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Newmont (NEM) Beats on Q1 Earnings, Sales Miss Estimates
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Gold mining giant Newmont Mining Corporation (NEM - Free Report) posted net income from continuing operations of $69 million or 13 cents per share in first-quarter 2017. The company recorded a loss from continuing operations of $12 million or 2 cents a share a year ago.
Excepting one-time items, adjusted earnings were 25 cents per share for the quarter, beating the Zacks Consensus Estimate of 23 cents.
Newmont's revenues of $1,659 million went up 13.5% from $1,462 million in the year-ago quarter as higher gold production and favorable pricing were partly offset by increased Gold Costs applicable to sales (CAS). However, revenues missed the Zacks Consensus Estimate of $1,752 million.
In the reported quarter, average net realized gold price improved $29 to $1,221 per ounce. The average net realized copper price also improved 65 cents to $2.68 per pound.
Newmont's attributable gold production increased 9% year over year to 1.23 million ounces in the quarter. The increase can be attributed to production from Merian and Long Canyon, offsetting geotechnical issues at Carlin. The company also noted that exceptional weather in South America and Australia affected operations.
Newmont’s CAS was $687 per ounce for gold in the quarter, up 1% year over year owing to increased cost of processing lower grades. Copper CAS in the reported quarter was $1.50 per pound, an increase of 17% year over year.
All-in sustaining costs (AISC) of $900 per ounce for gold rose roughly 1% year over year while $1.77 per pound for copper was up almost 17% year over year. Gold and copper AISC improved over the prior-year period due to higher CAS, near-term sustaining capital and advanced projects and exploration expense.
Newmont Mining Corporation Price, Consensus and EPS Surprise
Attributable gold production in North America in the first quarter was 504,000 ounces, rising 11% year over year. Consolidated copper production was at 4,000 tons, down from the 5,000 tons figure recorded in the year-ago quarter.
Gold CAS for the region was $760 per ounce, up 4%, and copper CAS was $1.80 per pound, declining 15% year over year.
South America
Attributable gold production in South America was 150,000 ounces, surging 63% year over year. Gold CAS for this region declined 9% year over year to $652 per ounce.
Australia
Attributable gold and copper production in the region was 360,000 ounces, declining 7% year over year, and 9,000 tons, up 13% with the year-ago quarter, respectively. Gold and copper CAS for this region was $651 per ounce, down 3%, and $1.31 per pound, down 17%, respectively.
Africa
The region produced 220,000 ounces of gold in the reported quarter, up 9% year over year. Gold CAS was $624 per ounce, increasing 12% year over year.
Financial Position
Net cash provided by continuing operating activities was $379 million in the first quarter, compared with $322 million in the prior-year quarter mainly due to increased sales and improved gold pricing. The company ended the quarter with $2,919 million cash in hand.
The company reduced net debt to $1.7 billion.
Outlook
Newmont anticipates attributable gold production in the range of 4.9–5.4 million ounces in 2017. Production at Merian and Long Canyon is anticipated to compensate the impact of declines at Twin Creeks and Yanacocha.
Attributable copper production forecast for 2017 remains unchanged from the previous guidance of 40,000–60,000 tons.
Gold CAS is expected to be between $700 and $750 per ounce in 2017. The company expects CAS to improve to $650 and $750 per ounce over the longer term. AISC is forecast to be between $940 and $1,000 per ounce in 2017.
Copper CAS is estimated in the range of $1.45–$1.65 per pound in 2017. AISC is expected to be between $1.85 and $2.05 per pound in 2017.
Over the longer term, Copper CAS is expected between $1.5 and $1.9 per pound, and copper AISC is expected to be between $1.85 and $2.25 per pound.
Capital spending guidance for 2017 is increased to the range of $900 million – $1.1 billion. This includes sustaining capital expenditure of between $600 million and $700 million, which remains unchanged from the prior guidance.
Price Performance
Newmont’s shares declined 3.7% in the last three months, underperforming the Zacks categorized Mining-Gold industry’s 1.5% gain.
U.S. Steel has an expected long-term earnings growth of 8%.
Ternium has an expected long-term earnings growth of 18.4%.
Lundin has an expected long-term earnings growth of 34.1%.
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Newmont (NEM) Beats on Q1 Earnings, Sales Miss Estimates
Gold mining giant Newmont Mining Corporation (NEM - Free Report) posted net income from continuing operations of $69 million or 13 cents per share in first-quarter 2017. The company recorded a loss from continuing operations of $12 million or 2 cents a share a year ago.
