Newmont Goldcorp faces Red Lake flood threat

Red Lake Gold Ore, Red Lake Mine, Ontario, Canada

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Newmont Goldcorp Corp. [NGT-TSX, NEM-NYSE] announced Sunday July 7 that partial underground operations at its Red Lake, Ontario operations have been on pause since July 3. However, the company said it expects those operations will partially restart on July 9, 2019.

A partial restart indicates that a portion of the mine will remain suspended with no timeline provided for a restart. Newmont Goldcorp did not indicate which portion of the mine will remain suspended nor did it speculate on the potential production impact.

Underground mining was proactively paused to allow for the installation of additional controls to further protect workers in the event that water entered the mine through an historic stope at the nearby Cochenour mining complex, which is part of the Red Lake operations.

“Processing and other surface operations at the mine have continued uninterrupted and underground workers were temporarily reassigned to jobs at the mill and other surface facilities,” the company said in a press release on July 7, 2019.

“The temporary pause in underground mining was proactively implemented following an in-depth review of an historic stope at Cochenour,” the company said. “Although there were no known changes to conditions at the mine, the decision to temporarily pause underground operations was taken to strengthen controls protecting the safety of Red Lake’s workforce.”

The Red Lake area is about 100 km from the Manitoba border and has produced over 29 million ounces of gold since 1949. It is home to Newmont Goldcorp’s Red Lake and Campbell underground mining and processing operations, which was expected to produce 235,000 ounces of gold in 2018, employing roughly 1,000 employees and contractors.

Ore from Red Lake Gold Mines is hoisted up either the Balmer or Campbell shafts and then processed at the Campbell mill using a conventional crushing and grinding circuit with a gravity concentration of free-milling gold or carbon-in-pulp for refractory gold.

Gold recoveries average 94%.

The Red Lake operations were owned by Goldcorp when the company was acquired by Newmont Mining in an all-stock merger deal worth $10 billion.

The combined company, called Newmont Goldcorp, now has operations in the Americas, Australia and Ghana, producing between 6.0 million and 7.0 million ounces of gold annually.

In a recent presentation to investors, the company said it expected to produce 7.0 million ounces in 2019 at an all-in-sustaining cost of US$945 an ounce, increasing to 7.4 million ounces in 2020, when the all-in-sustaining cost is expected to be US$935 an ounce.

Newmont Goldcorp shares fell 0.50% or 25 cents to $49.92 on Monday in light trading activity. The shares are currently trading in a 52-week range of $40.01 and $51.

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