Newmont posts record revenues in 2008

The Year of the Rat brought higher multiples for Newmont Mining Corp. (NMC-T, NEM-N). The gold major posted 2008 revenues of about US$6.2 billion, up 12% over 2007’s $5.5 billion.

Newmont, which has mines in the United States, Australia, Peru, Indonesia, Bolivia, New Zealand and Mexico, reported net income of $853 million or $1.88 per share, reversing a loss of $1.9 billion in 2007.

Despite rising costs across the industry, net cash provided from continuing operations tallied US$1.4 billion or $3.09 per share, up from $525 million the previous year, while gold operating margins increased 40% to $434 per oz.

Newmont even managed to navigate the stormy fourth quarter. The Denver-based company generated net cash from continuing operations in the quarter of $229 million on equity gold and copper sales of 1.35 million ounces and 40 million pounds, respectively. Including provisional copper price adjustments and non-cash, pre-tax write-downs of roughly $145 million, Newmont still reported fourth quarter net income of $10 million, or $0.02 per share.

Milestones in 2008 included finishing construction of the Nevada power plant and the Yanacocha gold mill, as well as completing 89% of the Boddington gold project in Western Australia.

In February, Newmont raised $1.7 billion to acquire the remaining 33.33% interest in Boddington, a large open-pit mine 130 km southeast of Perth, which Newmont describes as one of the world’s largest gold projects. The company expects start-up at Boddington in the middle of 2009 with an anticipated 12-month ramp-up schedule.

Newmont believes that when Boddington is completed, it will be Australia’s largest gold producer, with expected average annual production of about 1 million oz. gold at costs appplicable to sales of about $300 per oz. on a byproduct basis for the first five years of operation.

For 2009, Newmont has an exploration budget of roughly $165 to $175 million, with the majority of spending targeted at sulfide targets at Yanacocha in Peru, and on reserve and non-reserve mineralization conversion in Nevada, at Hope Bay in Canada, Ahafo in Ghana, Tanami in Australia and Yanacocha in Peru.

Greenfields exploration will continue in South America, North America, West Africa and the Asia Pacific, and the company will continue to advance its Hope Bay project in Canada and the Gold Quarry West Wall layback in Nevada, in addition to recent greenfield discoveries in Armenia and Australia.

Equity gold sales, which fell from 5.3 million oz. in 2007 to 5.2 million in 2008, are expected to increase to between 5.2 and 5.5 million oz. this year at lower costs applicable to sales of between $400 and $440 per oz.

At press-time in Toronto, Newmont was trading at C$53.89 per share, near the high-end of its 52-week trading range of C$27.14-$55.47 per share.

In New York, Newmont was trading at US$42.24 per share. It has a 52-week trading window of US$21.17-$55.15 per share.