Gold mining giant
Newmont Mining Corporation
) fourth-quarter 2012 adjusted earnings of $1.11 cents a share
dropped 2.6% from last year's earnings of $1.14 but exceeded the
Zacks Consensus Estimate of 98 cents.
On a reported basis, the company posted a profit of $673
million in the quarter versus a loss of $1,028 million a year
ago. The year-ago quarter's bottom line was hit by a sizable
For full-year 2012, adjusted earnings came in at $3.71 per
share, down from $4.31 per share in 2011 but ahead of the Zacks
Consensus Estimate of $3.58.
Profit for the full year (attributable to Newmont
shareholders), as reported, jumped nearly five-fold year over
year to $1,809 million or $3.63 per share from $366 million or 73
cents per share in the prior year. Profit from continuing
operation soared almost four-fold year over year to $1,885
million or $3.78 a share in 2012.
Newmont's revenues in the quarter fell nearly 10.5% year over
year to $2,476 million, missing the Zacks Consensus Estimate of
$2,643 million. Sales were affected by lower production from Asia
Pacific due to continued Phase 6 waste mining at Batu Hijau.
For the full year, sales were $9,868 million, down 4.7% year
over year, missing the Zacks Consensus Estimate of $10,229
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The company's attributable gold and copper production was 1.3
million ounces and 35 million pounds, respectively, in the
quarter. Gold and copper Cost applicable to sales (CAS) was $720
per ounce and $2.61 per pound, respectively. All-in sustaining
cost was $1,192 per ounce.
Gold production at the Nevada mine declined 8% year over year to
478,000 ounces in the reported quarter due to lower tons and
grades from Leeville. Production at La Herradura decreased 14% to
48,000 ounces due to the timing of leach recoveries, a refinery
adjustment, and lower grade ore.
Gold production at Yanacocha in Peru plunged 30% year over year
to 121, 000 ounces on account of lower mill grade and lower leach
placement earlier in the year. Gold production at La Zanja was
13,000 ounces, a decline of 13.3% year over year.
Newmont operates three mines in the Asia-Pacific, namely,
Boddington in Australia, Batu Hijau in Indonesia and Others in
Australia/New Zealand. Gold and copper production from Boddington
increased 7% and decreased 10% year over year, respectively, due
to higher gold grade and lower copper recovery, respectively.
At Batu Hijau, both gold and copper production plunged 56% and
33%, respectively, to 7,000 ounces and 16 million pounds due to
lower ore grade and recovery as a result of processing lower
grade stockpiled material. At Others in Australia/New Zealand,
gold production increased 7%, partly due to higher throughput at
Jundee, higher grade at Waihi and higher throughput and grade at
Newmont will split the Asia Pacific region into two regions in
2013, namely, Australia/New Zealand and Indonesia. The
Australia/New Zealand region will include Boddington and Other
Australia/New Zealand while the Indonesia region will include
Attributable gold production at the company's Ahafo mine in Ghana
jumped 40% from last year as a result of drawdown on in-process
inventory, higher grade and recovery.
Newmont had cash and cash equivalents of $1.56 billion as of Dec
31, 2012, versus $1.76 billion as of Dec 31, 2011. The company's
long-term debt increased roughly 74% year over year to $6.29
billion. Consolidated capital expenditures in 2012 were $3.2
billion, up from $3 billion in 2011.
Newmont has increased its quarterly dividend by 21% to 42.5 cents
per common share for the first quarter of 2013. The company's
dividend is linked to the bullion price.
Newmont 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. The company expects
lower production at Batu Hijau and Yanacocha. The company also
expects Akyem to start production in late 2013.
CAS for gold has been forecast in the range of $675 and $750 per
ounce due to lower production at Batu Hijau and Yanacocha
combined with higher expected costs for energy, labor and
contracted services. All-in sustaining cost is expected to be
between $1,100 and $1,200 per ounce.
CAS for copper is expected to be between $2.25 and $2.50 per
pound due to lower production at Batu Hijau.
Newmont expects gold production in North America to be in the
range of roughly 2 to 2.1 million ounces at CAS of around $600 to
$650 per ounce.
Newmont forecasts South America to produce 550,000-600,000 ounces
at CAS of roughly $600 to $650 per ounce. It expects
Australia/New Zealand to produce 1,625,000-1,725,000 ounces at
CAS of around $900 to $1,000 per ounce.
Newmont expects 2013 attributable gold production for its African
operations to be about 625,000 to 675,000 ounces due to new
production from Akyem in late 2013 at CAS of roughly $525 to $575
The company expects to invest roughly $2.1 billion to $2.3
billion in attributable capital expenditures in 2013.
Newmont is one of the world's largest producers of gold with
several active mines in Nevada, Peru, Australia/New Zealand,
Indonesia and Ghana. The company continues to invest in growth
projects in a calculated manner and is ramping up production
capacity. But rising costs and delays in project developments are
significant headwinds that may reduce the company's earnings
Currently, Newmont retains a Zacks Rank #3 (Hold).
Other companies in the gold mining industry having favorable
Zacks Rank are
AngloGold Ashanti Ltd.
Sandstorm Gold Ltd.
). All of them carry a Zacks Rank #2 (Buy).