Gold mid-tiers’ Q3 2024 fundamentals
All-time-high gold prices combined with relatively-contained costs catapulted unit earnings to another epic record.
DENVER, April 26, 2012 /PRNewswire/ — Newmont Mining Corporation (NEM) (“Newmont” or the “Company”) today reported attributable net income from continuing operations of $561 million or $1.13 per basic share ($1.11 per share on a fully diluted basis), up 9% from $514 million, or $1.04 per basic share in the first quarter 2011. Adjusted net income[1] was $578 million or $1.17 per basic share in first quarter 2012, compared with $513 million, or $1.04 per share for the prior year quarter.
First Quarter Highlights:
“We are pleased to announce another quarterly increase in our net income from continuing operations, up 9% over the prior year quarter to $561 million, or $1.13 per share. We also saw gold operating margin expansion of 29%, which outpaced the 22% increase in the average realized gold price from the prior year,” said Richard O’Brien, President and CEO. “During the first quarter, we continued to invest in the development of our Akyem project in Ghana, which remains on schedule for initial production in 2014. Regarding Conga in Peru, the project continues to be suspended pending further analysis of the economic and technical impacts from the recently released report from the independent panel,” added Mr. O’Brien.
[1] Non-GAAP measure. See page 10 for reconciliation.
Newmont is maintaining its previously announced 2012 outlook for attributable gold and copper production of 5.0 to 5.2 million ounces and 150 to 170 million pounds at CAS of between $625 and $675 per ounce (on a co-product basis) and $1.80 and $2.20 per pound, respectively.
Newmont is also maintaining its 2012 attributable capital expenditure outlook of $3.0 to $3.3 billion, or $4.0 to $4.3 billion on a consolidated basis. However, this estimate assumes the development of the Conga project in Peru proceeds as anticipated in connection with our original 2012 outlook provided in January 2012. As previously disclosed, development of the Conga project was temporarily suspended in November 2011 and recommencement and future development remains subject to certain risks, including political and social risks, and uncertainties, including those relating to the Environmental Impact Assessment (“EIA”) review. The Conga project’s EIA, which was previously approved by the central government of Peru in October 2010 after an extensive public engagement process, was subject to a review by independent experts during the first quarter at the request of the central government. The results of the independent review were released last week and confirmed that the reviewed sections of the EIA met Peruvian and international standards. The Company is currently in the process of evaluating the recommendations contained in the independent report, and additional recommendations from the central government related to the report, to assess the impact on the project economics. The Company will reevaluate its capital expenditure outlook after completing that evaluation process and when the development schedule of Conga is more clearly defined. Should the Company be unable to continue with the development of Conga, the Company may reprioritize and reallocate capital to other development alternatives in Nevada, Australia, Ghana and Indonesia.
As previously announced, Newmont’s Board of Directors approved a second quarter 2012 gold price-linked dividend of $0.35 per share[2] based on the Company’s average realized gold price of $1,684 per ounce for the first quarter of 2012, an increase of 75% over the $0.20 per share dividend paid in the second quarter of 2011.
Operations
North America
Nevada – Attributable gold production in Nevada was 435,000 ounces at CAS of $617 per ounce during the first quarter. Gold production was consistent with the prior year quarter due to higher grade ore mined as Gold Quarry resumed production, offset by lower underground ore grade mined at Leeville and Midas.
Costs applicable to sales per ounce decreased 4% as higher underground mining and milling costs were more than offset by an inventory build in 2012 compared to a drawdown of inventory in 2011.
The Company continues to expect 2012 attributable gold production from Nevada of approximately 1.725 to 1.8 million ounces at CAS of between $575 and $625 per ounce.
La Herradura – Attributable gold production at La Herradura in Mexico was 54,000 ounces at CAS of $581 per ounce during the first quarter. Gold production increased 10% due to higher leach placement at Soledad-Dipolos and first production from the Noche Buena pit. CAS increased 49% from the prior year quarter due to higher employee profit sharing costs and Noche Buena commencing production.
The Company continues to expect 2012 attributable gold production from La Herradura of approximately 200,000 to 240,000 ounces at CAS of between $460 and $510 per ounce.
