DENVER—Newmont Mining Corp., one of the world’s largest gold producers, on Thursday reported its first-quarter net income climbed more than fivefold as it lowered production costs while gold prices jumped.
Although Newmont’s gold sales rose just slightly, the company realized the full benefit of an average price of $933 per ounce of gold because it eliminated all forward-sales contracts last summer.
Chief Executive Officer Richard O’Brien also credited improvement in operations at mines in Nevada and Peru among other areas.
“Our operational and project execution efforts are beginning to pay real tangible awards,” he told analysts during a conference call. “This is clearly evidenced by our strong first quarter operating results.”
For the quarter that ended March 31, Newmont reported net income of $370 million, or 81 cents per share. The company said earnings from continuing operations totaled 80 cents per share.
In the first quarter of 2007, Newmont reported net income of $68 million, or 15 cents per share.
Revenue totaled $1.94 billion, compared with $1.22 billion in the year-ago quarter.
The results beat estimates from analysts surveyed by Thomson Financial who, on average, forecast income of 54 cents per share on revenue of $1.66 billion.
Newmont sold 1.29 million equity ounces of gold during the quarter. That compared to sales of 1.294 million equity ounces at an average price of $649 in the year-ago quarter. Costs applicable to sales dipped 2 percent to $396 an ounce.
In late March, Newmont started a mill at the Yanacocha mine in Peru, with plans to put it into commercial production during the second quarter. Capital costs were expected to be between $250 million and $270 million.
A 200 megawatt coal-fired power plant in Nevada, which cost between $620 million and $640 million, is scheduled to start operating in the second quarter, which should reduce costs applicable to sales by $25 an ounce.
Newmont reiterated its 2008 guidance of gold sales ranging from 5.1 million ounces to 5.4 million ounces and costs applicable to sales ranging between $425 an ounce and $450 an ounce. O’Brien said they also expect to net cash flow to be positive for the year given gold prices.
Newmont’s stock dipped 88 cents, or 2 percent, $42.97 a share in late Thursday afternoon trading.
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