Newmont Misses Estimates in 1Q
Gold mining giant Newmont Mining Corporation’s (NEM) first-quarter 2013 adjusted earnings of 71 cents a share were down 38.3% from last year’s earnings of $1.15, missing the Zacks Consensus Estimate of 78 cents.
On a reported basis, the company posted a profit from continuing operation of $315 million or 63 cents per share in the quarter, down 44% from $561 million or $1.11 per share a year ago. The bottom line was hit by lower grade and recovery at Carlin, lower grade at Twin Creeks in Nevada and reduced concentrate sales due to shipping delays.
Newmont’s revenues fell nearly 18.9% year over year to $2,177 million in the quarter, missing the Zacks Consensus Estimate of $2,319 million. Sales were affected by shipping delays.
Newmont’s attributable gold and copper production was 1.165 million ounces and 38 million pounds in the quarter, down 11% and up 9%, respectively, from the prior-year quarter. Attributable gold and copper sales were 1.142 million ounces and 31 million pounds in the quarter, down 11% and 16%, respectively, from the year-ago quarter.
Gold and copper cost applicable to sales (CAS) was $758 per ounce and $2.19 per pound, up 22% and 11% year over year, respectively. All-in sustaining cost was $92 million, down 7% from the previous year quarter.
Regional Performance
North America
Gold production at the Nevada mine declined 12% year over year to 381,000 ounces in the reported quarter, due to lower grade and recovery at Mill 5 and Mill 6 and lower grade at the Twin Creeks autoclave, partially offset by new production at Emigrant and higher throughput at Phoenix. Production at La Herradura increased 2% year over year to 55,000 ounces, due to higher leach placement and grade.
South America
Gold production at Yanacocha in Peru plunged 22% year over year to 147, 000 ounces on account of lower mill grade and lower leach ore placement from Chaquicocha. Gold production at La Zanja was roughly15, 000 ounces.
Australia/New Zealand
Gold and copper production at the Boddington mine in Australia increased 9% and 29% year over year, respectively, to 177,000 ounces and 18 million pounds, respectively, in the reported quarter, based on higher mill grade.
Other Australia/New Zealand
Gold production at the mines in Other Australia/New Zealand zone decreased 4% year over year to 258,000 ounces in the reported quarter, due to lower mill grade at Jundee, Kalgoorlie and Tanami coupled with lower throughput at Tanami,, partly offset by higher throughput at Waihi.
Indonesia
At the Batu Hijau mine in Indonesia, both gold and copper production decreased 36% and 5% year over year, respectively, to 7,000 ounces and 20 million pounds, respectively, in the reported quarter on account of lower grade and recovery resulting from the processing of lower grade stockpiled material.
Africa
Attributable gold production at Newmont’s Ahafo mine in Ghana plummeted 29% from last year to 125,000 ounces as a result of an increase of in-process inventory and lower milled grade, partly offset by higher recovery.
Financial Position
Newmont had cash and cash equivalents of $1,378 million as of Mar 31, 2013, versus $2,612 million as of Mar 31, 2012. The company’s long-term debt increased roughly 4.9% year over year to $6,379 million. Consolidated spending was down 13% year over year (or by $217 million) in the reported quarter.
Dividend
Newmont’s second quarter dividend payable of 35 cents per common share is in accordance with the company’s gold-price-linked dividend policy based on the average London P.M. Gold Fix and it is consistent with the prior-year quarter.
Outlook
Newmont, which is among the prominent players in the gold-mining industry along with Barrick Gold Corporation (ABX), Goldcorp Inc. (GG) and Kinross Gold Corporation (KGC), expects gold production to be roughly 4.8 million to 5.1 million in 2013.
Copper production is anticipated to be in the range of 150 million to 170 million pounds. In the second half of the year, planned production is anticipated to increase owing to greater mill throughput in Nevada and start up of the first production line at the Akyem mine in Ghana. Newmont also expects to ramp up Phase 6 ore mining at Batu Hijau in Indonesia late next year to improve free cash flow in 2014 and 2015.
Newmont has reduced its planned 2013 attributable and consolidated capital expenditure guidance by $100 million to $2 - $2.2 billion and to $2.3 - $2.5 billion, respectively. All-in sustaining cost is expected to be between $1,100 and $1,200 per ounce on both a consolidated and attributable basis for 2013.
Newmont expects 2013 attributable gold production in Nevada to be in the range of roughly 1.7 million to 1.8 million ounces at CAS of around $600 to $650 per ounce. The company expects 2013 attributable gold production at La Herradura, North America to be in the range of 225,000 and 275,000 ounces at CAS of around $650 and $700 per ounce.
Newmont forecasts 2013 attributable gold production at Yanacocha to be in the range of 475,000 and 525,000 ounces at CAS of around $600 and $650 per ounce. The company projected 2013 attributable gold production at La Zanja in the range of 40,000 and 50,000 ounces
Newmont expects 2013 attributable gold production at Boddington to be in the range of 700,000 and 750,000 ounces at CAS of around $850 and $950 per ounce. Attributable copper production is expected to be within 70 million and 80 million pounds at CAS of between $2.45 and $2.65 per pound.
Newmont forecasts 2013 attributable gold production at Other Australia/New Zealand mines to be in the range of 925,000 and 975,000 ounces at CAS of around $950 and $1,050 per ounce.
Newmont expects 2013 attributable gold production at Batu Hijau mine to be in the range of 20,000 and 30,000 ounces at CAS of around $900 and $1,000 per ounce. The company forecasts 2013 attributable gold production at Ahafo mine in to be in the range of roughly 525,000 and 575,000 ounces at CAS of around $550 and $600 per ounce.
Newmont currently carry a short-term Zacks Rank #3 (Hold).
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