Higher gold prices increase Newmont Q1 profit

A screenshot from Newmont Mining Corp'ls investor presentation covering first-quarter results announced April 26 shows strong results.

DENVER — Newmont Mining Corp. declared a dividend of 14 cents per share and a strong portfolio in first quarter 2018 results released April 26.

“Newmont delivered solid operating and financial results in the first quarter,” said Gary J. Goldberg, president and CEO in a statement. “Costs and production remained in line with guidance, and our next generation of profitable mines … advanced on schedule to the next stage of development study. We also generated $644 million in adjusted [earnings before interest, taxes, depreciation and amortization] and declared a dividend of $0.14 per share, nearly three times higher than prior year quarter.”

The company generated $644 million in EBITDA, representing a 12 percent increase compared to the same quarter in the previous year. The per share dividend is the strongest among senior gold producers, Newmont stated. Free cash flow totaled $35 million, and cash on hand amounted to $3.1 billion.

Net income from continuing operations attributable to stockholders was $170 million, or $0.32 per diluted share, delivered adjusted net income of $185 million or $0.35 per diluted share, up 35 percent compared to the prior year quarter.

Although the company had a strong quarter, Goldberg said the success was overshadowed by an accident at its Ahafo project in Africa that resulted in the deaths of six contractors.

“This loss has had a profound impact on the entire Newmont family, and it is with great humility and resolve that we renew our commitment to working safely,” he said. “Nothing is more important.”

The company — with about 70 percent of its projects in the U.S. and Australia — strengthened its portfolio in the first quarter, Goldberg explained in an investor conference call.

In North America, Newmont is on track to bring Northwest Exodus and Twin Creeks into commercial production this year, and has ushered Long Canyon Phase 2 into the next stage of a development study while underground development is ongoing. In the first quarter, Newmont began shipping concentrates from the Cripple Creek & Victor mine in Colorado for processing in Nevada, and the process is yielding higher-than-expected recoveries.

Revenue for Newmont increased by about 8 percent over the first quarter, to $1.8 billion, realized by higher gold prices, said Newmont Executive Vice President and Chief Financial Officer Nancy Buese on the conference call, despite lower production.

Newmont produced 1.21 million ounces of gold in the first quarter, a decrease of 2 percent from the previous quarter. Lower production was because of lower leach activity, lower grade, maintenance and reduced recovery at CC&V while the company prepared concentrate for shipment to Nevada.

Tom Palmer, Newmont executive vice president and chief operating officer, also gave updates on projects in South America, Africa and Australia. The company approved plans to begin the Yanacocha Sulfides feasibility study and added Chaquicocha Oxides as a new project in Peru; advanced Ahafo North in Ghana to definitive feasibility study; and commenced development of Tanami Power Project in Australia. Palmer explained that Newmont strives to increase safety and efficiency on all projects.

Adjusted net income was $185 million or $0.35 per diluted share, compared to $136 million or $0.26 per diluted share in the prior year quarter; favorable pricing was partially offset by lower production and higher CAS. The adjustments to net income of $0.03 related to restructuring, valuation allowances and other tax adjustments.

The company also continued to invest in projects and exploration “to improve mine life and build a stronger reserve base,” Buese said, adding that another focus is to return cash to shareholders. Newmont is on track to return $350 million to shareholders in 2018, she said.

Goldberg wrapped up the conference call by saying Newmont’s stable assets and pipeline of projects give the company an advantage in the industry. Going forward, the company aims for steady and profitable production over a longer horizon, investment in exploration, and to create value for investors.

Look for more details on Newmont’s first-quarter results in the summer 2018 issue of Mining Quarterly.

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