Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Oct 26 (Reuters) – Newmont Mining Corp’s third-quarter profit beat Street estimates but margins were squeezed as the cost of gold production increased and selling prices were lower, sending its shares down nearly 4 percent on Thursday.
Flush with cash and strong performance in North America and Africa, Newmont has been investing in new mines and harnessing technology to extend the life of mature mines.
The miner said its all-in sustaining costs to produce an ounce of gold – a key industry benchmark – rose $18 to $943, due to higher exploration and project expenses.
The Greenwood Village, Colorado-based company also said the average price per ounce for the precious metal fell 4 percent to $1,276 in the quarter ended Sept. 30.
Production from new mines such as the Merian in South America and Long Canyon in Nevada helped lift gold production by 7 percent to 1.3 million ounces.
Total revenue rose 5 percent to $1.88 billion.
Net income attributable to shareholders was $206 million, or 38 cents per share, compared with a loss of $358 million, or 67 cents per share.
The year-ago quarter included a charge of $527 million due to discontinuation of some operations.
Excluding items, Newmont earned 35 cents per share, beating analysts’ estimates by 2 cents, according to Thomson Reuters I/B/E/S.
The miner also maintained its 5.0 million-5.4 million production output forecast for 2017.
Shares of Newmont were down 3.8 percent at $35.33 in late-morning trading. Rival Barrick Gold Corp was off nearly 6 percent after posting slightly weaker-than-expected earnings.
(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sai Sachin Ravikumar and Martina D’Couto).
