Post-merger Newmont posts loss

Fresh off its acquisitions of Franco Nevada Mining and Normandy Mining, Newmont Mining (NEM-N), the World’s number one gold producer, has posted a net loss of US$10.9 million for the three months ended March 31, thanks in large to reduced production.

The loss translates into (4 per share), and compares with a year-ago net loss of US$39.1 million (20 per share). The recent quarter’s loss includes a non-cash, after-tax gain from derivatives of US$12.3 million. The year-ago loss included a mark-to-market gain and merger-related charges. Cash flow from operations nearly quadrupled to US$72.6 million.

Newmont’s CEO Wayne Murdy said, “The first quarter marks a transition and will not be indicative of our full year’s performance. This was an extremely ‘noisy’ quarter with consolidated results for just half a quarter and various accounting adjustments relating to the acquisitions.”

Murdy expects full-year earnings per share to come in around 40-50, assuming current gold prices continue.

Thanks to a half-quarter of post-merger operation and a higher gold price, sales climbed 13.5% to US$481.2 million. Total cash cost per oz. climbed US$25 per oz. to US$196. Similarly total production costs were US$262 per oz., up from US$220 per oz.

Newmont said its average realized price for an ounce of gold was US$291 in the first quarter, up from US$264 the previous year.

The company expects savings of about US$70-80 million per year arising from merger-related synergies to kick in during the second quarter. The company also expects to sell about US$400 million of non-core assets, up from a previous goal of $250-$300 million. So far, Newmont has sold about US$210 million of assets.

Looking ahead, Newmont expects to produce about 7.5 million equity oz. at US$180 per oz. during all of 2002.

Work aimed at adding to reserves and non-reserve material at Yanacocha in Peru, the underground operations in Nevada and in the Tanami and Yandal gold districts in Australia, continues. Also ongoing is the pre-feasibility studies for Martabe in Indonesia and Akim in Ghana.

At quarter’s-end Newmont had US$511.5 million in cash on hand.

The company is redeeming all issued and outstanding shares of its $3.25 Convertible Preferred Stock at the close of business on Wednesday by issuing about 4.4 million shares. The move is expected to save Newmont US$5.6 million in cash dividend payments over the balance of the 2002, and about US$7.5 million annually thereafter.