Gold Miner
Newmont Mining Corp.
(
NEM
) has entered into an agreement with the government of Peru to
suspend construction activities at the Conga project in Peru for
the safety of employees and community members. Conga is Newmont's
$4.8 billion gold project.
During the past month, the Conga project and the near-by
Yanacocha operations have experienced intermittent work stoppages
as a result of ongoing protests in the region. Local political
leaders want to stop the mine from being built, arguing that it
would replace a string of alpine lakes with artificial reservoirs
and cause pollution.
On the other hand, as per Newmont, its environmental study
rigorously adhered to the highest standards available, and stated
that it would try to respond to local concerns as much as possible
so that the mine can be built.
Newmont, based in Denver, Colorado, is the majority owner of the
Conga project, which was to begin production in 2015 and is an
extension of Yanacocha, Latin America's biggest gold mine.
Recently, Newmont released its third-quarter earnings. The
company's adjusted net income rose to $635 million or $1.29 per
share in the third quarter from last year's $533 million or $1.08
per share. The result exceeded the Zacks Consensus Estimate of
$1.24 per share.
Total revenue was $2.7 billion, up 6% year over year.
Newmont reported attributable gold and copper production of 1.3
million ounces and 58 million pounds, respectively, in the quarter
at costs applicable to sales (
CAS
) of $622 per ounce, and $1.10 per pound on a co-product basis.
For fiscal 2011, the company reiterated its previous expectation
of attributable gold production of approximately 5.1 million to 5.3
million ounces, with attributable copper production of 190 to 220
million pounds. Costs applicable to sales are expected to be
between $560 and $590 per ounce for gold.
The company currently plans to spend $2.1 to $2.5 billion in
attributable capital expenditures in 2011, or $2.7 to $3.0 billion
on a consolidated basis.
Approximately 40% of 2011 consolidated capital expenditures are
expected to be related to major project initiatives, including
further development of the Akyem project in Ghana, the Conga
project in Peru, Hope Bay in Canada, and the Nevada project
portfolio, while the remaining 60% is expected to be for growth and
sustaining capital.
The company faces stiff competition from
Posco
(
PKX
) and
Arcelor Mittal
(MT
).
Newmont has a short-term (1 to 3 months) Zacks #3 Rank ('Hold')
and a long-term Neutral recommendation
ARCELOR MITTAL (
MT
): Free Stock Analysis Report
NEWMONT MINING (
NEM
): Free Stock Analysis Report
POSCO-ADR (
PKX
): Free Stock Analysis Report
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