Earnings season continued in the gold patch this week, giving
investors and analysts a closer look at the effects of a falling
gold price on miners in the second quarter.
With gold down more than 20% so far this year, analysts at Stifel
Nicolaus recently estimated that the gold miners they cover would
report an average 20% drop in EBITDA in Q2, compared with the
previous quarter, according to the
Indeed, last week,
president and CEO Chuck Jeannes noted that the company's revenues
and operating cash flows were significantly impacted by lower
realized gold prices in the second quarter.
a net loss of $1.93 billion, or $2.38 per share, in Q2 resulting
from a non-cash impairment charge related to exploration potential
at its PeÃ±asquito mine in Mexico. This compares to net earnings of
$268 million, or $.33 per share in the second quarter of 2012.
Goldcorp's average realized gold price in Q2 2013 was $1,358 per
ounce, down from $1,596 in the same quarter of 2012.
"Almost half of our total quarterly gold and silver sales occurred
in the month of June, which coincided with a period of particularly
weak prices for the metals," said Jeannes, in a statement.
Also last week,
a non-cash impairment charge in its Q2 results -- primarily related
to the impact of lower gold and copper prices on long-term assets
at its Boddington and Tanami mines in Australia -- which resulted
in a $2 billion net loss, or $4.06 per share, in the quarter.
Looking ahead, many miners point to further spending reductions in
the near to medium term. Goldcorp, for example, says it is
reviewing its short-term operating plans with a focus on cost
containment as well as "on improving operating cash flow through
optimal mine planning in a lower cost price environment."
) said on Wednesday that it has "intensified" its focus on margins,
cost reduction, and cash flow as a result of the gold price drop.
a net loss of $2.5 billion, or $2.17 per share, in Q2, which it
also says is "largely as a result of lower short-term and long-term
gold price assumptions." The company says it does not expect to
make a decision on whether to proceed with a Tasiast mill expansion
until 2015 at the earliest.
On Thursday, it was
) turn, as the miner
a second-quarter net loss of $8.56 billion, or $8.55 per share,
reflecting $8.7 billion in after-tax impairment charges, which it
says were "largely driven by significant decreases in long-term
metal price assumptions" following the sharp declines in spot
prices in the second quarter.
Barrick has also said it expects to reduce capital spending at its
Pascua-Lama project by $1.5 billion to $1.8 billion in 2013-2014
and announced Thursday that it is cutting its quarterly dividend to
$.05 per share. On Wednesday, Kinross also suspended its
Newmont, which uses a gold price-linked dividend policy, also cut
its dividend to $.25 per share in July, based on the average London
P.M. Fix of $1,415 per ounce for the second quarter of 2013. In
April, the company's quarterly dividend was $.35 per share based on
the first quarter average gold price of $1,632 per ounce.
Barrick ended Thursday's trading session down 0.9%, while Kinross