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Newmont Beats on Q4 Earnings and Revenue Estimates - Analyst Blog

Gold mining giant Newmont Mining Corporation ( NEM ) registered fourth-quarter 2014 adjusted earnings of 17 cents a share, down 39.3% from the year-ago quarter's earnings of 28 cents a share. However, the results beat the Zacks Consensus Estimate of 11 cents.

On a reported basis, the company posted net earnings from continuing operations of $39 million or 8 cents per share in the fourth quarter versus net loss of $1,195 million or $2.39 per share a year ago. The bottom line was positively impacted by the sale of Newmont's stake in the Penmont joint venture in Oct 2014.

Newmont's revenues fell nearly 7.8% year over year to $2,017 million in the quarter on reduced gold and copper pricing, but surpassed the Zacks Consensus Estimate of $1,834 million by a wide margin.

For full-year 2014, adjusted earnings were $1.09 per share, down 12.8% from $1.25 per share recorded in 2013. The results also beat the Zacks Consensus Estimate by a penny. Reported net income from continuing operations for 2014 totaled $548 million or $1.10 per share versus a loss of $2,595 million or $5.21 per share in 2013.

For full-year 2014, revenues decreased roughly 13.3% to $7,292 million from $8,414 million in 2013, but surpassed the Zacks Consensus Estimate of $7,135 million.

Newmont Mining Corporation - Earnings Surprise | FindTheBest

Newmont's attributable gold production in the fourth quarter was 1.26 million ounces, down 13% year over year, due to the impact of divestments. Attributable copper production was 28,700 tons, up 30% year over year. Attributable gold and copper production for full -year 2014 was 4,845 million ounces and 86,500 tons, down 4% and up 6% year over year, respectively.

Gold and copper costs applicable to sales ("CAS") were $631 per ounce and $1.86 per pound in the reported quarter, down 18% and 51% year over year, respectively. Gold and copper CAS in 2014 was $706 per ounce and $2.88 per pound, down 9% and 30% year over year, respectively.

All-in sustaining costs ("AISC") were $927 per ounce in the fourth quarter, down 11% from the prior-year quarter. AISC for 2014 was $1,002 per ounce, down 10% from the previous year.

Regional Performance

North America

Attributable gold and copper production in North America was 396,000 ounces and 5,200 tons, respectively, in the fourth quarter of 2014. Gold production was down 29% due to planned stripping campaigns at Carlin and Twin Creeks, and the divestment of Midas and La Herradura mines.

Copper production, however, increased 13% year over year in the fourth quarter. Gold and copper CAS for this region in the reported quarter was $756 per ounce and $2.64 per pound, down 3% and up 51% year over year, respectively. In the reported quarter, gold and copper AISC was $1,010 per ounce and $2.82 per pound, respectively, up 4% and down 6% year over year.

South America

Attributable gold production in South America was 201,000 ounces, up 81% year over year. Gold CAS for this region fell 54% year over year to $409 per ounce, while AISC slipped 52% year over year to $650 per ounce in the reported quarter.

Australia/New Zealand

Attributable gold and copper production in Australia/New Zealand was 404,000 ounces and 8,400 tons, down 16% and up 12%, year over year, respectively. The fall in gold production in this region was a result of the sale of the Jundee mine. Gold and copper CAS for this region was $757 per ounce and $2.10 per pound, down 15% and 31% respectively from the year-ago quarter. Gold and copper AISC was $978 per ounce and $2.90 per pound, down 11% and 23%, respectively, from the year-ago quarter.

Indonesia

Attributable gold and copper production in Indonesia in the fourth quarter was 21,000 ounces and 15,100 tons, soaring 276% and 51% year over year, respectively. Gold and copper CAS for this region was $780 per ounce and $1.72 per pound, decreasing 60% and 61% respectively, from the year-ago quarter. Gold and copper AISC in the reported quarter was $958 per ounce and $2.22 per pound, down 52% and 57% respectively, from the fourth quarter of 2013.

Africa

The region produced 239,000 ounces of gold in the fourth quarter, down 18% year over year. Gold CAS and AISC were $488 per ounce and $722 per ounce, respectively, up 24% and 39%, respectively.

Financial Position

Newmont had cash and cash equivalents of $2,403 million as of Dec 31, 2014, up 54.5% year over year. The company's long-term debt increased roughly 5.5% year over year to $6,480 million.

Project Update

The Turf Vent Shaft project at Nevada is all set to commence commercial production in late 2015 and is expected to add 100,000-150,000 ounces of annual production to Leeville. Out of the total capital costs in the range of $350-$400 million for the project, around $70-$80 million will be spent in 2015.

For the Merian project, which is still under construction, average gold production is expected in the range of 400,000-500,000 ounces on a 100% basis during the first five years. Respective CAS and AISC are estimated to be in the range of $575-$675 per ounce and $650-$750 per ounce. This project helps Newmont to expand in a new district with good potential. Capital cost for this region is expected to be in the band of $600-$700 million in 2015. The project with its first production is expected in late 2016.

Outlook

Newmont's attributable gold production is expected to increase from 4.6-4.9 million ounces in 2015 to 4.7-5.1 million ounces in 2017. Fresh production at Merian and higher grades in Nevada and Indonesia are anticipated to offset lower grades at Yanacocha and Ahafo. Copper production is anticipated in the range of 130,000-160,000 tons in 2015 and 115,000-135,000 tons in 2016 and 2017.

Newmont expects gold AISC to improve from the range of $960-$1,020 per ounce in 2015 to the range of $925-$1,025 per ounce in 2017. Gold CAS is anticipated to remain stable in the range of $660-$710 per ounce in 2015 to $650-$750 per ounce in 2016 and 2017.

Newmont expects average copper AISC to be in the range of $1.70-$1.90 per pound in 2015 owing to higher grade ore at Batu Hijau and increase to $1.80-$2.00 per pound in 2017. Copper CAS is anticipated to be in the band of $1.20-$1.40 per pound in 2015 and $1.30-$1.50 per pound in 2016 and 2017.

Sustaining capital is expected to remain stable from 2015 through 2017 at between $850 million and $950 million.

Newmont currently carries a Zacks Rank #2 (Buy).

Other well-ranked companies in the gold mining industry include Gold Fields Ltd. ( GFI ), Gold Standard Ventures Corp ( GSV ) and Golden Star Resources, Ltd. ( GSS ), all carrying a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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