MAC: Mines and Communities

Newmont CEO Parries Environmental Attacks At Shareholder Meeting

Published by MAC on 2003-05-07

Newmont CEO Parries Environmental Attacks At Shareholder Meeting

Tom Locke, Dow Jones Newswires

7 May 2003

Denver - Newmont Mining Corp. (NEM) Chief Executive Wayne Murdy spent much of his time at the company's annual shareholders meeting in Denver Wednesday warding off attacks by environmental groups on the gold mining company's environmental and social policies.

Similar outcries at Newmont's annual meetings date back to at least 2000.

Diana Ruiz, a representative for the Berkeley, Calif.-based nonprofit group Project Underground, said that the Denver company was "creating destruction with every ounce" of gold produced.

Ruiz, who spoke out at last year's annual meeting, read opposition statements from Indonesian communities where Newmont has gold mines. Among other things, she asked for appropriate compensation to communities for Newmont's impact on land and water.

Murdy said that he would be glad to talk with her about the allegations and investigate them, as the company has in the past.

Project Underground also took Newmont to task for its operations in Peru, including a mercury spill in 2000. Murdy said that the company deeply regrets the spill, it has asked for independent health surveys, and there is "no evidence of any long-term health problems there."

He noted that the company has helped establish a jewelry-making operation in one area of Peru that is providing jobs to 1,000 local residents.

As for development of the Cerro Quillish gold deposit in Peru, Murdy said that "it's not a project for tomorrow." The company will produce a full environmental impact study first, he said.

The highest court in Peru ruled earlier this month that a complete environmental study would be necessary.

Another environmental group, Boulder, Colo.-based Global Response, asked Murdy to quit pressuring the government of Ghana for relaxation of environmental protections within protected forest reserves.

Murdy responded that Newmont has asked for relief from the government in Ghana on only one square kilometer of land for development of a gold operation.

"This is a classic tradeoff that society makes," he said.

Murdy noted that Newmont has "not made a decision to make a capital investment in Ghana." However, he also said in a prepared presentation that Ghana has the potential to become a core operating region for Newmont.

Murdy stressed that Newmont is making efforts to help the communities where it has operations, not only with jobs, but with social services such as schools.

At Newmont's annual meeting Wednesday, Chief Executive Murdy also reiterated previous guidance that he is confident that Newmont will be able to grow its reserves slightly in 2003.

Newmont was able to add enough reserves in 2002 to replace production-related depletion. In 2002, Newmont produced 7.6 million ounces of gold. In doing so, it consumed 9 million ounces, since recovery is not 100%.

By adding 9 million ounces in new reserves, it was able to keep total reserves flat. Excluding 3.7 million ounces from Newmont's equity interest in the TVX-Newmont Americas joint venture, year-end reserves were 83.2 million ounces, about the same as 2001 year-end pro forma reserves.

"We feel very good about the exploration program," said Murdy.

Murdy also said that Newmont's process of divesting non-core properties is largely complete. He thinks Newmont will have under $100 million in property sales in 2003, he said.

The company has faced some challenges on cash costs of production, Murdy said, because of the strength of the Australian dollar and higher fuel and power costs. But the company is focusing on bringing costs down, he said.

"Our focus right now is on bottom-line growth, not top-line growth," Murdy said.

Debt reduction remains a priority for the company, said Murdy. In addition, Newmont's board of directors continues to evaluate the company's dividends, he said, and the goal is to increase dividends over time.

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