Denver-based Newmont Mining Corp., the world’s third-biggest gold producer, said equity sales of the precious metal may fall as much as 14 percent this year because of lower output in Ghana and a dispute over a venture in Uzbekistan.
Sales might drop to 5.6 million to 5.8 million ounces from 6.5 million in 2005, Newmont said today in a statement. Sales in 2007 may decline to 5.2 million to 5.6 million ounces, partly because of lower output in Peru, the company said.
Power shortages in Ghana, the loss of metal production from the Zarafshan-Newmont venture in Uzbekistan and the sale of the Holloway mine in Canada will reduce 2006 output, the company said. Costs in 2007 will rise as much as 25 percent from this year because of higher expenses at the Yanacocha project in Peru, the company said.
“With the higher commodity and energy prices impacting the industry, and lower gold production at Yanacocha, we expect gold sales to reach a low point and costs to peak in 2007,” Chief Executive Officer Wayne Murdy said in the statement. “Beyond 2007, we expect to return to a growth profile with improving costs as we benefit from the ramp-up of our new mines.” Newmont shares trading on the New York Stock Exchange fell $1.02, or 2.3 percent, to $42.99 at 8:33 a.m. Mountain time. Before today, they had slumped 18 percent this year, compared with a 8.5 percent gain by Barrick Gold Corp., the world’s largest gold producer.
Asset Sales, Write-off Third-quarter profit will increase by $295 million from the sales of energy assets in Canada and an Indonesian project, Newmont said. Profit will be reduced by a $94 million write-off on the Uzbekistan venture.
Newmont in July had forecast sales of 5.9 million to 6.2 million ounces. The company affirmed 2006 costs will be $290 to $310 an ounce.
Uzbekistan in August seized gold and other assets of Newmont’s venture in the country after a tax ruling against the company. Newmont said today it will “continue to challenge the Uzbek government’s actions through international arbitration.” Barrick is the biggest producer by second-quarter output, followed by AngloGold Ashanti Ltd., according to World Gold Analyst magazine.
