NEM: Board Approves Low-Cost, High Return Ahafo Expansion Projects- Reaffirm Buy

Summary:

Newmont Board has reached an investment decision to develop its Subika underground mine and Ahafo mill expansion in Africa.Together, these two projects, for a combined capital spend of $300-$380 million, would increase Newmont's Ahafo production by 200,000-300,000 ounces and reduce costs applicable to sales (CAS) by $150-$250/oz for the first five years. In Figures 1 and 2, we estimate IRR to be in the low 20s for these two projects at $1,200/oz gold price. Newmont remains a top pick within our universe with at target of $45.