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Newmont (NEM) Q3 Earnings Beat, Revenues Trail Estimates

Newmont Mining CorporationNEM logged a net loss from continuing operations of $161 million or 31 cents per share in third-quarter 2018, against a net income of $213 million or 39 cents in the year-ago quarter. The bottom line was impacted by lower metal prices and the impairment of exploration and long-lived assets in North America, partly offset by lower income tax expenses.

Barring one-time items, adjusted earnings were 33 cents per share, which beat the Zacks Consensus Estimate of 22 cents.

Newmont reported revenues of $1,726 million, down around 8.1% year over year. The figure missed the Zacks Consensus Estimate of $1795.5 million.

Newmont Mining Corporation Price, Consensus and EPS Surprise

Newmont Mining Corporation Price, Consensus and EPS Surprise | Newmont Mining Corporation Quote

Operational Highlights

Newmont's attributable gold production fell roughly 4% year over year to 1.29 million ounces in the third quarter. The decline was primarily caused by lower leach production at CC&V, mill throughput at Carlin and narrower grades at KCGM. The impacts were partly offset by higher grades at Ahafo, Tanami and Yanacocha.

Average realized gold price declined 6% to $1,201 per ounce from $1,276 an ounce in the year-ago quarter. Average realized copper price fell roughly 18% to $2.50 per pound from $3.06 per pound.

Newmont's costs applicable to sales (CAS) for gold was $691 per ounce in the quarter, down 4% year over year. The improvement can be attributed to a favorable Australian dollar foreign currency exchange rate and a lower co-product allocation of costs to gold, partly offset by lower ounces sold.

All-in sustaining costs (AISC) for gold fell roughly 1% year over year to $927 per ounce as higher sustaining capital spend offset the impact of lower CAS.

Regional Performance

North America

Attributable gold production in North America was 511,000 ounces, down 11% year over year. Consolidated copper production was at 3,000 tons, flat year over year.

Gold CAS for the region was $803 per ounce compared with $742 in the year-ago quarter. Copper CAS was $1.86 per pound, up 18% year over year.

South America

Attributable gold production in South America was 178,000 ounces, up 5% year over year. Gold CAS for the region fell 21% to $636 per ounce.

Australia

Attributable gold and copper production in the region was 385,000 ounces, down 5% year over year. Gold CAS and copper CAS in this region was $691 per ounce, up 3%, and $1.46 per pound, up 11%, respectively.

Africa

The region produced 212,000 ounces of gold in the reported quarter, up 11% year over year. Gold CAS was $505 per ounce, down 22% year over year.

Financial Position

Net cash from continuing operating activities fell 12.6% year over year to $425 million in third-quarter 2018. The company ended the quarter with roughly $3.1 billion of cash in hand and debt of $4,043 million, down from $4,046 million in the year-ago quarter.

Outlook

For 2018, Newmont narrowed attributable gold production guidance in the range of 4.9-5.2 million ounces compared with the previous projection of 4.9-5.4 million ounces.

The company's cost outlook for 2018 has improved as AISC is now expected between $950 and $990 per ounce compared with the previous projection of $965-$1,025 per ounce. CAS outlook for gold are unchanged in the range of $700-$750 per ounce.

The company's attributable copper production forecast for 2018 is unchanged in the range of 40,000-60,000 tons.

Price Performance

Newmont's shares lost 16% in the past three months compared with 5.8% decline recorded by its industry .

Zacks Rank & Stocks to Consider

Newmont currently carries a Zacks Rank #5 (Strong Sell).

A few better-ranked stocks in the basic materials space are Methanex Corporation MEOH , KMG Chemicals, Inc. KMG and CF Industries Holdings, Inc. CF , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Methanex has expected long-term earnings growth rate of 15%. Its shares have rallied 27.7% in the past year.

KMG Chemicals has expected long-term earnings growth rate of 28.5%. Its shares have rallied 35.8% in the past year.

CF Industries has expected long-term earnings growth rate of 6%. Its shares have gained 18.2% in a year.

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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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