Newmont’s profit drops 48% y-o-y in first quarter

Newmont Mining Corp. (NEM-N), which operates mines in Indonesia, Australia, Ghana, and North and South America, saw its profits tumble 48% year-on-year in the first quarter of 2009.

Net earnings slid to US$189 million, or US40¢ per share, down from US$365 million or US81¢ per share in the first quarter of 2008. Revenues dipped 20% to US$1.55 billion.

Newmont reported that its average realized price for gold reached US$906 per oz., while its copper fetched US$1.69 per lb.

Richard O’Brien, president and chief executive officer, noted that lower commodity prices were both a curse and a blessing. While lower copper prices negatively impacted earnings and cash flow, he explained, lower than expected diesel costs and Australian dollar exchange rates also resulted in lower costs applicable to sales.

“If input commodity prices remain at our forecasted levels for the balance of the year and gold stays in the current trading range, we expect expanding margins for the rest of the year,” he said in a prepared statement.

Newmont believes its equity gold sales — or the portion it owns of joint ventures – will fall in a range of 5.2 million to 5.5 million oz. this year at costs applicable to sales of US$400 to US$440 per oz. (assuming an oil price of US$50 per barrel and an Australian dollar exchange rate of 0.70 for the balance of the year.)

Costs applicable to sales are expected to change by about US$6 per oz. for every US$10 change in the oil price and by roughly US$3 per oz. for every 0.10 change in the Australian dollar exchange rate for the rest of the year, Newmont maintains.

Higher than expected sales in Nevada, Australia and at Batu Hijau in Indonesia were partially offset by lower sales at Yanacocha in Peru. Costs applicable to sales per ounce were lower than expected in Nevada, Australia, Yanacocha in Peru, Batu Hijau in Indonesia and Ahafo in Ghana, but were partially offset by higher costs at Kori Kollo in Bolivia.

Newmont says by the end of the first quarter it had completed about 95% of the Boddington project in Australia. Start up is expected to be in mid-2009 with a 12-month ramp up schedule.

Newmont closed down 47¢ or 1.15% at US$40.24 on the New York Stock Exchange. It has a 52-week trading range of US$21.17-$53.77 per share and 489.3 million shares outstanding.