An equity loss related to the Batu Hijau copper-gold mine in Indonesia and a non-cash, hedging-related charge combined to sink second-quarter earnings for
The company posted a net loss of US$16.3 million (or 10 per share) for the period, compared with earnings of US$7.1 million (4 per share) in the second quarter of 1999.
Earnings before the US$7.3-million equity loss and the US$11.6-million charge amounted to US$2.6 million (2 per share). In the second quarter of 1999, Newmont recorded a US$4.9-million startup loss for Batu Hijau, plus an US$8.4-million after-tax gain related to the sale of property.
Newmont pumped out 1.1 million oz. gold during the recent quarter, a jump of 14% from a year ago. Total cash costs between the two periods fell 7%, to US$171 per oz.
Newmont’s sales improved by 13% to US$355.4 million, while the average realized gold price stayed essentially the same, at US$283 per oz.
Higher production and lower costs translated into an operating cash flow of US$103.2 million (61 per share).
Newmont saw higher output from North American operations in the recent quarter. Production hit 717,300 oz., up 13% from a year ago, and up 10% from the first quarter of 2000. Total cash costs averaged US$203 per oz., down from US$211 in last year’s second quarter.
Overseas gold output climbed as well, to 371,000 oz. on the strength of the Yanacocha mine in Peru. The heap-leach operation contributed 209,200 oz. to Newmont’s account in the second quarter. Cash costs were US$87 per oz., down 22% from a year ago. The company’s share amounts to a 51.35% interest, with 43.65% held by
Newmont reported strong operating performances at other mines around the world, including the Zarafshan heap-leach project in Uzbekistan, where, despite lower production, the company held the line on costs. Newmont’s 50% share of production fell to 57,700 oz. in the second quarter, down from 66,900 oz. in the second quarter of 1999. However, cash costs fell to US$127 per oz., compared with US$172 in the year-earlier period.
At the Minahasa gold mine in Indonesia, production grew to 73,300 oz. at cash costs of US$178 per oz., compared with 64,500 oz. at US$124 per oz. a year ago. Cash costs climbed as a result of a week-long shutdown.
Newmont’s 45%-held Batu Hijau mine saw its mining rate increase 35%, while mill throughput rose 18%. The company’s share of production amounted to 67.2 million lbs. copper and 30,800 oz. gold, representing an 11% increase and a 4% decrease, respectively, from the previous quarter. To date, the open-pit operation has produced 127.7 million lbs. copper and 62,800 oz. gold to Newmont’s account. Total cash costs, including gold byproduct credits, were US62 per lb. Costs are expected to fall to US55 per lb. in the second half of the year.
The company expects to increase production in the second half of 2000 with improved contributions from the Deep Post underground mine in Nevada and further expansion at Yanacocha in Peru. Production should top 4.8 million oz. for the year, surpassing last year’s record performance by 15%. Total cash costs for the year are projected at US$173 per oz. Newmont expects to receive US$500 million in cash flow from operations and be able to reduce its debt by as much as US$70 million.
Newmont remains one of the least-hedged mining companies. In the first half of the year, it delivered 62,500 oz. from the Minahasa mine in Indonesia under a forward contract at US$454 per oz. The US$8.5-million charge against second-quarter earnings resulted from the amortization of expired put options.
In all, the company retains put options for 383,300 oz. at US$270 per oz., forward sales of 545,800 oz. at US$317 per oz., and 2.35 million oz. in call options at US$378 per oz.
In other news, Newmont expects to complete its acquisition of
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