Newmont Posts Record Revenues In 2008

Newmont Mining (NMC-T, NEM-N) saw higher multiples in 2008, with the gold major posting revenues of about US$6.2 billion for the year, up 12% over 2007’s US$5.5 billion.

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

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

Newmont even managed to navigate the stormy fourth quarter. The Denver, Colo.-based company generated net cash from continuing operations in the quarter of US$229 million on equity gold and copper sales of 1.35 million oz. and 40 million lbs., respectively. Including provisional copper price adjustments and non-cash, pretax writedowns of roughly US$145 million, Newmont still reported fourth-quarter net income of US$10 million, or US2¢ 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 US$1.7 billion to acquire the remaining 33.33% interest in Boddington from AngloGold Ashanti (AU-N, AGD-L).

Boddington is a large open-pit mine, 130 km southeast of Perth, that Newmont describes as one of the world’s largest gold projects. The company expects startup 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 applicable to sales of about US$300 per oz. on a byproduct basis for the first five years of operation.

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

Greenfield exploration will continue in South America, North America, West Africa and the Asia Pacific, and the company will continue to advance Hope Bay 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 oz. in 2008, are expected to increase to 5.2-5.5 million oz. this year at lower costs applicable to sales of between US$400 and US$440 per oz.

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

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