| MINING NEWS ARTICLES
October 29, 2008
Newmont in ‘good shape' with 3Q income of $196M
By ADELLA HARDING - Correspondent
Elko Daily Free Press
DENVER - Newmont Mining Corp. is in good shape to weather the rough financial weather, President and Chief Executive Officer Richard O'Brien said today.
Newmont reported third-quarter net income totaling $196 million, or 43 cents per share, down 51 percent from the third quarter of last year.
“We're well positioned with a strong balance sheet,” O'Brien said, telling analysts in a teleconference that Newmont will carefully watch its spending and review proposed projects, but it also will be on the lookout for acquisitions of struggling exploration and mining companies.
“All these things remain on the table,” he said. “It's an ill wind that doesn't blow some good.”
Newmont's third-quarter net income last year was $397 million, or 88 cents per share, including $140 million in one-time gains, and the company said this year's results were affected by lower gold and copper sales as well as higher costs.
Higher gold prices in the quarter partially countered the lower sales and higher costs in the quarter. Gold prices averaged $865 per ounce in the 2008 quarter, compared with an average price of $681 per ounce last year.
Gold prices have since dropped into the $700s, but O'Brien said he expects the price to rise again because physical demand for gold is very tight and companies are “tightening their exploration belts,” which will mean lower production.
He said in the teleconference people's fear of holding onto any asset except U.S. treasuries is keeping the gold price down, rather than the price being linked to fundamental value of gold due to tight demand.
“People are worried,” O'Brien said. “We're in an unprecedented macro business environment with global inflation.”
The Denver-based company sold 1.28 million ounces of gold in the third quarter at applicable costs of $480 per ounce, compared with 1.33 million ounces in the third quarter of 2007, when costs were at $388 per ounce.
O'Brien said, however, that Newmont's forecast of gold sales this year of between 5.1 million and 5.4 million ounces remains the same. Costs are estimated at $425 and $450 per ounce based on an oil price of $75 per barrel of oil and a change of $1 per ounce for every $10 change in oil prices.
Newmont's Nevada gold sales were down to 544,000 ounces at a cash cost of $497 per ounce in the third quarter, compared with 583,000 ounces at a cost of $421 per ounce in the third quarter of last year.
The company said suspension of the Getchell Underground Mine at the Turquoise Ridge operations in Humboldt County and the mill closure at the Jerritt Canyon Mine north of Elko affected sales.
Barrick Gold Corp. suspended contract mining at Getchell Underground after three fatalities within a year's time. Barrick is 75 percent owner and operator at Turquoise Ridge, and Newmont owns 25 percent and processes gold mined at the Turquoise Ridge underground mine and Getchell.
Yukon-Nevada Gold Corp. closed the mill at Jerritt Canyon when the company halted operations and laid off workers. Jerritt Canyon had been processing Newmont ore at its roaster.
Newmont also reported Nevada's production was affected by slower than expected recoveries from the Carlin South and Twin Creeks Mine leach pads and less ore through the mill at the Midas Mine in far northwestern Elko County. Twin Creeks is in Humboldt County.
Newmont said higher costs in Nevada were due to gold prices being lower than expected, continued high diesel and contractor prices and lower by-product credits due to lower copper prices and volume. Newmont's Phoenix Mine produces copper, as well as gold.
Newmont's new TS Power Plant at Dunphy helped offset higher costs, the company said.
Costs are now predicted to be between $410 and $440 per ounce for Nevada operations, up from earlier estimates of $400 to $430 per ounce, Newmont said.
O'Brien also said today that construction of the Boddington Mine in Australia is continuing and is 85 percent completed with start-up in the middle of next year. The company reviewed costs in light of the changing economy and revised its estimates for its share of construction to $1.7 billion to $1.8 billion.
Earlier estimates had put Newmont's share at $1.4 billion to $1.6 billion. Newmont is partners with AngloGold Ashanti in the project, which will become the largest gold mine in Australia.
Companywide, Newmont's revenue was down to $1.4 billion from $1.6 billion, which was lower than analysts had predicted. The Associated Press reported that analysts surveyed by Thomson Reuters forecast on average earnings of 42 cents per share on revenue of $1.5 billion.
20081029
Return to the Mining News Articles Archives Page
|
