Higher gold prices boosted earnings in the recent 3-month period to US$128.7 million (or US29 per share), compared with US$114.4 million (US28 per share) a year earlier.
The company sold 1.7 million oz. gold at an average realized price of US$404 per oz., compared with just over 2 million oz. (16% more gold) at US$366 per oz. in the third quarter of 2003. The reduction in gold sales reflects lower sales from operations in Nevada, where stripping was higher and grades lower, as well as the sale of certain operations.
Newmont CEO Wayne Murdy predicts 2004 gold sales will total about 7 million oz. by year-end.
Revenue was up 32% to US$1.16 billion, while production costs increased 12% to US$296 per oz.
Mining-related activities generated US$339 million in cash.
Newmont reported a US$8.2-million writedown of assets in Australia and northern Peru (at Yanacocha), a US$6-million charge for Australian site reclamation, and US$3.9 million in miscellaneous charges. Diesel, electricity and equipment maintenance costs were also higher, though these increases were partially offset by a US$7.3-million gain on the sale of the Bronzewing mine in Australia.
In North America, 625,800 oz. gold were sold at a cash cost of US$292 apiece. Costs were higher at most operations, especially Golden Giant, in Hemlo, Ont., where they rose 76% as a result of a production halt. Operations ceased as a result of an ore-hoisting failure, lower mill grades, and a higher Canadian dollar. Golden Giant saw cash costs rise to US$418 per oz.
Operations in Australia and New Zealand sold 472,600 oz. gold, or 13% less than a year earlier, following the sale of two mines. The currencies of both countries increased in relation to the U.S. dollar, pushing up average cast costs to US$269 per oz.
Gold sales fell by 12% at Yanacocha and by 91% at the Kori Kolla mine in Bolivia. The latter ceased mining in October 2003 yet managed to produce 4,000 oz. from residual leaching in the recent quarter. Yanacocha sold 397,000 oz. while incurring cash costs of US$139 per oz.
In Indonesia, Newmont’s interest in the Batu Hijau mine decreased by 3.4% in early October to 52.8%. The mine sold 111.3 million lbs. copper at a total cash cost of US56 per lb., plus 134,100 oz. gold at US$166 per oz. The realized copper price was US$1.42 per lb. Throughput rates increased 7% as a result of modifications to the crusher in 2003.
The Minahasa mine, also in Indonesia, processed stockpiled ore until August (mining ceased in 2001), resulting in 20,400 oz. gold at a total cash cost of US$146 per oz. Operations were hampered by the month-long detention of five employees on pollution allegations; they have since been released on probation.
In Uzbekistan, the Zarafshan mine produced 8% less gold than a year earlier. Output totalled 46,100 oz. at a cash cost of US$165 per oz.
The Ovacik mine in Turkey produced 34,700 oz. gold at a cash cost of US$174 per oz.; that’s about a third of the gold produced in the third quarter of 2003, and costs were 36% higher. Newmont was forced to close the mine after the Turkish government suspended operating permits, though these are expected to be restored provided additional environmental assessment is carried out.
At the end of the quarter, Newmont’s cash and cash equivalents totalled US$1.4 billion, while outstanding debt was pegged at US$1.7 billion. The company had US$413.4 million in marketable securities and other short-term investments. Debt fell by US$66 million over the period.
Income from royalties and dividends in the third quarter totalled US$19.1 million, or 12% more than a year earlier. The increase reflects higher oil and gas prices. Transactions during the period resulted in Newmont’s owning 6.8% of the outstanding Canadian Oil Sands Trust (cos.un-t) units and 10.2% of Gabriel Resources (GBU-T), which is working on the Rosia Montana gold project in Romania.
Newmont spent US$54.1 million on exploration, research and development during the quarter.
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