Newmont Goldcorp Corp., [NGT-TSX, NEM-NYSE] said Monday it is safely ramping up operations at its Penasquito mine in Mexico. The move follows the lifting of an illegal blockade and the establishment of a dialogue process sponsored by the national government.
Concentrate shipments from the mine, as well as the delivery of supplies to the site, have resumed and workers are going through orientation sessions to ensure production begins in a safe and orderly manner.
Newmont Goldcorp shares advanced on the news, rising 0.60% or 29 cents to $48.26 on Monday. The shares trade in a 52-week range of $40.01 and $48.52.
The Penasquito Polymetallic mine is a key asset within the Newmont Goldcorp portfolio. It ranks as the fifth largest silver mine in the world and the second largest in Mexico. It is located in the north-eastern corner of the State of Zacatecas and is wholly-owned by Newmont Goldcorp.
The mine produced 272,000 ounces of gold in 2018 and directly employs more than 6,000 people, while supporting another 20,000 indirect jobs in the region.
During the temporary suspension of operations, which began on April 29, 2019, the mine used the downtime to bring forward maintenance on a variety of systems and equipment.
As part of the deal, Newmont Goldcorp is committed to good-faith dialogue with the trucking company and the San Juan de Cedros community (one of 25 neighbouring communities) to achieve a fair and enduring resolution to contract and water availability issues.
Penasquito has enhanced water availability to neighbouring communities through a number of projects, including water treatment plants, new wells, pipelines and water trucks. News of a deal having been signed and the blockade lifted came late Friday afternoon (June 14, 2019). This was subsequently confirmed by local news reports over the weekend in addition to the press release from Newmont Goldcorp. on Monday morning.
Following the approval of Newmont Mining’s $10 billion takeover of Goldcorp., the combined company, now known as Newmont Goldcorp, ranks as the world’s biggest gold producer with assets across the Americas, Africa and Australia.
By combining their operations, the duo are seeking steady profitable gold production and targeting between 6.0 million and 7.0 million ounces of steady gold production over a decades long time horizon.
The combined entity will also have the largest gold reserves and resources in the gold sector.
However, Newmont Goldcorp is expected to shed up to $1.5 billion worth of assets over the next two years, enabling it to function with a more reasonable size and stable production level. It will be looking to achieve up to $100 million in annual pre-tax synergies.