The world’s largest gold miner, Newmont, has posted a near threefold increase in second-quarter earnings, as a surging gold price offset lower production as a result of Covid-19 mine suspensions.
The US-based miner’s adjusted net income for the June quarter was $261-million, or $0.32 a diluted share, compared with $92-million, or $0.12 a diluted share, in the prior-year quarter.
Revenue rose 5% from the prior-year quarter to $2.37-billion, helped by record-high gold prices. The miner’s average realised gold price for the three months was $1 724/oz, an increase of $407/oz over the prior-year period.
The gold price has scaled record levels this year, as investors fled to safer assets during the coronavirus pandemic and intensifying tensions between the US and China. The spot metal touched $1 981.27/oz earlier this week, which is about $60/oz above the previous peak set in 2011.
The higher gold price helped Newmont to offset lower production as a result of Covid-19-related suspensions at Cerro Negro, Yanacocha, Éléonore, Peñasquito and Musselwhite. Attributable gold production fell 21% to 1.26-million ounces from the prior-year quarter, owing to the sites that the miner placed on care and maintenance during the pandemic, as well as the sale of Red Lake, in Canada, and Kalgoorlie, in Australia.
Gold cost applicable to sales (CAS) decreased 24% to $940-million from the prior-year quarter and, on a per-ounce basis, improved by 1% to $748/oz. All-in sustaining costs (AISC) increased by 8% to $1 097/oz, owing to care-and-maintenance costs, partially offset by lower sustaining capital spend.
"Our focus remains on ensuring the health, safety and wellbeing of our workforce and neighbouring communities as we manage through the Covid pandemic. I am very proud of our workforce for the agility and resolve that they have demonstrated during these challenging times," said CEO Tom Palmer.
He added that Newmont was well positioned to deliver an even stronger second half of 2020.
"The ongoing favourable gold price environment amplifies our free cash flow generation yet our discipline around capital allocation will not change as we continue to invest in profitable projects and provide shareholders industry-leading returns while maintaining a strong balance sheet.”
Newmont reaffirmed its revised guidance issued on May 19. The miner’s 2020 attributable gold production remains at about six-million ounces and the company said it expected to produce about one-million gold equivalent ounces from co-products.
Gold CAS has been lowered to $760/oz, while gold AISC is unchanged at $1 015/oz on increased sustaining capital spend.