UPDATE: Newmont Mining 3Q Profit Doubles On Record Revenue
October 29 2009 - 10:05AM
Dow Jones News
Newmont Mining Corp.'s (NEM) third-quarter profit more than
doubled, blowing past analysts' estimates, amid costs cuts and
record revenue due to higher metals prices.
The industry has seen gold prices rally - the metal broke
through the benchmark $1,000 level in September for the first time
since February and reached record levels. Gold and copper prices
both jumped during the quarter. Still, in the face of the economic
downturn, Newmont has cut costs.
On Thursday, President and Chief Executive Richard O'Brien said
cost cuts led to a 13% improvement in gold cost of sales per ounce
from the year-ago quarter.
The company also forecast that its equity gold sales for 2009
would be at the low end of its previously given range because of
the extended start-up of a new project. Newmont also forecast
equity gold sales would improve 5% to 10% in 2010 because of
increased production.
With that guidance, the company is showing production growth and
the ability to keep cost increases moderate, and that's what
investors like to see them do, Jefferies analyst Mike Dudas
said.
Newmont, the world's second-biggest gold miner after Barrick
Gold Corp. (ABX, ABX.T), reported third-quarter earnings of $388
million, or 79 cents a share, up from $191 million, or 42 cents, a
year earlier. Revenue jumped 49% to a record $2.05 billion.
Analysts polled by Thomson Reuters had expected earnings of 55
cents on $1.72 billion in sales.
The company saw net sales of gold jump 29%, and copper sales
more than quadrupled.
"Though it's not necessarily going to continue at this sort of
rate, we still look forward to strong quarterly earnings going
forward into 2010," Barnard Jacobs Mellet analyst Patrick Chidley
said. He added the company's results were good and very clean,
without the hedging problems seen with companies like Barrick
Gold.
The numbers were better than expected, Dudas said, adding he
thinks the market will "increasingly appreciate Newmont's ability
to provide price leverage to the bottom line," meaning that as
prices increase, that extra money earned goes to the bottom line
and isn't eaten up by higher costs.
Chidley said the slight delay of the company's big project at
Boddington until later in the fourth quarter was the one thing that
took a little shine off the report.
Newmont lowered its full-year outlook for the Australia and New
Zealand region for gold sales because of the later-than-expected
startup of Boddington.
But with gold prices likely staying strong and as the Boddington
project comes on line and boosts production, he said "this quarter
is pretty indicative of what we're likely to see next year."
Shares of Newmont rose 2.8% to $42.68 in recent trading. The
stock is up 4.9% so far this year but has lost 2.4% in the last
month.
-By Kerry Grace Benn and Nathan Becker, Dow Jones Newswires;
212-416-2353; kerry.benn@dowjones.com