Newmont’s debt reduction strategy, is paying off

New York-based Newmont Mining is still attempting to recover from a $2.2-billion dividend paid out last October to thwart a takeover bid by Texas oilman T. Boone Pickens.

Net income for the three months ended March 31 rose to $114.4 million(US) or $1.70 a share, from $24.9 million or 41} per share in the same period last year.

After selling off a number of assets including a 34% stake in Sherritt Gordon Mines for $40.8 million and about 4.2 million shares of E.I. du Pont de Nemours, Newmont had reduced its long-term debt to about $1.6 billion by May.

Newmont says it has also attempted to reduce its interest costs through a 1-million-oz gold loan which is scheduled to be repaid over a 5-year period with gold bought at market prices.

The gold loan carries a 2.5% interest rate compared with over 8% for other credit facilities available to the New York company. But interest rates on the gold and other loans will decline by 1% and % respectively after Newmont’s debt is reduced to $1.25 billion, the company said.

Newmont’s 90% interest in Newmont Gold and a 75% interest in Newmont Australia netted the company $32.1 million in pretax income in the first quarter of 1988. That represents a slight increase from the $31.1 million reported in the first quarter of 1987.

The two companies reported combined gold sales of 198,800 oz during the quarter compared with 180,600 at the same time last year.

After failing to reach a pricing agreement, Newmont recently elected to take its Australian subsidiary off the selling block.

While increasing its gold sales to 139,900 oz during the quarter from 132,500 oz last year, Newmont Gold pulled a record breaking drill intersection at its Post claims on the Carlin Trend in Nevada.

Assaying at 0.93 oz gold per ton over 470 ft, it is one of the richest drill holes ever recorded by any gold exploration company.

During the quarter, Newmont Gold’s Carlin reserves (in the proven/probable category) increased to 15 million oz at year end, compared with 12.3 million at the end of 1986.

Earnings from Newmont Mining’s 49.9% interest in the Peabody Holding Co. more than doubled to $16 million before tax during the quarter, from $7.2 million last year, the company said.

Newmont has also declared a dividend of 15} per common share payable June 10 to shareholders of record on May 26.