Newmont Mining (NEM-N), North America’s biggest gold miner by production, has joined the gold miner’s choir in singing the common refrain of weaker earnings and promises to meet annual production targets.
For the three months ended June 30, the Denver-based company posted a net loss of US$33.5 million (or 17 per share) on revenue of US$365.8 million, compared with a loss of US$25.8 million (13 per share) on US$410.5 million a year earlier. The company’s second-quarter net operating loss bulged to US$23.9 million, up from a loss of US$14.2 million in the same quarter of 2000.
Results for the latest quarter were hurt by weak gold prices and lower-than-anticipated equity gold sales, which tallied 1.22 million oz. (1.28 million oz. the previous year). The recent quarter’s average realized price per equity ounce was US$268. This was US$14 per oz. off last year’s average price.
Newmont warned of lower second-quarter earnings in July, owing to below-budget production of 1.26 million oz. at a total cash cost of US$194 per oz. (1.28 million oz. at US$173 per oz. the previous year). The shortfall was attributed to short-term operating changes at the 51.35%-owned Yanacocha mine in Peru and reduced throughput due to annual roaster maintenance at the Nevada operations.
During the quarter, production at the Nevada operations fell 8% to 615,000 oz. Cash costs rose US$11 per oz. to US$236. Yanacocha production grew by 17,000 oz., but cash costs jumped US$39 per oz. to US$ 127 per oz.
For the first half of 2001, Newmont’s operating loss amounted to US$29.4 million. Its net loss, after Battle Mountain merger and restructuring costs, piled up to US$72.6 million (37 per share). In the same period of 2000, the losses were US$4 million and US$32.3 million (17 per share), respectively.
Wayne Murdy, Newmont’s CEO, says ongoing transitions at the company’s two largest operations, Nevada and Yanacocha, will result in higher second-half production and improved cash costs. Murdy says the company is still on target to meet its annual output goal of 5.4 million oz. gold at a total cash cost of US$180 per oz.
Newmont shares were off US11 at US$18.75 in late afternoon trading on the New York Stock Exchange.
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