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Newmont Beats Q3 Earnings, Misses on Revs - Analyst Blog

By: Zacks.com
Posted: 11/1/2013 12:33:00 PM
Referenced Stocks: ANV;CAS;FNV;NEM;PVG

Gold mining giant Newmont Mining Corporation 's ( NEM ) third-quarter 2013 adjusted earnings of 46 cents a share dropped 46.5% from the year-ago quarter's earnings of 86 cents, but comfortably beat the Zacks Consensus Estimate of 32 cents.

On a reported basis, the company posted a profit from continuing operation of $429 million or 86 cents per share in the quarter, up 7% from $400 million or 81 cents per share a year ago. The bottom line benefited from the sale of Newmont's investment in Canadian Oil Sands Limited, and higher production from Nevada and Other Australia/New Zealand operations. 

Newmont's revenues fell nearly 20% year over year to $1,983 million in the quarter, missing the Zacks Consensus Estimate of $1,978 million. 

Newmont's attributable gold and copper production was 1.284 million ounces and 34 million pounds in the quarter, up 4% and down 3% year on year, respectively. Attributable gold and copper sales were 1.261 million ounces and 35 million pounds in the quarter, up 4% and down 5%, respectively, from the year-ago quarter.

Gold and copper cost applicable to sales (CAS) was $649 per ounce and $2.63 per pound, down 6% and up 11% year over year, respectively. All-in sustaining cost (AISC) was $993 per ounce, down 16% from the previous-year quarter.

Regional Performance

North America

Gold production at the Nevada mine increased 2.4% year over year to 468,000 ounces in the reported quarter due to higher leach production from Emigrant and Carlin North Area and higher grade and throughput at Juniper Mill and Phoenix, partly offset by lower grade and recovery at Mill 5 and lower throughput and recovery at Mill 6 and the Twin Creeks Autoclave. Production at La Herradura increased 2% year over year to 52,000 ounces due to higher production from Noche Buena and Centauro, essentially offset by lower production from Soledad and Dipolos. 

South America

Gold production at Yanacocha in Peru plunged 28% year over year to 132,000 ounces on account of lower leach production as a result of placing lower grade leach ore from Tapado Oeste, partly offset by higher mill grade from Tapado Oeste.

Australia/New Zealand

Gold production at the Boddington mine in Australia increased 7% year over year to 178,000 ounces in the reported quarter due to higher throughput and recovery, partly offset by lower ore grade milled. Copper production from the mine decreased 6% year over year to 15 million pounds on account of lower mill grade.

Other Australia/New Zealand

Gold production at the mines in Other Australia/New Zealand zone increased 26% year over year to 289,000 ounces in the reported quarter, due to higher mill throughput and ore grade from underground sources at Tanami, higher throughput at Waihi, and higher grade and throughput at Kalgoorlie, partly offset by lower grade at Jundee.

Indonesia

At the Batu Hijau mine in Indonesia, gold production decreased 44% year over year to 4,000 ounces in the reported quarter on account of lower ore grade, lower recovery, and lower mill throughput. Copper production of 19 million was at par with the previous-year quarter due to higher copper mill recovery.

Africa

Attributable gold production at Newmont's Ahafo mine in Ghana went up 10% from last year to 144,000 ounces based on higher mill recovery, partly offset by lower grade. The Akyem project in Ghana started its commercial production in October and maintained 2013 attributable gold production outlook between 50,000 and 100,000 ounces.

Financial Position

Newmont had cash and cash equivalents of $1,475 million as of Sep 30, 2013, down 4.7% from $1,549 million as of Sep 30, 2012. The company's long-term debt decreased roughly 2.5% year over year to $5,949 million. 

Dividend

Newmont's fourth quarter dividend of 20 cents per common share is in accordance with the company's gold-price-linked dividend policy based on the average London P.M. Gold Fix and it is consistent with the prior-year quarter.

Outlook

Newmont reiterated its gold production expectation for 2013 in the range of 4.8 million-5.1 million ounces. Copper production outlook has been lowered and is anticipated to be in the range of 135-145 million pounds from the previous outlook of 150 million-170 million pounds. 

Newmont continues to expect gold and copper CAS between $675 and $750 per ounce and $2.25 and $2.50 per pound, respectively, excluding the stockpile write-downs.  

Newmont has reduced its planned 2013 attributable and consolidated capital expenditure guidance by $200 million to $1.7-$1.9 billion and to $2-$2.2 billion, respectively. Attributable and consolidated sustaining capital outlook has been reduced by $100 million to $1-$1.1 billion and to $1.2-$1.3 billion, respectively.

Newmont currently carries a Zacks Rank #3 (Hold).

Other companies in the gold mining industry worth considering are Pretium Resources Inc. ( PVG ), Franco-Nevada Corp. ( FNV ) and Allied Nevada Gold Corp. ( ANV ). While Pretium Resources and Franco-Nevada carry a Zacks Rank #1 (Strong Buy), Allied Nevada holds a Zacks Rank #2 (Buy).



ALLIED NEV GOLD (ANV): Free Stock Analysis Report

FRANCO NV CP (FNV): Free Stock Analysis Report

NEWMONT MINING (NEM): Free Stock Analysis Report

PRETIUM RES INC (PVG): Free Stock Analysis Report

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