Newmont on Monday raised its annual cost forecast and warned that inflationary pressures would persist into 2023 after its second-quarter profit missed Street estimates, sending the world's biggest gold miner's shares down 12%.
Higher operating costs related to labor, energy and supplies have forced the miner to hike its annual forecast for all-in sustaining costs (AISC), an industry metric that reflects total expenses, to $1 150/oz from $1 050/oz earlier.
In comparison, the cost in the second quarter ended June 30 rose nearly 16% to $1 199/oz of gold.
The miner sees about a 20-30% spike in prices for raw materials such as cyanide and explosives, used in mining operations, in the second half of the year and a tight labor market to persist into 2023.
This would drive an additional 7% of cost escalation this year, on top of the 5% outlined in December, CEO Tom Palmer said on a call.
Global miners BHP and Rio Tinto have also signaled that labor crunch and inflationary pressures would continue into 2023.
The companies have been hit by a dip in bullion prices that faced their worst quarter since early 2021, falling nearly 7% in the three months ended June, as a firm dollar and aggressive rate hikes eroded the appeal of the non-yielding asset.
Newmont's shares fell as much as 12.05% to $45.20 after the company also lowered its annual production guidance to six-million ounces from 6.2-million ounces earlier, citing operational challenges and competitive labor market in Canada and Australia.
Gold production in the second quarter rose about 3.4% to 1.5-million ounces from a year earlier.
On an adjusted basis, Newmont's quarterly profit of 46c a share missed analysts' average estimate of 63c a share, according to Refinitiv IBES data.