo North Project to the execution stage. The project, exceeding the required internal rate of return (“IRR”), will be bringing profitable production from the best un-mined gold deposit in West Africa.

The Ahafo North Project includes four open-pit mines and the setting up of a stand-alone mill. The construction is expected to complete in the second half of 2023. At the current gold prices, production from the mine is expected to deliver more than 30% IRR.

It will also lead to the creation of approximately 1,800 jobs, with more than 550 permanent roles. The company aims to focus on the key aspect of achieving gender parity in the workforce after the commencement of operations.

There have been considerable engagements with traditional leaders, local and regional government agencies and also public stakeholder engagement meetings by the company. Stakeholders have backed the project’s infrastructure plans and permits necessary to begin construction.

The company remains dedicated to maintaining its stakeholder interaction by providing regular updates as the project proceeds. This will strengthen its social acceptance.

The full scope of funding will be deployed to high-impact activities, including but not limited to tasks like finalizing engineering and EPCM services, relocating of the national highway and support of additional resettlement activities, constructing and commissioning a 3.7-million-ton per annum plant, constructing a Tailings and Wastewater Management Storage Facility, and long-lead sourcing including the acquisition of 14 CAT 770 haul trucks.

Newmont noted that the project will expand its existing footprint in Ghana and add more than three million ounces of gold production over the initial 13-year mine life. It is committed to sustainably develop and operate the project to add value to its stakeholders.

Shares of Newmont have declined 3.8% over a year against the industry’s rise of 26%. Its earnings growth rate for the current year is pegged at 25.6%.

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In its first-quarter earnings call, the company said that it expects attributable gold production of 6.5 million ounces, gold cost applicable to sales (CAS) to be $750 per ounce and all-in sustaining costs (AISC) to be $970 per ounce. It also foresees an increase in gold production and is undertaking investments in its operating assets and other growth prospects.

Zacks Rank & Stocks to Consider

Currently, Newmont carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space include Glencore PLC GLNCY and Rio Tinto Group RIO, both sporting a Zacks Rank #1 (Strong Buy), and BHP Group BHP, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Glencore has a projected earnings growth rate of 296.7% for the current year. The company’s shares have appreciated 82.9% over a year.

Rio Tinto has a projected earnings growth rate of 124.3% for the current year. The company’s shares have grown 32.6% over a year.

BHP has a projected earnings growth rate of 192.5% for the current year. The company’s shares have gained 38.8% over a year.

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