South America
Yanacocha – Attributable gold production at Yanacocha in Peru was 188,000 ounces at CAS of $458 per ounce during the first quarter. Gold production increased 27% from the prior year quarter due to higher mill throughput, recovery and grade, partly offset by lower leach production from La Quinua, Carachugo and Yanacocha. CAS per ounce decreased 21% from the prior year quarter due to higher production, partially offset by higher labor, diesel, and workers’ participation and lower by-product credits.
[2] Payable on June 28, 2012 to shareholders of record as of June 12, 2012.
The Company continues to expect 2012 attributable gold production from Yanacocha of approximately 650,000 to 700,000 ounces at CAS of between $480 and $530 per ounce.
La Zanja – Attributable gold production during the first quarter at La Zanja in Peru was approximately 13,000 ounces.
The Company continues to expect 2012 attributable gold production from La Zanja of approximately 40,000 to 50,000 ounces.
Asia Pacific
Boddington – Attributable gold and copper production during the first quarter at Boddington in Australia was 162,000 ounces and 14 million pounds, respectively, at CAS of $782 per ounce and $1.94 per pound, respectively. Gold ounces and copper pounds produced were consistent with the prior year quarter as 17% higher throughput was offset by 15% lower grade and 2% lower recovery. Gold CAS increased 31% due to processing lower grade ore, higher milling and mining costs, a higher proportion of costs allocated to gold, and a stronger Australian dollar. Costs applicable to sales per pound decreased 11% mainly due to lower costs allocated to copper.
The Company continues to expect 2012 attributable gold production of approximately 750,000 to 800,000 ounces at CAS of between $800 and $850 per ounce and attributable copper production of 70 to 80 million pounds at CAS of between $2.00 and $2.25 per pound.
Batu Hijau – Attributable gold ounces and copper pounds produced during the first quarter at Batu Hijau in Indonesia were 11,000 ounces and 21 million pounds, respectively, at costs applicable to sales of $913 per ounce and $2.00 per pound, respectively. Gold and copper production decreased 76% and 49%, respectively, due to lower throughput, grade and recovery as a result of processing lower grade stockpiled material as Phase 6 waste stripping continues. Costs applicable to sales per ounce and per pound increased 184% and 108%, respectively, due to lower production, higher labor and diesel costs, and increased waste stripping costs.
The Company continues to expect 2012 attributable gold production of approximately 45,000 to 55,000 ounces at CAS of between $800 and $850 per ounce and attributable copper production to be approximately 80 to 90 million pounds at CAS of between $1.80 and $2.20 per pound.
Other Australia/New Zealand – Attributable gold production during the first quarter was 265,000 ounces at costs applicable to sales of $757 per ounce. Attributable gold ounces produced decreased 11% due to a planned mill shutdown at Waihi, mill maintenance at Kalgoorlie and a build-up of in-process inventory at Jundee and Kalgoorlie, partly offset by higher grade at Tanami. Costs applicable to sales per ounce increased 35% primarily due to lower production, a stronger Australian dollar, lower by-product credits, and higher diesel and royalty costs.
The Company continues to expect 2012 attributable gold production of approximately 980 to 1.03 million ounces at CAS of between $810 and $860 per ounce.
Africa
Ahafo – Attributable gold production during the first quarter at Ahafo in Ghana was 175,000 ounces at CAS of $568 per ounce. Gold production decreased 6% from the prior year quarter due to lower mill throughput and grade, partially offset by a reduction of in-process inventory and higher recovery. CAS per ounce increased 26% from the prior year quarter due to lower production and higher labor, diesel, and royalty costs.
The Company continues to expect 2012 attributable gold production of approximately 570,000 to 600,000 ounces at CAS of between $500 and $550 per ounce.
Capital Update
Consolidated capital expenditures were $720 million during the first quarter. Newmont is maintaining its 2012 attributable capital expenditure outlook of $3.0 to $3.3 billion, or $4.0 to $4.3 billion on a consolidated basis. Capital spending through the first quarter of 2012 has been lower than expected across the portfolio, due to temporary suspension of development at Conga, but is expected to increase throughout the year. For the remainder of the year, 60% of 2012 consolidated capital expenditures are expected to be associated with major project initiatives, assuming the development of the Conga project in Peru proceeds as originally anticipated, while the remaining 40% is expected to be sustaining capital.
