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.
Newmont has a short-term (1 to 3 months) Zacks #3 Rank ('Hold') and a long-term Neutral recommendation