newmont mining 2_Cap_Eff_Final


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newmont mining 2_Cap_Eff_Final

  1. 1. Capital Effectiveness & Project Development Guy Lansdown, Senior Vice President Safety, Project Development and Technical Services Tom McCulley, Vice President, Newmont Technology Limited, 1 Boddington Project
  2. 2. Agenda Capital Effectiveness Program Overview Program Overview Stage Gate Process Business Opportunity Creation Business Opportunity Delivery Early Stage Opportunities Business Opportunity Creation Project Pipeline Hope Bay Peru: Conga Ghana: Akyem & Ahafo North Phoenix: Copper Leach Batu Hijau: 3rd SAG Mill Line & Pit Water Shaft Major Business Opportunities in Delivery Nevada Power Plant Yanacocha Gold Mill Boddington February 8, 2008 2
  3. 3. Capital Effectiveness & Capital Effectiveness Major Projects Program Overview Russell Ball, Senior Vice President and Chief Financial Officer February 8, 2008 3
  4. 4. Capital Effectiveness Program Overview Background Effective means of managing a larger project and investment pipeline Highlights Stages for project work and deliverable reviews Gates for Executive Decisions and Funding Requests Governing policy regardless of project scope or scale 1 Strategic planning & Benefits capital allocation 2 Portfolio optimization Optimization of investment opportunities Efficient and effective delivery of information Project development and execution 3 “Right Decisions at the Right Time” Detailed Project scope and Project Project engineering and design execution ramp-up contracting Reliable Business Case outcomes 4 Capabilities & Structure Systems Processes mindsets February 8, 2008 4
  5. 5. Capital Effectiveness Stage-Gate Process Gate 1 Gate 2 Gate 4 Gate 3 Advance viable Determine if a Select a single Ensure single business Business Case option to achieve option is opportunities exists Business Case optimized, predictable and competitive Stage 1 Stage 2 Stage 3 Stage 4 Execution Operations Gate Gate Gate Gate Gate Gate Gate Gate Business Opportunity Business Delivery Opportunity Creation Stage Gate Defined work requirements Determine if the investment performed by various aligns with Newmont’s cross functional groups Strategy & Objectives February 8, 2008 5
  6. 6. Capital Effectiveness Business Opportunity Creation Purpose Value creation Evaluation of creative andinnovative options Development of strong business cases Highlights Focus on Business Objectives versus Project Objectives Single point accountability leveraging consistent cross functional teams Applies to internal and external opportunities for consistent portfolio management Benefits Business cases align with regional and corporate business strategies Standardized processes and sharing of “best practices” February 8, 2008 6
  7. 7. Capital Effectiveness Business Opportunity Delivery Purpose Focus on achieving business results through project execution Fast ramp up to delivering on business objectives Highlights Focus on Project Objectives that achieve Business Objectives Standard work processes that align directly with Stage Gate Process Single point of accountability and dedicated cross functional teams Implementation of Value Improving Practices (VIP) Front End Loading of work prior to project authorization Operational Readiness Benefits Better project definition prior to full funds authorization Efficient and effective project management Projects seamlessly transition into operating phase February 8, 2008 7
  8. 8. Capital Effectiveness & Early Stage Opportunities Major Projects Russell Ball, Senior Vice President and Chief Financial Officer February 8, 2008 8
  9. 9. Business Opportunity Creation Project Pipeline Several Early Stage Gold and Copper Internal Opportunities Only Projects Include Potentially Economic Material Inventories 30-40 million ounces gold 5-10 billion pounds of copper 100-200 million ounces silver Larger Projects Include Yanacocha district sulfides Nassau Akyem Hope Bay Additional Interests in Fort ala Corne, Gabriel and Euronimba February 8, 2008 9
  10. 10. Hope Bay Business Objectives Integrating Miramar into Newmont Deliver near-term exploration results Maintain engaged project team and positive community and government relations Develop a reliable business case with earliest possible production Project Status Rescheduling and assessing Miramar’s Doris North Stage 2 studies underway Evaluating multiple options to optimize asset Developing infrastructure on site Establishing community and regional presence Building cross functional project team February 8, 2008 10
