Peru's Yanacocha Gold Output to Drop Sharply in 5 Years
08/17/2012| 02:47pm US/Eastern
LIMA, Peru--The sprawling Yanacocha mine in northern Peru is currently expected to produce an average of about 1 million ounces of gold a year over the next five years before production drops off sharply, the chief executive of the company operating the mine said.
"The existing mining operations, from a height of about 3.25 million ounces produced in 2005, will be averaging down to about a million ounces a year for the next five years or so and then really dropping off after that," Newmont Mining Corp. (>> Newmont Mining Corp) chief executive Richard O'Brien said Friday in an interview.
"Mining will stop in about five years, then we'll begin processing. At the same time we will be working on final reclamation, and continuing to do some exploration with the hopes that we will find some additional reserves," he added.
The Yanacocha mine, run by Minera Yanacocha, began producing in 1993, It is forecast to produce up to roughly 1.4 million ounces of gold this year.
Mr. O'Brien said that over the past several years the company has mined about 165 million tons a year, down from 200 million tons in 2005.
"When we get out to 2015 or 2016, it will be below 75 million tons, so we will need less trucks, less shovels. That will hopefully be offset by some successful exploration and maybe we will get into more of the sulphide deposits instead of the oxide deposits that we have been in," he said.
Those sulphide deposits could contain more copper.
"We don't currently mine copper at Yanacocha so it would be a different processing circuit. With our hopeful exploration results and the ability to move copper to a new circuit we could actually re-energize Yanacocha at some point. This is very similar to what we see in our operations in the United States," he added.
Minera Yanacocha, 51.35% owned by Newmont, is also developing the Minas Conga copper and gold project, just east of the Yanacocha open-pit complex. Work on Minas Conga has been hobbled by protests by antimining activists.
Mr. O'Brien said with what is going on with that project, the company is very mindful of putting capital to work.
"We are going to want to ensure that we have continued social acceptance and community acceptance," he said.
Peru's Compania de Minas Buenaventura SA (BVN, BUENAVC1.VL) has a 43.65% stake in Minera Yanacocha. The World Bank's International Finance Corp. holds the rest.
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