Newmont posts record production in latest quarter

An improved gold price and record gold production helped Newmont Mining (NEM-N) earn US$46.8 million, or 28 per share, in the quarter ended Dec. 31, 1999.

Newmont posted record production of 1.22 million oz. at a cash cost of US$164 per oz. and total production costs of US$211 per oz., compared with 98 million oz. at US$181 and US$246 in the corresponding quarter of 1998.

The company, largely an unhedged producer, averaged a realized gold price of US$295 per oz. Although this was US$5 less than in the fourth quarter of 1998, it was US$24 more than the third quarter, when the price of gold dropped to its lowest level in 20 years.

Newmont produced a record 4.18 million oz. gold at a total cash cost of US$175 per oz. for the entire year, compared with 4.07 million oz. at US$183 per oz. in 1998.

Production at North American operations increased 14% to 764,800 oz. gold in the quarter. Total cash costs were reduced US$10 to US$203 per oz. The increase in production was largely due to higher-grade ore from the Deep Post open-pit deposit in Nevada.

International operations produced 459,200 oz. of gold, a 42% increase from the 1998 quarter, while total cash costs fell US$13 to US$99 per oz. The increase was due to a combination of:

better recovery rates at the Zarafshan mine in Uzbekistan;

start of production at the 56%-owned Batu Hijau copper-gold mine in Indonesia; and

higher grades from the Minahasa gold mine, also in Indonesia.

Gold revenue for the year remained flat at US$1.45 billion. North American production fell to 2.7 million oz. from 2.94 million oz. in 1998. This was offset by a 30% increase in production from international operations, from 1.13 million oz to 1.47 million.

On the exploration front, reserves at Minera Yanacocha in Peru, Newmont’s joint venture with Minas Buenaventura (BVN-N), rose by 60% to 32.9 million oz., of which Newmont’s share was 16.9 million oz. This was up from 20.6 million oz., of which Newmont’s share was 10.6 million oz. The principal increases came from the Cerro Yanacocha, Cerro Quilish, La Quinua, and Carachugo deposits.