Newmont sails into black following profitable quarter — Sets record for highest gold output in U.S.

Despite a significant drop in the price of gold, Newmont Mining (NEM-N) and Newmont Gold (NGC-N) made money in the fourth quarter, and for 1997 as a whole.

Newmont Mining earned US$38.6 million (or 25cents per share) during the fourth quarter of 1997, compared with US$21.5 million (14cents per share) for the same period in the previous year.

Revenue between the two periods rose considerably, to US$412.2 million from US$305.5 million.

For the year, Newmont Mining earned US$68.4 million (44cents per share), compared with US$98.6 million (63cents per share) in 1996. The decrease is attributed to non-recurring charges associated with the merger with Santa Fe Pacific Gold. (In May 1997, Newmont Mining completed its US$2.1-billion merger with Santa Fe on the basis of 0.43 share of Newmont Mining for each Santa Fe share. Following the merger, Newmont Mining transferred Santa Fe’s properties to its 94%-owned operating subsidiary, Newmont Gold.) Excluding those charges (totalling US$104.4 million), the year’s earnings were US$1.07 per share.

Revenue in 1997 was US$1.6 billion, compared with US$1.1 billion in 1996.

The rise is partly due to a change in how production was reported for the mines operated by its Peruvian affiliate, Minera Yanacocha.

For its part, Newmont Gold earned US$41.2 million (25cents per share) during the fourth quarter, compared with US$23 million (14cents per share) for the same period last year.

Earnings for the year amounted to US$72.9 million (44cents per share), compared with US$105.2 million (63cents per share) in 1996.

Despite weakness in the gold price, Newmont produced 3.4 million oz. during 1997, up from 3.1 million in 1996. Of this total, 3 million oz. were produced in the U.S. — the highest annual gold output ever achieved by one company in that country.

Gold production in the fourth quarter totalled 1.1 million oz.

Total cash costs during the year fell US$31 to US$187 per oz., with all operations showing significant cost reductions. The company realized an average gold price of US$354 per oz. for the fourth quarter of 1997 — US$41 less than in the same period of the previous year.

Gold production at the Yanacocha operations exceeded 1 million oz., of which Newmont’s share amounts to 51.4%. (The company is awaiting final resolution for a case before the Peruvian Supreme Court, which is expected to settle ownership rights concerning a third party.)

Overall capital expenditures are expected to decrease in 1998, notwithstanding the fact that construction is continuing at both the Batu Hijau copper-gold project in Indonesia and the Herradura project in Mexico.

Also, the company plans to limit its exploration budget to US$30 million in 1998, focusing on areas around its existing mine sites in Nevada and Peru.