Newmont’s Q1 results surprise to the upside as output, prices rise

VANCOUVER (miningweekly.com) – US gold major Newmont Mining has surprised investors by beating average consensus estimates during the first quarter ended March, as the miner reported improved output and prices, which were slightly offset by higher costs.

The Denver, Colorado-based miner reported net income from continuing operations of $69-million, or $0.13 a share, a significant swing from the net loss from continuing operations of $12-million, or $0.02 a share, a year earlier.

Excluding special items, adjusted earnings came in at $0.25 a share for the quarter, beating the average Wall Street analyst forecast for earnings of $0.23 a share.

Newmont's revenues of $1.7-billion increased by 13.5%, from $1.5-billion in the comparable period of 2016, boosted by higher gold output and improved realised prices for gold. However, revenue missed average Wall Street analyst forecasts calling for $1.73-billion for the period.

Newmont reported that the average net realised price for gold improved by $29/oz to $1 221/oz in the period, with the average net realised copper price also improving by $0.65/lb to $2.68/lb.

Attributable gold output increased 9% year-on-year to 1.23-million ounces in the quarter as the Merian and Long Canyon mines recorded strong performance during the period. These operations offset geotechnical issues at Carlin. The company also noted that exceptional weather in South America and Australia affected operations.

Costs applicable to sales (CAS) rose 1% year-on-year to $687/oz for gold, on the back of processing lower grades, the company said late on Monday.

All-in sustaining costs (AISC) of $900/oz for gold rose roughly 1% year-on-year, while copper AISC increased by nearly 17% compared with the year-earlier period, to $1.77/lb. Gold and copper AISC were higher over the prior-year period owing to higher CAS, near-term sustaining capital and advanced projects and exploration expenses.

Newmont expects attributable gold output in the range of 4.9-million to 5.4-million ounces in 2017. Production at Merian and Long Canyon is expected to compensate for the impact of declines at Twin Creeks and Yanacocha. The Subika underground and Ahafo mill expansion projects are expected to improve volumes beginning in 2018, improve costs starting in 2020, with additional development capital in 2017 to 2019.

Attributable copper output is expected to remain flat year-over-year at between 40 000 t to 60 000 t.

Gold CAS is expected to range between $700/oz and $750/oz this year, improving to between $650/oz and $750/oz over the long term. AISC is forecast to be between $940/oz and $1 000/oz in 2017.

Copper CAS is estimated to be in the range of $1.45/lb to $1.65/lb in 2017, with AISC expected to range between $1.85/lb and $2.05/lb in 2017. Over the long term, copper CAS is forecast at between $1.5/lb and $1.9/lb, and copper AISC is expected to be between $1.85/lb and $2.25/lb.

Capital spending guidance for 2017 increased to a range of $900-million to $1.1-billion. This includes sustaining capital expenditure of between $600-million and $700-million, which remains unchanged from previous guidance.

Newmont’s NYSE-listed stock lost 2.43% on Tuesday to close at $32.89 apiece, having shed 3.5% in value since the start of the year.