Batu Hijau gold mine will start production in 1999

Batu Hijau gold mine will start production in 1999

SINGAPORE (Reuter): The chief financial officer of U.S. giant Newmont Mining Corp said yesterday the company's US$1.9 billion Batu Hijau mining project on Indonesia's Sumbawa island was expected to start production late 1999.

"We start construction in May... It should go into production late 1999," Wayne Murdy said.

Newmont's partner in the project is Japan's Sumitomo Corp, which has taken a 35 percent stake in the project.

He said low gold prices has not affected Newmont's overall exploration program, although smaller outfits were suffering.

"We're fortunate in that we are a low-cost producer," Murdy told Reuters with gold prices to just under US$325 an ounce, from more than $340 in July,

"We're the lowest-cost producer in North America," he said on the sidelines of a three-day gold conference in Singapore. "We're committed to exploration."

Newmont will spend $100 million this year in exploration and will probably allocate the same amount in 1998.

Coupled with the lingering impact of the Busang gold scandal in Indonesia, Murdy said in a speech to the conference "the decline in the gold price has dried up investment capital for many junior exploration companies and eliminated any thought of equity offerings by the majors".

In his speech, Murdy said the decline in gold prices wiped out about $3.5 billion of shareholder wealth.

"It is significant that stock prices for the North American companies with the largest hedge positions have done no better than those with limited hedges," he said.