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Newmont (NEM) Tops Q3 Earnings & Sales Estimates, View Intact

Gold mining giant Newmont Mining Corporation NEM posted net income from continuing operations of $213 million or 39 cents per share in third-quarter 2017, up 22% from $169 million or 32 cents recorded a year ago. Results benefited from higher gold production and lower income tax, which partly offset the impact of lower average realized gold prices.

Barring one-time items, adjusted earnings were 35 cents per share for the quarter, which surpassed the Zacks Consensus Estimate of 31 cents.

Newmont's revenues of $1,879 million were up 4.9% from the year-ago quarter due to higher sales volume offsetting the impact of lower average realized gold prices. The figure beatthe Zacks Consensus Estimate of $1,836 million.

In the reported quarter, average net realized gold price decreased 4% to $1,276 per ounce from $1,329 an ounce a year ago. The average net realized copper price improved to $3.06 per pound from $2.04 per pound a year ago.

Newmont's attributable gold production increased 7% year over year to 1.3 million ounces in the quarter. The increase can be attributed to new production at Long Canyon and Merian, which was partly offset by lower grades at Boddington and lower throughput at Twin Creeks.

Newmont’s gold costs applicable to sales (CAS) was $721 per ounce in the quarter, up roughly 2% from year-ago quarter of $706. Copper CAS in the reported quarter was $1.38 per pound, an increase of 36% year over year.

All-in sustaining costs (AISC) of $943 per ounce for gold rose roughly 2% year over year on higher exploration and advanced projects spending and increased CAS per ounce, which was partly offset by lower sustaining capital. Copper AISC fell 36% year over year to $1.65 per pound on improved unit CAS.  

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 third quarter was 573,000 ounces, rising 6% year over year. Consolidated copper production was at 3,000 tons, down 40% from 5,000 tons recorded in the year-ago quarter.

Gold CAS for the region was $742 per ounce, increasing 9% year over year, and copper CAS was $1.57 per pound, declining 54% year over year.

South America

Attributable gold production in South America was 169,000 ounces, surging 125% year over year. Gold CAS for the region fell 21% year over year to $806 per ounce.

Australia

Attributable gold and copper production in the region was 406,000 ounces, declining 5% year over year. Gold and copper CAS for this region was $670 per ounce, up 12%, and $1.32 per pound, down 15%, respectively.

Africa

The region produced 191,000 ounces of gold in the reported quarter, down 5% year over year. Gold CAS was $646 per ounce, decreasing 17% year over year.

Financial Position

Net cash provided by continuing operating activities improved 35.4% year over year to $688 million in the third quarter owing to taxes paid and working capital changes. The company ended the quarter with $3 billion cash in hand.

The company reduced net debt by over 77% to $1.1 billion.

Outlook

Newmontreiterated its guidance of attributable gold production in the range of 5-5.4 million ounces for 2017 factoring in full potential improvements in Africa and North America. On year-over-year comparison, production at Long Canyon and Merian is anticipated to compensate the impact of declines at Yanacocha and Twin Creeks.

The company also kept attributable copper production forecast for 2017 unchanged from the previous guidance of 40,000-60,000 tons per year, including Phoenix and Boddington.

The company kept its AISC guidance for 2017 unchanged at between $900 per ounce and $950 per ounce, as it expects reduction of sustaining capital in Africa, North America and Australia.

Copper CAS is estimated in the range of $1.45-$1.65 per pound in 2017. AISC is expected to be between $1.85 per pound and $2.05 per pound in 2017.

Newmont has retained its capital spending guidance for 2017 in the range of $890-$990 million, which includes capital for the Northwest Exodus and Tanami expansions, the initial capital for the Ahafo Mill Expansion, Subika Underground, Quecher Main and Twin Underground. This includes sustaining capital expenditure of between $575 million and $675 million.

Price Performance

Newmont shares have moved up 11.7% in the last six months, outperforming the 2.8% growth recorded by its industry.

 

 

Zacks Rank & Other Stocks to Consider

Newmont currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Huntsman Corporation HUN, FMC Corporation FMC and Westlake Chemical Corporation WLK. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Huntsman has an expected long-term earnings growth rate of 7%.

FMC has an expected long-term earnings growth rate of 11.3%.

Westlake Chemical has an expected long-term earnings growth rate of 8.3%.

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