Newmont Mining Posts Strong Results
Gold and copper producer Newmont Mining Corp. (NYSE: NEM – $36.24) reported adjusted second period earnings well above Street views and topped sales expectations. The company said adjusted earnings per share settled at $0.46, above consensus of $0.26, and up 59% from the $0.30 a year earlier. The company reported revenues for the second quarter of $1.88 billion, above the Street view of $1.78 billion and up from $1.67 billion reported a year ago. During the quarter, Newmont reduced net debt to $1.5 billion, ending the quarter with $3.1 billion cash on hand; an industry-leading investment-grade credit profile; and further deleveraged and simplified the balance sheet with the full repayment of $575 million convertible senior notes. Attributable gold production increased 13% to 1.4 million ounces for the quarter as new production from Merian and Long Canyon plays more than offset lower grades at the Tanami and Yanacocha mines.
The company expects to sustain the current performance through strong technical fundamentals and ongoing investment in value-added technology, cost reductions and capital improvements. Newmont also is positive on its production outlook for the remainder of the year. The recent results give the company the means to fund near-term growth of their new Twin Underground mine and profitable expansions at Ahafo, Tanami and Northwest Exodus. Management went on to say it plans to invest in maintaining profitability for years to come with new prospects as well as expand its current interest in the high-grade Buriticá project in Colombia and the promising Plateau opportunity in the Yukon. Adding it all up, shares in Newmont Mining – up about 7% in today’s trading – are best considered for portfolio diversification purposes and an allocation of about 5% of a well-diversified aggressive portfolio is acceptable.