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Copper Puts a Shine on Newmont Mining Corp.'s Earnings

Newmont Mining's Boddington project is one of Australia's largest-producing gold mines. Image source: Newmont Mining.

Gold and copper miner Newmont Mining (NYSE:NEM) surprised the market Wednesday by reporting higher sales and profits than Wall Street anticipated, but as metal prices remain below where they were a year ago (despite their recent rally), they still dragged the miner's performance down.

Newmont reported average realized gold prices were $1,194 per ounce, down less than 1% from the $1,203 per-ounce price realized a year ago, while copper was down almost 14% to $2.02 per pound, compared with $2.34 a pound a year earlier.

Importantly, though, despite having forecast that its all-in sustaining costs for gold were going to creep higher in 2016, for the first quarter anyway, the company was still able to lower average AISC to $828 per ounce compared to $849 per ounce last year, despite significant cost increases at its mature Yanacocha project in Peru. Newmont still expects AISC to rise to as much as $940 per ounce this year and as much as $950 per ounce in 2017, but the bottom end of its forecast range could see costs improve to as low as $850 per ounce. It anticipates costs to remain below $1,000 per ounce in 2018.

The higher revenue Newmont Mining notched this quarter was due to a combination of factors, including greater sales of copper from its Indonesian operations at Batu Hijau, where it sold 142 million pounds of copper this quarter compared to 104 million a year ago. Similarly, gold sales were higher in the period, pushed up by higher sales out of its Asia-Pacific projects even though...


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