Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Gold mining giant Newmont Mining Corporation’s (NEM - Analyst Report) fourth-quarter 2012 adjusted earnings of $1.11 cents a share dropped 2.6% from last year’s earnings of $1.14 but exceeded the Zacks Consensus Estimate of 98 cents.

On a reported basis, the company posted a profit of $673 million in the quarter versus a loss of $1,028 million a year ago. The year-ago quarter’s bottom line was hit by a sizable impairment charge.

For full-year 2012, adjusted earnings came in at $3.71 per share, down from $4.31 per share in 2011 but ahead of the Zacks Consensus Estimate of $3.58.

Profit for the full year (attributable to Newmont shareholders), as reported, jumped nearly five-fold year over year to $1,809 million or $3.63 per share from $366 million or 73 cents per share in the prior year. Profit from continuing operation soared almost four-fold year over year to $1,885 million or $3.78 a share in 2012.

Newmont’s revenues in the quarter fell nearly 10.5% year over year to $2,476 million, missing the Zacks Consensus Estimate of $2,643 million. Sales were affected by lower production from Asia Pacific due to continued Phase 6 waste mining at Batu Hijau.

For the full year, sales were $9,868 million, down 4.7% year over year, missing the Zacks Consensus Estimate of $10,229 million.

The company’s attributable gold and copper production was 1.3 million ounces and 35 million pounds, respectively, in the quarter. Gold and copper Cost applicable to sales (CAS) was $720 per ounce and $2.61 per pound, respectively. All-in sustaining cost was $1,192 per ounce.

Regional Performance

North America

Gold production at the Nevada mine declined 8% year over year to 478,000 ounces in the reported quarter due to lower tons and grades from Leeville. Production at La Herradura decreased 14% to 48,000 ounces due to the timing of leach recoveries, a refinery adjustment, and lower grade ore.

South America

Gold production at Yanacocha in Peru plunged 30% year over year to 121, 000 ounces on account of lower mill grade and lower leach placement earlier in the year. Gold production at La Zanja was 13,000 ounces, a decline of 13.3% year over year.

Asia Pacific

Newmont operates three mines in the Asia-Pacific, namely, Boddington in Australia, Batu Hijau in Indonesia and Others in Australia/New Zealand. Gold and copper production from Boddington increased 7% and decreased 10% year over year, respectively, due to higher gold grade and lower copper recovery, respectively.

At Batu Hijau, both gold and copper production plunged 56% and 33%, respectively, to 7,000 ounces and 16 million pounds due to lower ore grade and recovery as a result of processing lower grade stockpiled material. At Others in Australia/New Zealand, gold production increased 7%, partly due to higher throughput at Jundee, higher grade at Waihi and higher throughput and grade at Tanami.

Newmont will split the Asia Pacific region into two regions in 2013, namely, Australia/New Zealand and Indonesia.  The Australia/New Zealand region will include Boddington and Other Australia/New Zealand while the Indonesia region will include Batu Hijau.

Africa

Attributable gold production at the company’s Ahafo mine in Ghana jumped 40% from last year as a result of drawdown on in-process inventory, higher grade and recovery.

Financial Position

Newmont had cash and cash equivalents of $1.56 billion as of Dec 31, 2012, versus $1.76 billion as of Dec 31, 2011. The company’s long-term debt increased roughly 74% year over year to $6.29 billion. Consolidated capital expenditures in 2012 were $3.2 billion, up from $3 billion in 2011.

Dividend

Newmont has increased its quarterly dividend by 21% to 42.5 cents per common share for the first quarter of 2013. The company's dividend is linked to the bullion price.

Outlook

Newmont expects gold production to be roughly 4.8 million to 5.1 million in 2013. Copper production is anticipated to be in the range of 150 million to 170 million pounds. The company expects lower production at Batu Hijau and Yanacocha. The company also expects Akyem to start production in late 2013.

CAS for gold has been forecast in the range of $675 and $750 per ounce due to lower production at Batu Hijau and Yanacocha combined with higher expected costs for energy, labor and contracted services. All-in sustaining cost is expected to be between $1,100 and $1,200 per ounce.

CAS for copper is expected to be between $2.25 and $2.50 per pound due to lower production at Batu Hijau.

Newmont expects gold production in North America to be in the range of roughly 2 to 2.1 million ounces at CAS of around $600 to $650 per ounce.

Newmont forecasts South America to produce 550,000-600,000 ounces at CAS of roughly $600 to $650 per ounce. It expects Australia/New Zealand to produce 1,625,000-1,725,000 ounces at CAS of around $900 to $1,000 per ounce.

Newmont expects 2013 attributable gold production for its African operations to be about 625,000 to 675,000 ounces due to new production from Akyem in late 2013 at CAS of roughly $525 to $575 per ounce.

The company expects to invest roughly $2.1 billion to $2.3 billion in attributable capital expenditures in 2013.

Newmont is one of the world's largest producers of gold with several active mines in Nevada, Peru, Australia/New Zealand, Indonesia and Ghana. The company continues to invest in growth projects in a calculated manner and is ramping up production capacity. But rising costs and delays in project developments are significant headwinds that may reduce the company’s earnings power.

Currently, Newmont retains a Zacks Rank #3 (Hold).
Other companies in the gold mining industry having favorable Zacks Rank are AngloGold Ashanti Ltd. (AU - Snapshot Report), Banro Corporation (BAA - Snapshot Report) and Sandstorm Gold Ltd. (SAND - Snapshot Report). All of them carry a Zacks Rank #2 (Buy).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
BITAUTO HOLD BITA 35.33 +14.82%
ANI PHARMACE ANIP 24.79 +14.66%
E HOUSECHINA EJ 10.99 +9.24%
CANADIAN SOL CSIQ 26.97 +7.15%
INTERNATIONA ICAGY 33.30 +5.38%