Newmont Mining suffered its biggest one-day stock drop in nearly a year Wednesday on a report of lower profits, then faced off against its environmental critics at the annual shareholders meeting in Denver.
First-quarter net income at the world’s largest gold miner dropped 3.4 percent because of lower gold production and higher costs.
Wall Street responded by sending Newmont shares down $2.55 to $37.70, a 6.3 percent drop.
“Production was lower because we had a bit of operating problems,” Newmont president Pierre Lassonde said after the meeting.
Sloughing from mine walls slowed production at mines in Nevada and Indonesia, contributing to a 10 percent decline in first-quarter gold sales, Lassonde said.
Profits also were hurt by rising costs of mining materials, particularly diesel fuel.
Newmont had budgeted 90 cents a gallon for diesel purchases in the first quarter but ended up paying $1.50 a gallon. Energy represents about 17 percent of Newmont’s operating costs.
The first quarter was a contrast to Newmont’s full-year 2004 performance, in which the company recorded gains in revenue, operating income and dividends paid.
The nearly two-hour annual meeting attracted about 300 attendees who entered the Brown Palace ballroom under tight security from uniformed Denver police officers and plain- clothes private security guards.
Newspaper photographers and television camera crews were held at bay outside the ballroom, although reporters – including from The New York Times – were admitted.
After lauding the 2004 performance, Newmont chief executive Wayne Murdy took questions from environmental and community activists who had traveled to Denver from Indonesia, Peru, Ghana, Romania and Nevada.
The questions and answers were familiar refrains from prior meetings. The activists questioned Newmont’s commitment to environmental safeguards and sustainable development; company officials responded with their track record of corporate good-citizenship.
“U.S. law tells us we don’t have the right to say no to mining activities,” said Kristi Begay, a member of the Western Shoshone Nation in Nevada. “This violates our human rights, culturally and spiritually. If you allow your company to merely go by these discriminatory laws, then you are a party to those violations as well.”
Murdy said Newmont spent $33 million last year on health, education and community-development projects in areas that it mines.
Staff writer Steve Raabe can be reached at 303-820-1948 or sraabe@denverpost.com.
