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Newmont Results Disappoint on Integration Costs

Gold and industrial metals miner Newmont Goldcorp (NYSE: NEM – $37.28) reported a second-quarter loss amid its integration of Goldcorp operations. In January, Newmont Mining acquired Canada’s Goldcorp in a $10 billion all-stock transaction that was completed in April, creating the world’s largest gold producer. On an adjusted basis, NEM posted a profit of $0.12 per share, $0.11 below Street estimates and compared to $0.26 in last year’s second quarter. Newmont posted revenue of $2.26 billion, compared with $1.66 billion a year ago, but below analysts’ estimates for $2.38 billion. Second-quarter gold production surged 37% from a year earlier to 1.59 million ounces, as the average realized gold price rose by $25 to $1,317 per ounce in the period.

       The Denver-based company said it expects attributable gold production of 6.5 million ounces for 2019, at an all-in sustaining cost of $975 an ounce, excluding production at its Barrick Gold joint venture in Nevada. Management said it needs to do as much as three years of work at the mines it added through its acquisition of Goldcorp to bring them to acceptable levels of performance. Hence, 2019 will likely be a transition year for Newmont with the need to move into 2020 with the ability to demonstrate execution on synergies and operating improvements. The shares are best suited for portfolio diversification.

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