Gold and copper producer Newmont Mining Corp. (NYSE: NEM – $36.94) reported adjusted net income of $144 million or $0.26 per share for the second quarter, compared to $248 million or $0.46 per share in the prior year, but two cents higher than Street estimates. Primary adjustments to net income include $0.18 per share related to the sale of the company’s royalty portfolio and $0.08 per share of net tax adjustments primarily related to valuation allowances. Revenue decreased 11% to $1.662 billion primarily due to lower production, partially offset by higher average realized gold prices. Average realized price for gold was $1,292, an improvement of $42 per ounce over the prior year quarter; average realized price for copper was $2.99 per pound, an improvement of $0.53 vs. last year. Attributable gold production decreased 14% to 1.16 million ounces primarily from lower grades at the Carlin, Twin Creeks, Boddington and Akyem mines. Attributable copper production from the Phoenix and Boddington mines decreased 7% to 14,000 tons for the period.
Newmont’s outlook reflects stable gold production and ongoing investment in its operating assets and most promising growth prospects. Attributable gold production remains unchanged at between 4.9 and 5.4 million ounces in 2018 and 2019. Attributable copper production remains unchanged at between 40,000 and 60,000 tons in 2018 and 2019. Separately, Newmont said it would acquire a 50 percent stake in a gold project in Western Canada as miners look for new reserves. Newmont would pay $275 million to Novagold Resources for its stake in the Galore Creek project. The remaining stake is held by Teck Resources Ltd. A 5% allocation of NEM is appropriate in a diversified aggressive account for defensive purposes.