Newmont Mining swings to a loss

A combination of lower gold and copper prices along with stockpiles and ore on leach pads contributed to a net loss attributable to shareholders of US$2 billion or US$4.06 per share, compared to a net profit of US$279 million, or US$0.56 per share, in the same quarter a year ago, Newmont Mining (TSX: NMC; NYSE: NEM) reported today.

The Denver-based miner wrote down the value of its assets, stockpiles and ore on leach pads by US$1.8 billion on an attributable basis net of taxes. Of that amount, US$1.5 billion was related to impairments on property, plant and mine development and other long-term assets at its Boddington and Tanami operations in Australia.

Revenues in the quarter reached US$2 billion with cash flow from continuing operations of US$293 million, or US$0.59 per share. All-in sustaining costs totaled US$1,136 per oz., excluding stockpile write-downs, or US$1,548 per oz., reflecting stockpile write-downs.

The company is maintaining its full year guidance of 4.8-5.1 million ounces of gold and 150-170 million pounds of copper.

On the cost-cutting front Newmont president and chief executive officer Gary Goldberg noted that the company has cut spending—excluding development capital—so far this year by 10%, or US$362 million, compared to the same period last year. Capital expenditures were also down $458 million, or 29%, in the second quarter compared to the same quarter last year. Newmont is on track to cut its corporate work force by more than a third.  

“Our operations are performing in line with expectations and our cost improvement efforts are really gaining momentum,” Goldberg declared on a morning conference call, adding that management is taking a number of measures to strengthen the business for all cycles including “accelerating the pace and magnitude of our cost and efficiency improvements, strengthening our fundamental technical skills from resource modeling through reclamation, optimizing our portfolio, exploration strategy and project pipeline and investing only in our most promising growth opportunities, and finally, preserving financial flexibility.”

Looking ahead to the rest of the year, Goldberg said he expects “a stronger second-half performance due to improved mill throughput here in Nevada and new production in Ghana.”