TORONTO (miningweekly.com) – The world’s largest gold miner by market capitalisation Newmont on Wednesday disappointed investors with narrower-than-expected fourth-quarter headline earnings of $20-million, or $0.04 a share – $0.08 a share below Wall Street analyst forecasts – as lower realised metals prices and the impact of divestitures impacted on the bottom line.
The Denver, Colorado-based company said a noncash reclamation charge, tax valuation allowance adjustments and a one-time payment related to previous period royalties and taxes from the revised Ghana Investment Agreement impacted on net income, which totalled a loss of $247-million, or $0.48 a share, in the fourth quarter ended December 31, compared with net income of $39-million, or $0.08 a share, for the comparable period of 2014.
Revenue fell 10% year-on-year to $1.8-billion in the fourth quarter, as a 9% slide in the average realised gold price and flat attributable gold sales offset higher production at Batu Hijau, in Indonesia, and the addition of Cripple Creek & Victor gold mine, in Colorado.
A 27% year-on-year slide in the average realised copper price to $1.86/lb offset an 18% increase in attributable sales at 40 t, as Batu Hijau continued to mine higher-grade Phase 6 ore. However, fourth-quarter copper sales volumes were impacted on by the export permit delay. Newmont received a six-month export permit on November 20, 2015, and revenue from about 27-million pounds of copper and 39 000 oz of gold shipped in December was expected to be recognised in the first quarter 2016.
Attributable gold output was 1% lower year-on-year at 1.25-million ounces in the fourth quarter, as higher output at Batu Hijau and the addition of Cripple Creek & Victor offset production declines at Yanacocha, in Peru, and Ahafo, in Ghana.
Newmont advised that it had generated about $1.7-billion asset sales since 2013, while maintaining steady attributable gold production.
All-in sustaining costs (AISC) totalled $999/oz for the three-month period, up 8% over the comparable period as a result of lower volumes at Yanacocha and the timing of sustaining capital expenditures. Copper AISC was down 36% year-on-year at $1.51/lb in the fourth quarter, down from $2.39 in the comparable quarter.
Newmont’s consolidated cash flow from continuing operations was $275-million in the period, down 51% when compared with $562-million a year earlier. Free cash flow was negative $185-million in the fourth quarter, compared with $218-million in the previous year quarter. The company held $2.8-billion of consolidated cash on its balance sheet as at year-end 2015, up 16% from the previous year.
The company had $6.24-billion in debt on its balance sheet as at December 31.
Newmont expected an AISC of below $1 000/oz this year and profitable production of at least 4.5-million to 5-million ounces a year through 2020.
Attributable gold output was expected to increase from between 4.8-million and 5.3-million ounces in 2016, to between 5.2-million and 5.7-million ounces in 2017. New production at Cripple Creek & Victor, Long Canyon Phase 1, in Nevada, Merian, in Suriname, and the Tanami expansion, in Australia, was expected to offset the impacts of maturing operations at Yanacocha and mine sequencing at Batu Hijau.
Attributable copper output was expected to be between 120 000 t and 160 000 t in 2016 and 2017 before decreasing to between 70 000 t and 110 000 t by 2018, owing to the depletion of higher-grade Phase 6 ore at Batu Hijau.
AISC was expected to improve from between $900/oz and $960/oz in 2016, to between $850/oz and $950/oz in 2017. AISC for 2018 was expected to remain below $1 000/oz, despite higher stripping at Boddington, in Australia, and lower output at Batu Hijau.
Newmont also announced on Wednesday that it had added five-million ounces of reserves through exploration and four-million ounces more through the acquisition of Cripple Creek and Victor mine, more than offsetting a depletion of 6.5-million ounces.
Newmont’s NYSE-listed stock fell 3.3% in aftermarket trading to $24.02 apiece, having added 1.53% in value over the last 12 months.