Gold mining giant Newmont Mining Corporation’s (NEM) fourth-quarter 2013 adjusted earnings of 33 cents a share dropped 70% from the year-ago quarter’s earnings of $1.11 a share and also missed the Zacks Consensus Estimate of 42 cents.
On a reported basis, the company posted net loss from continuing operations of $1,174 million or $2.34 per share in the quarter versus net earnings of $645 million or $1.30 per share a year ago. The bottom line is impacted by asset impairment charges as a direct result of changes in gold pricing.
Newmont’s revenues fell nearly 12.4% year over year to $2,169 million in the quarter but beat the Zacks Consensus Estimate of $2,101 million.
For full-year 2013, adjusted earnings were $1.40 per share, down 62% from $3.71 per share recorded in 2012. The results missed the Zacks Consensus Estimate of $2.07 Reported net loss from continuing operations totaled $2,523 million or $5.06 per share versus an earning of $1,885 million or $3.78 per share in 2012.
For full-year 2013, revenues decreased roughly 16% to $8,322 million from $9,868 million in 2012 but surpassed the Zacks Consensus Estimate of $8,242 million.
Newmont’s attributable gold and copper production was 1,448 million ounces and 38 million pounds in the quarter, up 16% and 9% year on year, respectively. Attributable gold and copper production was 5,065 million ounces and 144 million pounds in 2013, up 2% and 0.7% year on year, respectively.
Gold and copper cost applicable to sales (CAS) were $744 per ounce and $4.02 per pound in the reported quarter up 4.8% and 54% year over year, respectively. Gold and copper cost applicable to sales (CAS) were $761 per ounce and $4.42 per pound in 2013, up 12.4% and 89% year over year, respectively.
All-in sustaining cost (AISCF) was $1,032 per ounce in the quarter, down 14% from the previous-year quarter. All-in sustaining cost (AISCF) was $1,104 per ounce in 2013, down 6% from the previous-year.
Gold production at the Nevada mine increased 12% year over year to 535,000 ounces in the reported quarter due to higher tons and grade at Mill 6, higher grade at the Juniper mill and higher grades at Phoenix and also higher leach production at Carlin North Area and Emigrant. Production at La Herradura decreased 54% year over year to 22,000 ounces due to the suspension of the explosives permit related to a land dispute which resulted in an impairment to the value of ore on leach pads.
Gold production at Yanacocha in Peru slipped 21% year over year to 95,000 ounces on account of planned lower gold production from leach pads due to lower grades.
Gold and copper production at the Boddington mine in Australia decreased 17% and 16% year over year to 179,000 ounces and 16 million pounds, respectively, in the reported quarter due to lower ore grade and throughput, partly offset by higher recovery.
Other Australia/New Zealand
Gold production at the mines in Other Australia/New Zealand zone increased 24% year over year to 304,000 ounces in the reported quarter, due to higher ore grade and higher mill throughput.
At the Batu Hijau mine in Indonesia, gold production decreased 14% year over year to 6,000 ounces in the reported quarter on account of lower ore grade for gold. Copper production of 22 million pounds increased 38% from the previous-year quarter due to higher ore grade for copper and higher copper metal recovery.
Attributable gold production at Newmont’s Ahafo mine in Ghana went up 32% from last year to 162,000 ounces based on higher ore grade and mill throughput. The Akyem project in Ghana started its commercial production in Oct 2013 and its attributable gold production for the reported quarter was 129,000 ounces.
Newmont had cash and cash equivalents of $1,555 million as of Dec 31, 2013, down 0.4% from $1,561 million as of Dec 31, 2012. The company’s long-term debt decreased roughly 2.3% year over year to $6,145 million.
Newmont’s gold production expectation for 2014 is 4.6–4.9 million ounces and for 2015 and 2016 it is anticipated to be 4.8–5.2 million ounces. Copper production for 2014 is anticipated to be in the range of 95–110 million pounds, and for 2015, it is expected to be in the range of 145–160 million pounds. For 2016, it is expected to be in the range of 125–140 million pounds.
Newmont continues to expect gold and copper CAS of between $740 and $790 per ounce and $2.00 and $2.25 per pound, respectively, in 2014. Copper CAS is anticipated to improve as the Batu Hijau mine plan progresses, reaching higher grade ore.
In 2014, Newmont will be investing roughly $1.3 to $1.4 billion in consolidated capital expenditures allocating roughly 90% to sustaining capital. Total capital expenditures are expected to reduce by 25% in 2014 from 2013.
Newmont will be prioritizing projects that create value, lower cost and extend mine life, such as the Turf Vent Shaft project in Nevada that will strengthen its portfolio in 2014.The company also has plans of revitalizing Tanami and Waihi mines.
Improving economic profiles for a number of organic growth projects are underway. Decision on the development of the Merian project in Suriname is expected in the second quarter of 2014. The company will also be evaluating all its projects and expenditures in order to protect its balance sheet and contribute more to free cash flow.
Newmont currently carries a Zacks Rank #5 (Strong Sell).
Other companies in the gold mining industry worth considering are Franco-Nevada Corp. (FNV), Pretium Resources Inc. (PVG), Gold Fields Ltd. (GFI). While Franco-Nevada carries a Zacks Rank #1 (Strong Buy), Pretium Resources and Gold Fields hold a Zacks Rank #2 (Buy).