Newmont Mining Corp. (NEM) reported Thursday a surge in profit for the third quarter, significantly above market projections, reflecting strong sales of gold and copper. Further, the Denver, Colorado-based gold miner revised its equity gold sales forecast for fiscal 2009.
Net income for the quarter grew to $645 million from prior year's $222 million. Third-quarter net income attributable to Newmont stockholders was $388 million or $0.79 per share, higher than last year's $191 million or $0.42 per share.
Excluding prior year's discontinued operations, income from continuing operations rose to $388 million or $0.79 per share from $182 million or $0.40 per share in the same quarter last year.
On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $0.54 per share. Analysts' estimates typically exclude special items.
Revenues for the quarter increased to $2.05 billion from $1.37 billion in the prior-year quarter. Four analysts estimated revenues of $1.72 billion. Net sales from gold rose to $1.65 billion from $1.28 billion a year ago, and sales from copper surged to $396 million from $90 million last year.
In the quarter, the company reported equity gold sales of 1.33 million ounces at average realized prices of $964 per ounce and costs applicable to sales of $404 per ounce that was down about 13% from $467 per ounce in the year ago quarter. The company noted that higher than expected sales at Yanacocha in Peru, Batu Hijau in Indonesia and Jundee in Australia were partially offset by lower than expected sales at Tanami in Australia. Costs applicable to sales per ounce were better than expected as a result of higher production.
Copper sales were 64 million pounds at average realized prices of $2.80 per pound.
Commenting on the results, Richard O'Brien, president and chief executive officer, said, "Our continued focus on cost containment resulted in a 13% improvement in gold cost of sales per ounce over the same quarter last year. Combined with the current favorable commodity price environment, our gold operating margin grew by 41% to $560 per ounce during the quarter. Additionally, our equity gold sales grew by 4% from the year ago quarter resulting in record operating cash flow."
In the preceding second quarter, Newmont had reported a decline in net income to $306 million on lower realized copper prices and a significantly higher tax rate, despite a drop in expenses. Net income attributable to Newmont stockholders was $162 million or $0.33 per share, net income from continuing operations was $171 million or $0.35 per share, and adjusted net income was $213 million or $0.43 per share. Revenues for the quarter advanced to $1.602 billion from $1.503 billion in the previous year.
Among peers, Ontario, Canada-based Barrick Gold Corp. (ABX, ABX.TO) reported Thursday a third-quarter net loss of US$ 5.4 billion or US$ 6.07 per share, compared to net income of US$ 254 million or US$ 0.29 per share in the same quarter last year. On an adjusted basis, net income was US$ 473 million or US$ 0.54 per share, compared to US$ 404 million or US$ 0.46 per share in the year ago quarter. Sales for the quarter increased to US$ 2.1 billion from US$ 1.9 billion in the comparable quarter last year.
Gold Fields Limited (GFI) Thursday reported a sharp increase in profit for the first quarter, as revenues increased 30% year-over-year on higher average gold price. Net profit attributable to owners of the parent was US$ 128.7 million or 18 cents per share, much higher than US$ 5.2 million or 1 cent per share in the prior year. Earnings, excluding items, surged to US$ 80 million or 11 cents per share from US$ 16 million or 2 cents per share in the comparable period. Quarterly revenues increased to US$ 948.3 million from US$ 739.5 million in the prior year. Gold Fields' attributable gold production increased 14% to 906 thousand ounces from 798 thousand ounces last year.
Last week, mining giant Freeport-McMoRan Copper & Gold, Inc. (FCX) reported a surge in profit for the third quarter on strong operating performance, reflecting improved commodity prices and revenue growth. Net income for the quarter climbed to $1.20 billion from $742 million in the year-ago quarter. The Phoenix, Arizona-based company posted net income attributable to common stock of $925 million $2.07 per share, higher than $523 million or $1.31 per share last year. Revenues for the quarter declined to $4.14 billion from $4.62 billion in the same quarter last year,
For the nine months of fiscal 2009, Newmont's net income grew to $1.23 billion from last year's $1.12 billion. Meanwhile, net income attributable to Newmont stockholders fell to $739 million or $1.52 per share from $827 million or $1.81 per share a year ago. Nine-month revenues rose to $5.19 billion from $4.80 billion in the same quarter a year earlier.
Looking ahead, Newmont said it currently estimates its outlook for 2009 equity gold sales to be approximately 5.2 million ounces, at the lower end of its previously estimated range, due to the extended start-up of Boddington. The company has narrowed its outlook for 2009 costs applicable to sales to between $400 and $425 per ounce, reflecting ongoing cost reduction efforts and favorable by-product credits.
For 2010, the company expects equity gold production to improve by approximately 5% to 10%, mainly due to higher production from Boddington in Australia and Batu Hijau in Indonesia, partially offset by lower production in Nevada and Yanacocha in Peru. Costs applicable to sales for the year are estimated to be modestly higher by approximately 5%, partially as a function of higher expected energy costs and adverse changes in exchange rates.
In Nevada, Newmont maintained its outlook on expected 2009 equity gold sales of between 1.9 and 2.0 million ounces. The outlook for 2009 costs applicable to sales also remains unchanged at between $535 and $575 per ounce.
At Yanacocha, in Peru, the company continues to expect equity gold sales of between 1.0 and 1.05 million ounces. Costs applicable to sales for Yanacocha during 2009 also remain unchanged at between $300 and $320 per ounce.
In Australia/New Zealand, Newmont said it is updating its 2009 outlook for equity gold sales to between 1.2 and 1.3 million ounces, down from the previously announced outlook of between 1.4 and 1.5 million ounces, due to the later than expected start-up of Boddington. The company also revised its regional costs applicable to sales to between $500 and $520 per ounce, up from the previously announced outlook of between $460 and $500 per ounce.
At Batu Hijau in Indonesia, the company continues to expect equity gold and copper sales of between 225,000 and 250,000 ounces and 210 million and 230 million pounds, respectively. The company also maintained its outlook for costs applicable to sales for copper of between $0.50 and $0.65 per pound, while lowered its outlook for costs applicable to sales for gold for 2009 to between $200 and $220 per ounce from between $280 and $320 per ounce previously.
NEM closed Wednesday's regular trading session at $41.50, down $1.78, on a volume of 9.6 million shares.
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