Newmont Mining Reports Mixed Results; Revises Dividend Strategy

NEM Results at Newmont Mining Corp. (NYSE: NEM – $34.32) swung to a third-quarter loss, hurt by a charge tied to the planned sale of its stake in one of the largest copper deposits in Indonesia, the Batu Hijau mine. The deal, which had been expected to close in the third quarter, is now expected to close in the fourth quarter. Overall, Newmont lost $358 million, compared with a year-earlier profit of $219 million. Profit from continuing operations, however, rose 6% and excluding certain items, profit surged to $0.38 a share from $0.22 a year earlier. Revenue rose 15% to $1.79 billion. However, analysts had projected $0.50 a share in adjusted profit on $1.9 billion in revenue. Gold production rose 3.4% to 1.25 million ounces, while the average realized gold price rose 20% to $1,329 a troy ounce. Meanwhile, copper output was roughly flat from the year-ago period at 15,000 metric tons as average realized prices rose 4% to $2.04 a pound. Separately, Colorado-based Newmont, the world’s No. 2 gold miner by production, said it was updating its gold price-linked dividend policy to take advantage of rising prices. The company’s next quarterly payout, under its old policy, will be on Dec. 29, when shareholders will receive 5 cents a share, double its previous payout. Under the new policy, the company would pay at least 10 cents a share at gold prices below $1,150 an ounce beginning in the first quarter.

       The company is currently performing well from an operational standpoint. My sense is this is supported by management’s emphasis on mine safety and effective organization structure, which, in turn, is reflected in Newmont’s financial results and its ability to generate higher levels of cash flow.

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