DENVER—Newmont Mining Corp., one of the world’s largest gold producers, said Thursday it swung to a loss in the fourth quarter because of a $1.1 billion writedown and lower gold sales.
Although the average price of gold rose in the quarter, so did costs, and the Denver-based company said it met expectations on both for the fourth quarter. “We actually had an extremely strong quarter,” Chief Financial Officer Russell Ball told analysts during a conference call.
The results were issued as Newmont faces a Friday deadline to sell a 10 percent stake in one of its Indonesian properties to government authorities there. Indonesia officials claim that Newmont has breached the contract.
Chief Executive Officer Richard O’Brien said the company is working with Indonesian officials to try to resolve the situation.
“We firmly, firmly disagree with the allegation,” he told analysts. “I hope we can continue to work constructively to try to avoid a situation where we would otherwise have to invoke international arbitration to protect our interests at Batu Hijau …. It’s day-to-day.”
For the quarter ended Dec. 31, Newmont posted a net loss of $289 million, or 63 cents a share, compared with net income of $223 million, or 49 cents a share, in the year-ago quarter.
The results included a number of one-time items, including a $1.1 billion non-cash charge due to reserve replacement results and new accounting rule requirements, a pretax gain of $900 million related to an asset sale.
Revenue dipped to $1.41 billion from $1.42 billion.
Analysts surveyed by Thomson Financial on average forecast a profit of 37 cents per share on revenue of $1.47 billion.
In the most recent quarter, Newmont sold 1.4 million ounces of gold, down from 1.7 million in the year-ago quarter—which company spokesman Omar Jabara attributed to lower production at operations in Nevada and Peru.
Although the average price rose to $785 an ounce from $612 an ounce, the costs applicable to sales also increased to $384 an ounce from $324 an ounce.
Noting the variety of special charges, the fourth-quarter results were “largely immaterial, quite frankly,” HSBC Global Research analyst Victor Flores said. “You could drive yourself nuts trying to figure out what they actually earned.”
By Flores’ calculations, the company earned about $1.28 a share excluding special items.
Jabara said 2007 was a year of transition and reinvestment for the company, which is refocusing its priorities on core assets.
For the year, Newmont reported a net loss of $1.9 billion, or $4.17 a share, compared with $791 million, or $1.75 a share, in 2006. Revenue rose to $5.53 billion from $4.9 billion.
For 2008, the company forecast gold sales between 5.1 million and 5.4 million ounces, with costs applicable to sales ranging from $425 an ounce to $450 an ounce.
Newmont’s shares fell 51 cents, or 1 percent, to close at $50.64 a share Thursday.
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