  11. 11. Peru: Conga Business Objectives Sustain regional production and presence Identify additional opportunities Deliver a reliable business case balanced with earliest possible production Reserves (Newmont): 6.1 million ounces of gold 1.7 billion pounds of copper Status Stage 3 study underway Permitting activities underway Building cross functional teams Development decision expected in 2008 February 8, 2008 11
  12. 12. Ghana: Ahafo North and Akyem Business Objectives Grow regional production Maintain positive employee, community and governmental relations Deliver a reliable business case balanced with earliest possible production Reserves Akyem: 7.7 million ounces of gold Ahafo North: 3.2 million ounces of gold Status Stage 3 study for Ahafo North project underway Stage 2 study for Akyem project underway Permitting activities underway Building cross functional teams Akyem development decision expected in 2008 February 8, 2008 12
  13. 13. Phoenix: Copper Leach Business Objectives Reduce Phoenix operating costs Increase reserves Maximize use of Phoenix and Nevada Infrastructure Deliver a reliable business case balanced with earliest possible production Phoenix Reserves 7.6 million ounces of gold 740 million pounds of copper Project Status Stage 3 study underway Main SXEW Permitting activities underway Plant Area Analyzing options Development decision expected in 2008 February 8, 2008 13
  14. 14. Batu Hijau: 3rd SAG Mill Line & Pit Water Shaft Business Objectives Reduce operating costs Increase Cu and Au reserves and production Deliver a reliable business case balanced with earliest possible production Batu Hijau Reserves (Newmont): 4.2 million ounces of gold 4.1 billion pounds of copper Status Stage 3 studies underway Pit Water Shaft 3rd SAG Mill Line Securing production slots for long lead items Assembling cross functional project teams February 8, 2008 14
  15. 15. Capital Business Major Effectiveness & Major Projectsin Delivery Opportunities Russell Ball, Senior Vice President and Chief Financial Officer February 8, 2008 15
  16. 16. Nevada Power Plant 12/31/2007 Status Business Objectives Reduce NV operating costs by approximately $25 per ounce Preserve gold reserves Power Production 200MW, coal fired ~ 150MW consumed by NV operations Remaining power sold Project Metrics Safety – TRIFR: 0.25 Capital: $620 - $640 million Progress: 95% complete Start-up: On track for mid 2008 First Fire on Coal: Completed January 2008 February 8, 2008 16
  17. 17. Yanacocha Gold Mill 12/31/2007 Status Business Objectives Prepare for complex ores within region Efficiently exploit resource potential Production (100%) Gold annual average: 400 – 500 thousand ounces CAS life of mine average: $250 – $300/oz Project Metrics Safety – TRIFR: 0.77 Capital: $250 - $270 Million Progress: 96% complete Start-up: On track for mid 2008 February 8, 2008 17
  18. 18. Boddington 12/31/2007 Status Business Objectives Develop long life operation in AAA country Increase future reserves Create long term stable cash flows Current Reserves (Newmont): 11.1 million ounces of gold 1.0 billion pounds of copper Production First Five-Years (100%) Gold annual average: 950 – 1,050 thousand ounce Copper annual average: 30 – 35 thousand tones Project Metrics Safety – TRIFR: 1.21 Capital (Newmont): $1.4 to $1.6 billion Progress: 62% complete Start-up: On track for late 2008 / early 2009 February 8, 2008 18
  19. 19. Boddington 12/31/2007 Status Operations Exploration upside locally and in district Good experienced operations team onboard Operating costs agreements in place Owner mining well underway Plant modeled extensively Commissioning – benchmarked ramp-up to full production Attractive work location – close to Perth and beach towns Good community support for project February 8, 2008 19
  20. 20. Conclusion Development and Investment Decision Making Consistent approach to project development and investment decision making Portfolio management for resource and investment planning Opportunities Project pipeline focused on reserve/ production growth and CAS reduction Emphasis on optimizing operation efficiency and value creation Approach Focus on Corporate Strategy Integrated with Business and Regional Strategy Standardized project work processes and governance Manage full project life-cycle through delivery February 8, 2008 20
  21. 21. Questions & Answers 21