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Hope Bay put on hold
Gold property operations limited to care and maintenance while Newmont undergoes company-wide reviewThandiwe Vela Northern News Services Published Monday, February 6, 2012
The world's largest gold producer announced last week that the Doris North and Hope Bay belt projects are moving into care and maintenance mode indefinitely while the company conducts a strategic review of its global project development options. "We don't know how long the review will take," said Chris Hanks, vice-president of environment for Hope Bay Mining Ltd.. "It's an ongoing evaluation of Newmont's global opportunities and where it wants to place its capital to maximize shareholder value." Hope Bay is one of 30-odd international projects in the Newmont pipeline and "right now, it is just not as high against other projects which are getting funded," Hanks said. "But that can change at some point," he added. "Nunavut's got very attractive geology and Hope Bay is a very attractive belt. But the costs of working there are very high and it just makes the up-front capital it takes to get to production not as competitive as other places might be." The Hope Bay belt is host to up to nine million ounces of gold potential. The original purchase price for the project was about $1.5 billion and in the past four years Newmont has spent roughly another half-billion dollars on developing the project – pegging its total investment so far at about $2 billion. While the current care and maintenance program is about the shorter term competition for capital, Newmont is looking at ways it can improve the competitiveness of the Hope Bay property in the long term, Hanks said, including a second phase for the belt currently before the Nunavut Impact Review Board. Phase two positions Doris North as the starting mine in a development sequence of mines, including the Madrid and Boston gold deposits. In a letter to the review board dated Jan. 31, the company requests the board continue to process the regulatory applications relating to the Hope Bay belt project expansion, and modifications to the Doris North mine water license. "The (Nunavut Impact Review Board's) continued attention to these applications will support project development should the Doris North and Hope Bay belt projects be brought out of care and maintenance at a future date," the letter states. Newmont is currently working through how much funding it will apply to care and maintenance of Hope Bay, which will include demobilization and shutting down its camp. While the company will try to keep costs as low as possible, the goal in care and maintenance is to continue operating the facility safely, keeping it environmentally sound, meeting all regulatory requirements and other obligations to groups like the Kitikmeot Inuit Association, Hanks said. Charlie Evalik, president of the Kitikmeot Inuit Association, said communication between Newmont and the association has always been open, and the board was made aware of a possible slowdown of Hope Bay activity during a meeting in January. While the Kitikmeot has several resource development projects ongoing on Inuit-owned lands, Evalik said the association has some short-term concerns in light of the Hope Bay project postponement. "All projects in Kitikmeot are important, and it will have some impact in terms of our employment, training and contracting opportunities," Evalik said. At any given time on site the project had more than 200 people, including an average Inuit beneficiary employment of 142 people per month. The company is still working on how much the employment will be reduced during care and maintenance. Further details with respect to the length of the care and maintenance period is expected at the end of the month. Shares of Colorado-based Newmont Mining Corp. closed at $62.65 on Wednesday on the Toronto Stock Exchange.
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