Gold and copper producer Newmont Mining Corp. (NYSE: NEM – $38.33) reported a better-than-expected quarterly adjusted profit of $0.40 per share, above analysts’ average forecast of $0.38 and 60% better than last year’s fourth quarter. Revenue rose eight percent to $1,935 million, on increased sales volumes and higher average realized gold prices. Operating cash flow rose to $754 million, up 28% from the prior year quarter and increased free cash flow to $445 million, up 54 percent. Newmont, which has mines in the Americas, Africa and Australia, said fourth-quarter gold output nudged 1.4% higher to 1.34 million ounces, matching rival Barrick’s performance, as prices rose 6.5% to $1,270 per ounce. In the next two years, Colorado-based Newmont sees annual output between 4.9 million and 5.4 million ounces of gold, then between 4.6 million and 5.1 million ounces annually through 2022. The all-in sustaining costs to produce an ounce of gold — a key industry benchmark — rose 5.4 percent to $968.
The miner lifted its 2018 capital budget to $1.2 billion to $1.3 billion from a December forecast of $900 million to $1 billion, citing a range of projects. Newmont reported gold reserves of 68.5 million ounces for 2017, unchanged from 2016, as it replaced reserves through exploration, projects, revisions and acquisitions. The company also said it plans to spend about $230 million on exploration in 2018, earmarking some 39 percent for North America, 20 percent for Australia and the rest for South America, Africa and other locations. Earlier this week, Newmont revised its dividend policy with a quarterly payout of 14 cents per share, nearly doubling the previous $0.075 paid in the previous quarter and, thus, yielding 1.47%. A 5% allocation of Newmont can continue to be held for portfolio diversification in an aggressive account.