Boddington set to mine its first million ounces
The Age
Saturday July 25, 2009
AUSTRALIA'S biggest and costliest goldmine to build - the $3.5 billion Boddington mine in the Darling Ranges, south-east of Perth - will produce its first gold next month, slightly behind schedule.Owned by US gold giant Newmont, the mine is expected to average more than 1 million ounces of gold in annual production - worth $1.16 billion at current prices.When the project was first talked about in the late 1990s, its development as a 500,000 ounce-a-year producer was estimated at $400 million.Since then, the gold resource has got bigger, the scale of the project has increased and gold prices have trebled. Ownership of the project has also changed from a joint-venture that once included Melbourne-based Newcrest and South Africa's AngloGold to sole ownership by Newmont.Once full production is achieved after a ramp-up phase, the mine will boost Australia's gold production by 14 per cent, helping to drag the industry up from its 20-year lows in production. Before Boddington reaches full capacity, the battle for the title of Australia's biggest goldmine will continue to be fought out on a quarterly basis by the Newmont/Barrick "super pit" at Kalgoorlie and Newcrest's Telfer mine, also in Western Australia. They average about 650,000 ounces each annually.Boddington is based on a 20.1 million ounce reserve and is expected to have a mine life of more than 24 years, with annual production rates to fall from the 1-million-ounce level in later years.The project's massive cost partly reflects the fact that the bulk of its construction occurred during the resources boom, which sent the prices of materials and labour skyrocketing before the global financial crisis hit last September. But with forecast production costs of $US300 an ounce (after byproduct copper metal credits), the mine will be capable of a rapid payback of the capital outlaid. It should enjoy a cash margin of $US650 an ounce at current gold prices or $US650 million a year.Newmont told the US market that the first of the two processing mills at Boddington had started and it would take 12 months to ramp up to full production from all four mills.First production in August represents about a one-month delay, with Newmont blaming lower productivity associated with a slowdown in the contractor labour market, as well as wetter than expected weather conditions.Gold sales from Boddington for calendar 2009 are now forecast to be in a range of 200,000 to 300,000 ounces, down from a previous forecast range of 375,000 to 450,000 ounces.The start to production represents a second coming for Boddington. A shallow and low-grade laterite gold resource covering the ore body was previously mined in the 1990s.
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