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Newmont Adjusted 4Q Profit Helped By Higher Gold Output, Lower Costs

Kitco News

Editor's Note: updating earlier story with more details from report, updated reserves.

(Kitco News) - Newmont Mining Corp. (NYSE: NEM) Thursday reported a slightly higher adjusted profit in the fourth quarter as a rise in production helped offset lower gold prices, plus costs fell.

The company, which is in the process of acquiring Goldcorp Inc., listed adjusted net income in the fourth quarter of $214 million, or 40 cents per share. This was up from $206 million, or 39 cents, in the same period a year ago, plus the result also beat consensus estimates that news reports put around 25 cents a share.

The main special items in the October-December quarter included 23 cents per share for tax adjustments and valuation allowances, plus 7 cents per share for impairment of equity and cost method investments. The net loss from continuing operations was $3 million, or zero cents per share.

Fourth-quarter revenue rose 6% to $2 billion on higher gold production, with the company listing output of 1.44 million gold ounces that was up 8% from the prior-year quarter. All-in sustaining costs decreased 9% year-on-year to $845 per ounce. The company also produced 11,000 tonnes of copper, largely flat compared to a year ago.

The average realized gold price was 3% lower for the quarter at $1,233 per ounce. The average realized price for copper was 18% lower to $2.62 per pound.

Meanwhile, for full-year 2018, adjusted net income was $718 million, or $1.34 per share, compared to $774 million, or $1.45, for 2017. Net income from continuing operations was $280 million, or 53 cents. The company said it ended the year with $3.4 billion cash on hand and net debt of $0.9 billion.

Newmont’s full-year gold production was 5.1 million ounces, in line with guidance, while AISC of $909 per ounce beat guidance. For 2019, the company projected gold production of 5.2 million ounces and AISC at $935 per ounce, unchanged from the December estimates.

Meanwhile, Newmont reported that gold reserves fell to 65.4 million ounces for 2018 compared to 68.5 million ounces at the end of 2017. New additions of 6.7 million ounces exceeded the company’s target, but were offset by negative revisions of 3.6 million ounces and depletion of 6.1 million ounces, Newmont said. Copper reserves increased by 7% to 1.3 million tonnes.

Gary J. Goldberg, chief executive officer, reported that the company returned $400 million to shareholders during 2018 through its dividend and share repurchases.

“This performance gave us the means to complete expansions in the U.S. and Africa, advance projects and exploration on four continents, and pursue an agreement to create the world’s leading gold business as measured by assets, people, prospects and value,” he said.

The mostly stock transaction to acquire Goldcorp, which is subject to approval by shareholders of both companies, is expected to close in the second quarter, Newmont said. The combined company will be known as Newmont Goldcorp.

On Wednesday, Newmont announced a quarterly dividend of 14 cents per share payable on March 21 to shareholders of record at the close of business on March 7. This is the same as in the previous quarter.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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