Accounting charges related to hedging pulled down earnings for
The company posted a loss of US$39 million (or 23 cents per share) after a US$41.3-million non-cash charge (25 cents per share) related to liquidation of call options. In the comparable 3-month period of 1998, Newmont earned US$6.1 million (4 cents per share).
Newmont sold the call options to finance the purchase of put options, which contain no lease rates or margin call risk.
The recent quarterly report included a gain of US3 cents per share from the sale of Argentina Gold shares, and a US1 cents-per-share charge for startup expenses at the Batu Hijau project in Indonesia. A similar 1 cents charge was included in the third quarter of 1998.
Excluding external items, Newmont earned US$2.3 million (2 cents per share) from operations during the recent quarter. The figure is based on a realized gold price of US$271 per oz.
Equity production rose 4% to just over 1 million oz., while cash costs fell 6% to US$174 per oz. and total production costs declined 10% to US$228 per oz. Total sales amounted to US$328 million, down from US$349.9 million a year ago.
North American operations accounted for 649,000 oz. in the recent quarter, and cash costs were US$215 per oz. — down from 720,400 oz. at US$214 per oz. a year ago. International operations picked up the shortfall, with a 39% increase in production to 393,600 oz. at an average cost of US$108 per oz.
At the Minahasa mine in Indonesia, production nearly doubled to 98,300 oz., while cash costs fell 37% to US$99 per oz. Meanwhile, in Uzbekistan, the 50%-held Zarafshan joint venture showed strong improvement, with production jumping 86% from a year ago to 155,600 oz. Cash costs there fell 26% to US$153 per oz. Also, Newmont’s share of production from the Yanacocha mine in Peru increased 13% to 217,500 oz. at US$96 per oz.
Construction of the US$1.8-billion Batu Hijau project was recently completed under budget by US$130 million, and Newmont says the first copper-gold concentrates will be shipped earlier than expected.
The company has a 45% interest in the copper-gold porphyry project, with Sumitomo holding 35% and a local firm, the remainder.
On a daily basis, the operation mines 300,000 tonnes and processes 120,000 tonnes. At full production, it is expected to contribute 510,000 oz. gold and 615 million lbs. copper annually at cash costs under US50 cents per lb. copper.
Closer to home, at the Deep Post mine in Nevada, the company has advanced a decline 3,800 ft. and started an exploration drift connecting the decline with the nearby Deep Star mine.
Startup at Deep Post is slated for mid-2001, with annual production expected to exceed 350,000 oz. at US$150 per oz.
Overall, Newmont expects to produce 4.5 million oz. in 2000 at an average cash cost of US$175 per oz.
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