DENVER—Newmont Mining Corp. said Thursday its fourth-quarter profit surged as gold and copper prices soared and it cut production costs.
Newmont earned $558 million, or $1.13 per share, compared with $4 million, or a penny a share, during the same period last year.
Adjusted profit was $1.14 per share, easily beating the 79 cents-per-share estimate of analysts surveyed by Thomson Reuters. These estimates normally exclude one-time items.
Gold prices rose steadily throughout 2009, hitting a peak of $1,227.50 an ounce in early December. Copper prices increased about 18 percent during the fourth quarter. Commodity prices have benefited from low U.S. interest rates, which make the dollar less attractive to investors. Since commodities are priced in dollars, they become more appealing to foreign buyers whose currencies are stronger against the dollar.
Gold and copper are key commodities for investors and consumers. Gold is favored as a hedge against inflation and as a safer investment risk during uncertain economic times. Copper is an important component of electronics and is essential for wiring and pipes in homes and office buildings.
Newmont’s average realized gold price in the fourth quarter was $1,102 per ounce and the average realized copper price was $3.24 per pound. Gold sales rose 8.5 percent to 1.5 million ounces, while copper sales increased 80 percent to 72 million pounds.
Revenue jumped 90 percent to $2.52 billion from $1.33 billion. Analysts predicted revenue of $2.02 billion.
For the year, Newmont’s profit surged to $1.3 billion, or $2.66 per share, from $831 million, or $1.83 per share, in the prior year. Adjusted earnings were $2.79 per share.
Annual revenue grew 26 percent to $7.71 billion.
The Denver mining giant will boost its budget for developing new mines by 40 percent this year. Argus Research analyst Bill Selesky said Newmont has been slower than other mining companies to commit to a significant exploration program in the last five years. “I think they’re just making up for lost time,” he said.
Newmont said it will work this year to bring its Boddington mine in Australia into full production and continue development of projects in Nevada, Ghana, Peru and Canada.
Barnard Jacobs Mellet analyst Patrick Chidley said he hopes two or three of the projects will be put into production in the next four years. “The sooner the better. I wish they would move a little bit quicker,” he said.
The company predicts its 2010 gold production will rise slightly to between 5.3 and 5.5 million ounces.
Shares of Newmont rose $2.56, or 5.5 percent, to $49.04 in afternoon trading.
