DENVER—Newmont Mining Corp. said Thursday its first-quarter net income fell 48 percent as the leading gold producer was hurt by higher operating costs and lower copper prices.
The company’s adjusted earnings beat Wall Street expectations, and it also maintained its 2009 outlook.
For the January-March quarter, Newmont reported net income of $189 million, or 40 cents per share, compared with $365 million, or 80 cents per share, in the year-ago quarter.
The most recent results included charges for job cuts and the acquisition of the Boddington mine in western Australia, adding up to a reduction of 4 cents per share.
Excluding one-time items, adjusted net income amounted to $208 million, or 44 cents per share.
Analysts surveyed by Thomson Reuters expected profits of 42 cents a share. Analysts typically exclude one-time charges.
Revenue fell 20 percent to $1.55 billion from $1.94 billion during the prior-year period. Analysts forecast revenue of $1.4 billion, on average.
Operating costs applicable to gold sales were $435 an ounce, compared with $396 an ounce in the year-ago quarter. Newmont’s 2009 outlook calls for these costs to range between $400 per ounce and $440 per ounce.
Overall costs were hurt by lower copper prices but benefited from lower-than-expected fuel prices and Australian dollar exchange rates, Richard O’Brien, president and chief executive officer, told analysts during a conference call.
“It is still early in the year and we’re continuing to see lots of fluctuations in costs,” he said. “Higher expected gold sales in the second half of the year will drive our costs applicable to sales down closer to the midpoint of our annual outlook.”
Barnard Jacobs Mellet analyst Patrick Chidley said the results were solid despite the cost issues. “Newmont is looking pretty robust compared to a lot of other sectors,” he said. “The gold sector is still strong.”
In a research note, Thomas Weisel Partners analyst Heather Douglas noted the Batu Hijau operation in Indonesia turned in a weaker-than-expected performance because of higher allocation costs to gold.
The Ahafo mine in Africa and Nevada operations performed better than expected due to lower input costs, she said.
In the first quarter, Newmont reported equity gold sales of 1.27 million ounces at an average realized price of $906 per ounce and equity copper sales of 43 million pounds at an average realized price of $1.69 per pound.
For 2009, Newmont has forecast equity gold sales outlook ranging from 5.2 million ounces to 5.5 million ounces and adjusted income of $208 million, or 44 cents per share.
O’Brien said they still are negotiating with the government of Indonesia to divest a 17 percent stake in its Indonesian subsidiary as required under a contract with the government.A key sticking point has been a sale price for the shares, estimated to be worth more than $800 million.
Newmont maintained its 2009 capital spending expectations of between $1.4 billion and $1.6 billion. During the first quarter the company spent about $330 million, with over 50 percent attributable to its Boddington project. In January, Newmont agreed to buy the remaining 33.3 percent interest in Boddington for $1 billion. The company said the project was about 95 percent complete at the end of the first quarter, with startup expected in mid-2009.
Shares of Newmont fell $1.18, or 3 percent, to $39.53 in midday trading.
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AP Energy Writer Deborah Jian Lee in New York contributed to this report.
