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Newmont Sets Redemption Date, Shares Up

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Shares of gold miner Newmont Mining Corporation (NEM - Free Report) gained around 0.7% during the trading session following the announcement that it has fixed Feb 18, 2014 as the redemption date for all of its outstanding exchangeable shares (other than those held by Newmont and its affiliates). The company has mailed all the related documents along with the redemption notice to the shareholders.

On the redemption date, the holders of the exchangeable shares (other than those held by Newmont and its affiliates) will receive one common stock of Newmont for each exchangeable share. They will also receive cash payment for any declared and unpaid dividends, provided that the record date for the payment of such dividends is prior to the redemption date.

On the day of redemption, Newmont or one of its affiliates, Callco, will be exercising the redemption call right to buy the outstanding exchangeable shares. Callco will then be purchasing the exchangeable shares, rather than Newmont.

Last month, Newmont released its third-quarter 2013 results. The company’s adjusted earnings of 46 cents a share fell 46.5% from the year-ago quarter’s earnings of 86 cents, but exceeded the Zacks Consensus Estimate of 32 cents.

On a reported basis, the company’s profit from continuing operations of $429 million or 86 cents per share in the quarter was up 7% from $400 million or 81 cents a year ago. The bottom line benefited from the sale of Newmont’s investment in Canadian Oil Sands Limited, and higher production from Nevada and Other Australia/New Zealand operations.
Newmont’s revenues declined nearly 20% year over year to $1,983 million in the quarter, beating the Zacks Consensus Estimate of $1,978 million. Weak gold and copper pricing, coupled with lower productions from South America and Indonesia, contributed to a double-digit drop in revenues.

Newmont reiterated its gold production expectation for 2013 in the range of 4.8–5.1 million ounces. Copper production outlook has been lowered and is anticipated to be in the range of 135-145 million pounds. Newmont continues to expect gold and copper CAS between $675 and $750 per ounce and $2.25 and $2.50 per pound, respectively, excluding the stockpile write-downs.  
Newmont has reduced its planned 2013 attributable and consolidated capital expenditure guidance by $200 million to $1.7–$1.9 billion and to $2–$2.2 billion, respectively. Attributable and consolidated sustaining capital outlook has been reduced by $100 million to $1–$1.1 billion and to $1.2–$1.3 billion, respectively.

Newmont currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the gold mining industry include Golden Star Resources, Ltd. (GSS - Free Report) , Pretium Resources Inc. (PVG - Free Report) and AngloGold Ashanti Ltd. (AU - Free Report) . While Golden Star Resources carries a Zacks Rank #1 (Strong Buy), Pretium Resources and AngloGold Ashanti hold a Zacks Rank #2 (Buy).

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