Newmont posts loss

Denver — Higher production was not enough to offset the effects of low gold prices for Newmont Mining (NEM-N) in 2000.

In the fourth quarter, the Denver-based company earned US$19.7 million (or 12 per share), down from US$46.8 million (28 per share) in the corresponding period in 1999. For the year, Newmont incurred a loss of US$18.9 million (11 per share), compared with earnings of US$24.8 million (15 per share) in 1999.

Production in the fourth quarter hit 1.6 million oz. gold at cash operating costs of US$163 per oz., up from 1.24 million oz. at US$164 per oz. in the last three months of 1999.

Production in 2000 reached 4.9 million oz. gold, with cash costs ringing in at US$171 per oz., compared with year-ago output of 4.2 million oz. at US$175 per oz.

Higher production overcame lower prices, resulting in higher revenues in both the fourth quarter and the year, though several factors — an accounting change, a writedown and other non-cash items — ate into earnings.

The writedown, which amounted to US$21.3 million in the quarter, is largely attributed to the Mesquite mine in California, which has only two years of operations remaining.

However, the company expects a pretax writedown of nearly US$40 million in 2001, related to the recently completed acquisition of Battle Mountain Gold.

The company’s North American operations stood out, with production increasing some 40% to 1.07 million oz. Much of the increase came from high-grade ores at the Deep Post mine in Nevada’s Carlin trend. For the year, North American operations accounted for 3.2 million oz., representing a 19% increase over year-ago levels. Cash operating costs were US$202 per oz.

The Batu Hijau copper-gold mine in Indonesia contributed US$4.8 million in equity income during the fourth quarter. Production during the three months ended Dec. 31 was 168.4 million lbs. copper and 128,000 oz. gold. Newmont’s share amounted to 94.7 million lbs. copper and 72,000 oz. gold. Cash operating costs were US46 per lb.

In its first full year of operation, Batu Hijau cranked out 520.8 million lbs. copper and 320,100 oz. gold. The company’s share was 292.9 million lbs. copper and 180,100 oz. gold. Cash operating costs averaged US57 per lb.

From all its operations, Newmont expects to produce 5.4 million oz. in 2001 and maintain at least 5 million oz. for each of the next five years. Much of the production should come from the Yanacocha operation in Peru, where the company hopes to push production beyond 2.5 million oz. per year.

Newmont wants to reduce costs to less than US$160 per oz. and slash its debt-to-capitalization ratio to less than 30%. The company cut its long-term gold price assumption to US$300 per oz., down from US$325 per oz. Despite the change in price, proven and probable reserves had grown to 56.7 million oz., net of depletion, by the end of 2000.