Newmont digs in for future

Newmont has drilled 70m into the Correnso mine in Waihi, which has raised concerns about blasting work under some residents' homes. Photo / Correnso

Mining company tunnelling $1 billion Correnso mine in Waihi despite falling gold prices

Newmont is 70m into tunnelling for its $1 billion Correnso mine in Waihi and says it's "business as usual" at its Waihi mines despite falling gold prices, which have forced this country's other big miner to cut back production and lay off staff.

While OceanaGold is scaling back at its Macraes site in East Otago, Newmont Waihi Gold spokesman Kit Wilson said the company was continuing its exploratory work on the massive underground Correnso mine and staff numbers were stable at around 385.

"We can't control the gold price. Like any prudent business we're keeping a close eye on our input costs but currently it's business as usual for us," Wilson said.

Denver headquartered Newmont is one of the largest gold producers in the world, with about 40,000 employees.

Wilson said at Waihi the company had three mines operating - the Martha open pit, the underground Trio mine and it had started the exploration and development drive of the controversial Correnso project under houses in the east of the Coromandel town.

Permission for the project was granted in October last year and the 5m by 5m exploratory tunnel began just before Christmas.

The company has said it would spend hundreds of millions of dollars tunnelling to a depth of 350m beneath east Waihi.

The capital spend to bore 13.5km of truck-size tunnels is estimated at more than $200 million.

It was not known how long it would be before mining could start.

"The exploration drive runs parallel to the ore body as we know it and we're putting a series of small drill cuddies off it to allow us to fully investigate the size and shape of the ore body," Wilson said.

"As we've learned from previous experience the ore bodies here tend to be quite variable."

The new mine has upset some residents concerned about blasting work under their homes and strict conditions have been imposed.

As part of permission for production blasting, the company must offer to buy the affected property at market value or, if the owner prefers, make an ex gratia payment equal to 5 per cent of its value.

If a property owner elects to sell at market value they will also get an "inconvenience payment" and help with legal and moving costs.

Gold hit record highs of about US$1900 an ounce in August 2011, but is now trading at about US$1225.

While the high New Zealand dollar generally hurts the returns from exported gold, miners do get some relief for imported fuel and materials used for building mines such as steel.

Wilson said Newmont was more concerned about the three-year average gold price when planning new developments.

"When you're planning a gold mine which is going to take 10 years to get up and running it's the rolling average that's more important than the gold price on any given day," he said. "But I think it's fair to say like every gold mining company in the world we are looking very closely at the gold price."