Newmont reports solid results (November 19, 2007)

Higher metal prices helped buoy third-quarter results for gold heavyweight Newmont Mining (NMC-T, NEM-N).

The gold producer posted net income of US$397 million or US88 per share, up from US$198 million or US44 per share in the third quarter of 2006.

A strong performance from the majority of its operations generated about US$520 million in cash.

The strong financial results sent Newmont shares on the New York Stock Exchange up US$3.77 apiece to US$50.21 in mid-day trading, on a volume of 9.3 million.

Newmont’s net income in the third quarter benefited from changes in the valuation allowance on deferred tax assets associated with foreign tax credits (US$84 million) and the Zarafshan-Newmont joint-venture settlement (US$54 million), the company said in a statement announcing its results.

Newmont said it is “narrowing its outlook” for equity gold sales for the year to between 5.2 million and 5.4 million oz. at costs applicable to sales of between US$400 and US$430 per oz.

During the third quarter, the company continued to troubleshoot in Nevada, including the “slower than anticipated” reopening of its Midas mine.

Newmont spent US$47 million on exploration efforts in the third quarter, bringing the 9-month total for the year to US$132 million.

In North America, those exploration dollars were channelled into developing mine programs in Nevada’s Carlin trend, Battle Mountain-Eureka trend and Northern Nevada Rift.

Overseas, exploration funds were focused on mine programs at Yanacocha in Peru and greenfield projects in the Guiana Shield and the Andes in Peru.

In New Zealand and Australia, Newmont conducted development drilling at Boddington, Jundee and Martha, as well as reserve and non-reserve mineralization drilling at the Callie deposit in the Tanami.

Finally, in Ghana, it continued its drill programs at Ahafo to explore reserve and non-reserve mineralization expansions at depth and on targeting definition in the Sefwi and Ashanti belts.

It was also a busy quarter for Newmont in terms of building its portfolio of properties. Earlier this month, the Denver-based company bid for all of the shares of Miramar Mining (mae-t, mng-x).

Miramar is a Canadian gold company that controls the Hope Bay project in the country’s Far North. Hope Bay is an undeveloped gold project in the territory of Nunavut that extends over 1,000 sq. km.

Newmont’s offer to take all of Miramar’s outstanding shares for $6.25 per share values Miramar at about $1.5 billion on a fully diluted basis.

The bid represents a premium of about 29% over Miramar’s 20-day volume-weighted average trading price on the Toronto Stock Exchange.