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Newmont earnings down in quarter

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Newmont gold price cash flow

Newmont Corp., which posted first-quarter earnings down from the 2021 quarter because of COVID-19 and supply chain issues, also reported a potential change at the Cripple Creek & Victor Mine in Colorado could affect Nevada Gold Mines.

Newmont’s first-quarter earnings were $448 million, or 56 cents share, down from $559 million, or 70 cents per share, in the first quarter of 2021, and adjusted net earnings of $546 million, or 69 cents per share while revenue was up 5.2% to $3.02 billion on higher gold and copper prices despite lower production.

The adjusted earnings per share fell below Zack’s Consensus Estimate of 71 cents per share.

The Denver-based company produced 1.34 million ounces in the quarter, compared with 1.46 million ounces in the 2021 quarter, including 288,000 ounces of gold from its share of Nevada Gold Mines production. Newmont owns 38.5% of NGM, and Barrick Gold Corp. holds 61.5% and is the operator.

Cripple Creek ships ore from its mine to NGM in Nevada for processing, but Newmont’s chief operating officer, Rob Atkinson, said in the April 22 earnings call, that Newmont is looking at converting Cripple Creek to a heap leach operation only “instead of sending concentrate to Nevada.”

He said that with the pending conclusion of a contract for shipping the ore, “we’re stepping back” to assess not running the mill and only heap leaching ore. Atkinson said there will be an update in July.

The average realized gold price was $1,892 per ounce, up from $1,751 per ounce in the 2021 quarter, and Chief Operating Officer Nancy Buese said Newmont receives $400 million in free cash flow from every $100 hike in the gold price.

Gold prices closed at $1,932.30 Friday, and Newmont shares were down $3.30 to $74.52 on Friday.

Newmont’s president and chief executive officer, Tom Palmer, said in the April 22 earnings call that the company remains on track to meet its guidance for the year of 6.2 million ounces of gold production, and he expects production to ramp up in the second half of the year.

Palmer said there were COVID-19 challenges in the first quarter because of a surge in the Omicron variant that led to absences and affected production, but he said that Newmont’s requirement that all employees be vaccinated prevented serious cases.

Newmont also is closely monitoring supplies of critical material due to pandemic-related supply chain issues and issues created with the war in Ukraine, Palmer said, commenting that “we are in uncharted territory.” The company has budgeted a 5% cost escalation for this year.

The all-in sustaining costs for production in the first quarter averaged $1,156 per ounce, compared with $1,039 in the first quarter of last year. The all-in cost for NGM was $1,086 in the quarter.

In addition to the 1.34 million ounces of gold production, Newmont reported 350,000 ounces of attributable gold equivalent ounces from co-products.

The production drop was attributed to lower mill throughput at Cripple Creek, Tanami in Australia, Porcupine in Canada and Nevada and lower ore grades at Penasquito in Mexico, Newmont’s 40% share of Pueblo Viejo in the Dominican Republic, Eleonore in Canada and Porcupine and a build-up of in-circuit inventory.

Higher ore grade milled at Boddington in Australia and higher production at Yanacocha.

Newmont acquired 100% of the sulfides project at Yanacocha in Peru in the quarter, including Buenaventura’s 43.65% and Sumitomo Corp.’s 5% interest, and the company continued to advance the sulfides project, as well as the Tanami Expansion 2 in Australia and Ahafo North in Ghana.

The company also announced a dividend of 55 cents per share for the quarter, consistent with the prior quarter, and stated that $475 million remains of its $1 billion share buyback program and share buybacks will be used opportunistically this year.

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