Despite missing analyst estimates, Newmont lifts FY headline earnings 89%

VANCOUVER (miningweekly.com) – US gold major Newmont Mining has reported an 89% increase in full-year 2016 adjusted earnings of $619-million, or $1.16 a diluted share, missing average analyst forecasts calling for earnings of $1.54 a share.

The net loss attributable to Newmont stockholders from continuing operations narrowed to $220-million, or $0.41 a share, down from a net loss of $1-million for 2015, as the company booked a $970-million impairment change on South America’s largest gold mine, Yanacocha, in Peru, related to the increased closure costs that extend over decades of reclamation.

Attributable gold output for the 12-month period was 4.9-million ounces, up 7% year-over-year from the prior year, boosted by new production from the Merian and Long Canyon mines; a full year of production at Cripple Creek & Victor and Carlin’s Turf Vent shaft; and productivity improvements at Kalgoorlie.

All-in sustaining costs (AISC) fell 2% over 2015 to $912/oz, the fourth consecutive year of reducing the World Gold Council cost metric aimed at demonstrating the true cost of gold.

“We increased adjusted [earnings before interest, taxes, depreciation and amortisation] by 25% to $2.4-billion and more than doubled free cash flow to nearly $800-million on the back of superior operational performance. We invested these proceeds with an eye to long-term value creation – building two mines, advancing profitable expansions in the Americas and Australia, and adding higher-grade ounces to our reserve base,” president and CEO Gary Goldberg stated in an after-market news release Tuesday.

During the year, Newmont successfully built Merian mine, in Suriname, and Long Canyon mine, in Nevada, $200-million below budget, and delivered expansions and the investment case at Cripple Creek & Victor, in Colorado. The company also progressed profitable expansions at Tanami, in Australia, and Northwest Exodus, in Nevada; and generated $920-million in gross cash proceeds from the sale of Newmont’s stake in PTNNT, which operates the Batu Hijau copper and gold mine in Indonesia.

Greenwood Village, Colorado-based Newmont also added ten-million ounces of higher-grade reserves and resources by the drill bit during 2016.

During the 12-month period, Newmont reduced net debt to $1.9-billion, ending the year with $2.8-billion cash on hand and a strong financial profile.

For the fourth quarter ended December, Newmont reported a net loss attributable to shareholders from continuing operations of $391-million, or $0.73 a share, owing to the higher closure liability and impairment charges at Yanacocha, and adjusted net income of $133-million, or $0.25 a share, up from a loss of $0.03 in the prior-year quarter. Analysts had on average expected quarterly adjusted earnings of $0.33 a share.

Attributable gold output for the three-month period increased 17% to 1.3-million ounces, with AISC falling 11% year-over-year to $918/oz.

Newmont has doubled the fourth quarter dividend to $0.05 a share, in line with Newmont’s improved gold price-linked dividend policy.

For 2017, the company expects to produce between 4.5-million and 5.4-million ounces, as full-year production at Merian and Long Canyon more than offsets declines at Twin Creeks and Yanacocha. The company expects longer-term output of between 4.5-million and 5-million ounces as the portfolio is bolstered by production from Long Canyon and Ahafo, in Ghana, partly offsetting declines at maturing assets, the miner said.

Newmont’s NYSE-listed stock fell 1.66% in after-market trading to $36.82 apiece.