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Newmont earnings fall on lower prices, beats Street

Newmont earnings fall on lower prices, beats Street

Photo by Bloomberg

31st October 2014

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Gold producer Newmont Mining has reported lower earnings for the three months ended September 30, as lower sales and metals prices weighed on its balance sheet.

However, the Denver, Colorado-based company’s financial results beat analyst forecasts, helped, in part, by lower costs.

Net income attributable to Newmont stockholders in the third quarter was $213-million, or $0.43 a share, compared with $398-million, or $0.80 a share, for the third quarter of 2013.

The company reported that stockpile inventory adjustments, triggered by increased future costs as a result of the new memorandum of understanding with the Indonesia government at Batu Hijau, lower realised gold prices and the inability to export concentrate in Indonesia, was partially offset by a favourable deferred tax settlement in the current quarter.

Indonesia implemented a ban on mineral ore exports and introduced an escalating export tax for concentrates on January 12 to encourage domestic mineral processing to increase the value of exports.

As a result, Newmont and fellow US miner Freeport-McMoRan stopped copper/gold concentrate exports for several months this year. Newmont resumed exports early this month, while Freeport resumed shipments early in August.

Newmont reported adjusted net income of $249-million, or $0.50 a share, compared with $217-million, or $0.44 a share, a year earlier.

This was significantly higher than the average analyst expectation of $0.16 a share on expected revenue of $1.7-billion.

Newmont’s consolidated revenue for the quarter under review came in at $1.7-billion, down 15% year-on-year, impacted by lower metals prices.

The average realised gold price fell 4% compared with last year at $1 270/oz, while the realised copper price fell 12.5% to $2.71/lb.

Attributable gold output for the period was 1.15-million ounces, down 10% year-on-year, as higher output in Africa following the start-up of Akyem, in Ghana, in the fourth quarter of 2013 only partially offset lower output in North America and Australia.

North American volumes were lower mainly owing to planned stripping campaigns at Carlin and Twin Creeks, in Nevada, which were expected to continue into 2015. Australian volumes were lower as a result of selling Jundee, completed on July 1, and planned lower grades mined at Tanami.

Copper output for the quarter fell 29% to 13 700 t compared with 19 200 t a year earlier, owing to the shutdown from June 5 to September 23 at Batu Hijau.

All-in sustaining costs (AISC) for gold were lower in the third quarter at $995/oz, while the AISC for copper more than doubled to $6.61/lb.

Newmont said it was on track to meet its full-year production outlook of 4.7-million to 5-million attributable gold ounces, even after accounting for asset divestitures, at a lower AISC range of $1 020/oz to $1 080/oz.

Despite closing 2.31% lower on the NYSE on Thursday at $20.33 a share, Newmont’s stock was gaining in after-market trading, adding 1.82% at $20.65 apiece.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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