Off The Wire
Newmont 1Q earnings boosted by higher output, gold prices
Adjusted net income was pegged at $326 million, or 40 cents per share, compared to $176 million, or 33 cents, in the same quarter of 2019. The consensus estimate of analysts was 42 cents, according to news reports.
Net income from continuing operations was $837 million, or $1.04 per share. The company said this increased by $724 million from a year ago mostly due to the gains on the sale of KCGM, Continental Gold and Red Lake, higher production from Goldcorp assets assets acquired last year, and higher average realized gold prices.
Revenue rose 43% year-on-year to $2.58 billion primarily due to new production from the former Goldcorp assets and higher gold prices, the company said. Newmont received an average of $1,591 per gold ounce, an increase of $291 over the prior-year quarter, although the average price for copper was $1.56 per pound, a year-on-year decrease of $1.33.
Gold production increased 20% year-on-year to 1.48 million ounces, the company said. Gold-equivalent production from other metals increased by 606% to 339,000 ounces. All-in sustaining costs per gold ounce increased 14% to $1,030 per ounce.
“Our world-class diversified portfolio of assets and resilient team delivered solid first-quarter performance with $1.1 billion in adjusted EBITDA and $611 million in free cash flow,” said Tom Palmer, president and chief executive officer. “Our robust balance sheet provides us with significant financial flexibility to continue allocating capital where it is needed most during this time of [COVID-19] uncertainty, while maintaining our industry-leading returns to shareholders."
In response to the global COVID-19 pandemic, Newmont said two operations are temporarily in “care and maintenance,” but sites representing approximately 90% of its planned 2020 production are operating.
Due to government restrictions in Canada, Argentina and Peru, four Newmont operations were temporarily put on care and maintenance in March, including Musselwhite, Éléonore, Cerro Negro and Yanacocha. Then in April, operations at Peñasquito were added to the list. However, the company said that it is in the process of ramping up operations at Cerro Negro, Yanacocha and Éléonore.
As of the time Newmont filed its quarterly earnings report, the company said it had no confirmed cases of COVID-19 at any of its sites. Like other producers, Newmont instituted a number of health and safety protocols due to the pandemic. The company also established the $20 million Newmont Global Community Support Fund to help local communities, governments and employees combat the pandemic.
Newmont said liquidity of $6.6 billion “is sufficient to continue business operations during this volatile period.” As of quarter-end, cash and cash equivalents were put at $3.7 billion, and the company said it had access to more cash under its borrowing facilities.
Newmont did not update 2020 production guidance. On March 23, Newmont withdrew full-year 2020 guidance in response to impacts from the pandemic, saying some production could be deferred into 2021. The company said the COVID-19 situation could impact costs in 2020 if some operations closed for an extended time.