Newmont Mining Swings to Profit on Steady Gold and Copper Production


Newmont Earnings Rose Ninefold rise in first quarter thanks to higher gold prices and increased production

NEM’s net income rose to $822m in the three months to March 31, from $87m in the same period a year earlier. Revenues in the quarter rose 43 per cent to $2.58bn. The company said the average realized price for its gold had risen by $291 an ounce from a year earlier to $1,591 a troy ounce.

The gold price is up 12 per cent since the start of the year as investors seek haven assets while the coronavirus crisis wreaks havoc in other markets. The earnings also reflect a rise in output because of Newmont’s $10bn acquisition last year of Canada’s Goldcorp.

Gold production in the quarter rose 20 per cent to 1.5m ounces.

“Despite the disruption from Covid-19 we are well positioned to withstand this pandemic,” said Tom Palmer, Newmont chief executive.

The company said that while there had been no confirmed cases of coronavirus among its employees, it had significantly reduced the number of workers at its mines.

Newmont also reduced production at some operations “to reduce the risk of transmission to nearby communities with limited healthcare capacity”.

In March Newmont halted operations at four mines in Argentina, Canada and Peru because of the virus and last month said it was reducing production at its Peñasquito mine in Mexico.

However on Tuesday it said it was resuming output at three of the sites and that mines representing 90 per cent of its planned 2020 production remained in operation. The costs of production have also risen because of the acquisition, with the all-in sustaining cost of gold production up 14 per cent to $1,030 an ounce.

Shares in Newmont have risen 44 per cent this year to trade at $62.74 on the New York Stock Exchange.

Newmont is the world’s largest gold miner and has been a big beneficiary of the 12% gain in the metal in 2020. Its stock is up 37% for far this year, to $60, making it one of the top performers in the S&P 500 index.

The Newmont, CEO Say the Denver-based company has never been better shape during its 99-year history with rising gold prices Will Boost . Gold mining is the largest and fastest growing operating division of the company, contributing 93% of total revenues in 2019.

Gold revenue growth has been key to Newmont’s stock price appreciation of over 82% from $34 at the beginning of 2019 to about $62 as of 6th May 2020. A major part of this appreciation, i.e. 38%, came about in the last 3 months since the WHO announced a global health emergency on 31st January 2020. We discuss Newmont Valuation analysis in full, separately.