World No. 2 gold miner Newmont's output will be slightly down in 2006 and 2007 before it begins to rise in 2008, Chief Executive Wayne Murdy said, adding that he expected gold prices to remain strong for years.

"Generally, our production is down slightly this year from last year. It will be slightly down to flat next year and then we start to get into growth production mode," Murdy told Reuters from his Denver, Colorado, headquarters on Thursday.

Output at some Newmont mines was slipping due to depletion of reserves, and the firm was waiting for new mines to open, Murdy said in a telephone interview with Reuters in Ghana, where the company poured its first gold at a new mine this week.

In February, Newmont forecast consolidated 2006 gold sales of 7.98 million ounces at a cash cost of $283 an ounce, down from 8.6 million ounces in 2005 at a cost of $236 per ounce.

Murdy said he expected global production to remain flat or fall, helping support gold prices which hit a 26-year high of $730 a troy ounce on May 12.

"We feel there are a lot of reasons why the gold price has moved so positively ... it has to do with factors such as the growth in investment demand, growth in traditional demand. As a total industry, production is going to be flat to down globally," he said.

"We feel the factors that support the gold price continue to be in place, we expect the gold price to continue to be strong for a number of years," he added.

Spot gold was $635.20/90 per ounce at 1330 GMT on Friday, up more than $3 from Thursday's New York close.

But Murdy said consumers were not put off by high prices.

"Demand numbers continue to be very strong. People like to buy things which are going up in price. The jewellery side last year was up globally by 4 percent," he said.

LOOKING FOR ACQUISITIONS

Newmont lost its place as the world's top gold producer when Canada's Barrick Gold Corporation took over rival Placer Dome this year, taking the new group's projected 2006 output to 8.6-8.9 million ounces.

Newmont's reserves are at a record 95 million ounces but it hopes to increase that, maybe through acquisitions, Murdy said.

"We continue to have good exploration results, we think we can continue to grow our reserve base," he said. "We are always looking at acquisition opportunities ... It is an important part of our strategy."

A key plank in expanding Newmont's resources has been its investments in Ghana where it has some 18 million ounces of reserves, or nearly 20 percent of its total. Newmont poured the first gold this week at its 500,000 ounce-a-year Ahafo mine.

The mine benefited from a $125 million loan from the World Bank's International Finance Corporation (IFC), despite dissent within the IFC's board over its environmental impact.

"If you look at development in any country, there is always trade offs. A lot of the time there will be displacement, that is the judgement the government has to make. For people to say the costs are greater than the benefits, I would question their motives," Murdy said.

Newmont was actively exploring elsewhere in Ghana, Africa's second biggest gold producer after world No.1 South Africa, and favoured expansion there rather than elsewhere on the continent, he added.