Excepting one-time items, adjusted earnings were 25 cents per share for the quarter, beating the Zacks Consensus Estimate of 23 cents.
Newmont's revenues of $1,659 million went up 13.5% from $1,462 million in the year-ago quarter as higher gold production and favorable pricing were partly offset by increased Gold Costs applicable to sales (CAS). However, revenues missed the Zacks Consensus Estimate of $1,752 million.
In the reported quarter, average net realized gold price improved $29 to $1,221 per ounce. The average net realized copper price also improved 65 cents to $2.68 per pound.
Newmont's attributable gold production increased 9% year over year to 1.23 million ounces in the quarter. The increase can be attributed to production from Merian and Long Canyon, offsetting geotechnical issues at Carlin. The company also noted that exceptional weather in South America and Australia affected operations.
Newmont’s CAS was $687 per ounce for gold in the quarter, up 1% year over year owing to increased cost of processing lower grades. Copper CAS in the reported quarter was $1.50 per pound, an increase of 17% year over year.
All-in sustaining costs (AISC) of $900 per ounce for gold rose roughly 1% year over year while $1.77 per pound for copper was up almost 17% year over year. Gold and copper AISC improved over the prior-year period due to higher CAS, near-term sustaining capital and advanced projects and exploration expense.
Newmont Mining Corporation Price, Consensus and EPS Surprise
Newmont Mining Corporation Price, Consensus and EPS Surprise | Newmont Mining Corporation Quote
Regional Performance
North America
Attributable gold production in North America in the first quarter was 504,000 ounces, rising 11% year over year. Consolidated copper production was at 4,000 tons, down from the 5,000 tons figure recorded in the year-ago quarter.
Gold CAS for the region was $760 per ounce, up 4%, and copper CAS was $1.80 per pound, declining 15% year over year.
South America
Attributable gold production in South America was 150,000 ounces, surging 63% year over year. Gold CAS for this region declined 9% year over year to $652 per ounce.
Australia
Attributable gold and copper production in the region was 360,000 ounces, declining 7% year over year, and 9,000 tons, up 13% with the year-ago quarter, respectively. Gold and copper CAS for this region was $651 per ounce, down 3%, and $1.31 per pound, down 17%, respectively.
Africa
The region produced 220,000 ounces of gold in the reported quarter, up 9% year over year. Gold CAS was $624 per ounce, increasing 12% year over year.
Financial Position
Net cash provided by continuing operating activities was $379 million in the first quarter, compared with $322 million in the prior-year quarter mainly due to increased sales and improved gold pricing. The company ended the quarter with $2,919 million cash in hand.
The company reduced net debt to $1.7 billion.
Outlook
Newmont anticipates attributable gold production in the range of 4.9–5.4 million ounces in 2017. Production at Merian and Long Canyon is anticipated to compensate the impact of declines at Twin Creeks and Yanacocha.
Attributable copper production forecast for 2017 remains unchanged from the previous guidance of 40,000–60,000 tons.
Gold CAS is expected to be between $700 and $750 per ounce in 2017. The company expects CAS to improve to $650 and $750 per ounce over the longer term. AISC is forecast to be between $940 and $1,000 per ounce in 2017.
Copper CAS is estimated in the range of $1.45–$1.65 per pound in 2017. AISC is expected to be between $1.85 and $2.05 per pound in 2017.
Over the longer term, Copper CAS is expected between $1.5 and $1.9 per pound, and copper AISC is expected to be between $1.85 and $2.25 per pound.
Capital spending guidance for 2017 is increased to the range of $900 million – $1.1 billion. This includes sustaining capital expenditure of between $600 million and $700 million, which remains unchanged from the prior guidance.
Price Performance
Newmont’s shares declined 3.7% in the last three months, underperforming the Zacks categorized Mining-Gold industry’s 1.5% gain.
Zacks Rank & Key Picks
Newmont currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the basic materials space include United States Steel Corp. (X - Free Report) , Ternium S.A. (TX - Free Report) and Lundin Mining Corp. (LUNMF - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
U.S. Steel has an expected long-term earnings growth of 8%.
Ternium has an expected long-term earnings growth of 18.4%.
Lundin has an expected long-term earnings growth of 34.1%.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>