Newmont Indicates Potential for Favona Ore Extensions

Newmont Mining Corporation said in the international exploration section of its first quarter report to March 31, that its Favona underground gold mine under development near Waihi has potential for extending its orebody.

“In New Zealand, down dip offsets at Favona indicate potential orebody extensions.” Newmont commented in its report. The report also said that sales of gold from the openpit Martha gold mine at Waihi had decreased 17%. In the first quarter of 2005 it had 44,100 oz compared to 36,700 oz in the same period of 2006.

Newmont said the drop in gold production was mainly due to a 19% decrease in mill ore grade and a 9% decrease in ore milled. This was partially offset by higher mill recovery rate of 94.4% compared with 92.9% in the first quarter of 2005.

Sales per ounce increased by 6%.

Meanwhile Newmont Waihi Gold, the New Zealand subsidiary of Newmont Mining, announced on its website newsletter Update last month, that it has been granted an Extension of Land (EOL) to its Favona Mining Permit 41808.

Newmont Waihi Gold said the land within this (1094 hectare) extended permit area was already held by the company under a number of different exploration permits that had various expiry dates.

Keen to retain security of tenure so that its exploration programme can continue in this area, the company now has a single mining permit assured until 2029, when the Favona mining permit is due to expire.

“From the exploration work completed to date, there are some areas of potential interest, so we sought the mining permit to provide a greater level of protection for our exploration investment.” Newmont Waihi Gold general manager, Adriaan van Kersen said in the newsletter:

The company said in the newsletter that the change from several exploration permits to a single mining permit is a change in name only and will not have any effect on landowners and occupiers in the area of interest. Even with a landowner's permission, the mining permit does not allow Newmont to start mining. Because mining activities have potential impacts on land, air and water, Newmont would first need to obtain Resource Management Act consents.

Mr van Kersen confirmed in the newsletter that Newmont had not lodged any resource consent applications to mine within the new area covered by the permit.

“The grant of this permit does not signal an imminent intention to mine,” he said.

“The mining permit simply replaces existing exploration permits, and landowners and occupiers within the area retain all the same, existing property rights.”

“The company is specifically looking for areas of high grade deposit suitable to mine by underground methods - just like the Favona project. If at some time in the future we find a viable deposit that we want to mine, we would apply for resource consents,” he said.

“That would be a process in which anyone with an interest in the issue could become involved.”

“We announced in early 2004 that we wanted to remain mining in the region for a long time, and have significantly increased our exploration activity in an attempt to turn this vision into a reality,” Mr van Kersen said.

Newmont Waihi said it spent $9 million on exploration during 2005, which is a record for the Waihi area. The company plans to spend a similar amount this year.

“The sensible business decision is to protect this magnitude of investment by securing long-term access to any minerals we discover without having to worry about expiry of our permits,” he said.

In another Update item, Newmont Waihi Gold reported that decline tunnel giving access to the planned Favona mine had passed the 1000m milestone in March.

Sources: Newmont Mining Corp quarterly report to March 31, 2006 and Newmont Waihi Gold’s website newsletter Update.