Newmont CEO sees gold in range of $1,200

Newmont Mining Corp's new Boddington mine in Australia should produce 300,000 to 500,000 ounces of gold this year and account for almost 20 percent of the company's total production by some time next year, its chief executive said on Wednesday.

Richard O'Brien also told the Reuters Global Mining and Steel Summit that he sees gold trading in a range between $900 and $1,200 per ounce over the next few years, supported by lower industry output and inflation concerns.

"I will be surprised to see gold on average below $900 this year," O'Brien said. "If you take the highest gold price in the 80's and escalate it into today's dollars, you get a number around $2,000 an ounce.

"I don't see that particular number as being out there, but there is clearly upward mobility...and I do think we're in a trading range of $900 to $1,100 or $1,200 over the next several years."

The price of gold went through the $1,000 per-ounce barrier last month -- an 11-month high. But it has dropped back since then and was around $907 in London on Wednesday.

O'Brien said gold producers should see expanded profit margins this year as a result of the high gold price, while Newmont also will benefit from production starting-up of Boddington, in Western Australia.

Boddington will be biggest gold mine in Australia, with a 20-year mine life, and is expected to begin producing in the second half of this year, he said.

Newmont expects to produce 300,000 to 500,000 ounces there this year, O'Brien said, and be up to a rate of 1 million ounces per year sometime next year. This year, Denver-based Newmont, the world's second largest gold miner, estimates total gold sales of 5.2 million to 5.5 million ounces.

In addition, the cost of mining gold at Boddington will be around $300 per ounce -- one of the lowest costs in the world, O'Brien said.

Despite having based its 2009 estimates on a $750 gold price, O'Brien did not increase the company's production and sales estimates. "We're comfortable with what we have out there now."

Asked whether Newmont was looking for acquisitions, he said the key would be to grow production, like at Boddington, which Newmont took full possession of last year by buying Anglogold Ashanti's (AU.N: Quote, Profile, Research, Stock Buzz) one-third stake.

"We're looking at things that make us better not bigger," he said, adding that the company was looking at a number of junior and mid-tier range companies and also at joint ventures.

Newmont also has explored areas such as Turkey, eastern Europe and Papau New Guinea, with partners.

In Ghana, where it has one operating mine, Ahafo, Newmont is looking to secure reliable power sources before committing to developing a second mine, he said.