Gold and copper producer Newmont Mining Corp. (NYSE: NEM – $40.74) reported first-quarter profit increased as prices of the commodities climbed. Adjusted income rose 44% to $192 million, or $0.36 cents per share, for the first period from $0.25 a year earlier and topped analysts’ estimates by two cents. Profits improved thanks to favorable pricing, which was partially offset by lower production and higher costs. Revenue for the period rose 8% to $1.8 billion compared to $1.66 billion last year, slightly below Street expectations of $1.84 billion. Average realized price for gold was $1,326/oz., an improvement of $107 per ounce over the prior year quarter; average realized price for copper was $2.88 per pound, an improvement of $0.20 over the prior year quarter.
Newmont’s outlook reflects stable gold production and ongoing investment in its operating assets and promising growth prospects. Capital spending will take a jump this year, reflecting expenditures on mine development. This should not be a problem for Newmont, given its ability to generate healthy operating cash flow along with its current financial position. The recently increased dividend of $.56 on an annualized basis, will yield 1.3% this year. A small allocation in shares of Newmont are appropriate for an aggressive account as a diversification strategy.