Gary Goldberg, who will become chief executive officer of Newmont Mining Corp. (NEM) March 1, said he’ll try to turn around the second-biggest gold producer’s underperforming assets before he considers selling them.
“I’ve taken a look through our portfolio and had a good chance over the last year to look at things,” he said yesterday in an interview, declining to name which assets need to improve. “My first thing is to give them an opportunity to set things straight. If that doesn’t work then we’ll look at some potential paths to sell some assets.”
Newmont is among gold producers that say they’re trying to contain rising mining costs and boost profit margins after underperforming the price of the commodity. Barrick Gold Corp. (ABX), its biggest competitor, is seeking buyers for assets including an energy business and a stake in a nickel project in Tanzania.
Goldberg is currently Newmont’s chief operating officer and president. He joined the Greenwood Village, Colorado-based company in 2011 after 30 years working for London-based Rio Tinto Group. As CEO he will replace Richard O’Brien, who announced his departure in December. O’Brien will start as CEO of U.S. mine-drilling company Boart Longyear Ltd. (BLY) next month.
At least six North American gold miners have announced a change of CEO in the past year as the industry grapples with cost inflation and the fallout of money-losing takeovers and mines that went over budget.
Newmont fell 23 percent in 2012 while gold gained for the 12th straight year. Goldberg said he’s focused on reducing costs across Newmont’s operations.
“I’ve been saying no a lot more to requests within the business,” he said in Hollywood, Florida, where he was attending a mining and metals conference organized by BMO Capital Markets, referring to Newmont’s focus on costs. “That sends the message that things are changing.”
Still, now is a good time to assess potential acquisitions as mining companies seek to cut back on spending and consider selling assets, according to Goldberg.
“That’s the time to look in the opposite direction from the herd to see what opportunities might be out there that make sense but that add good value along the way,” he said. “There’s some potential things but I don’t have my radar locked on any one particular thing at this stage.”
Goldberg said he’s comfortable with the company’s dividend policy, which links payments to gold prices. Newmont may consider repurchasing stock as cash flow increases in late 2014 and in 2015 “if there’s not other good uses for capital,” he said.
Parliamentary approval of an investment agreement for Newmont’s Merian project in Suriname may come in “weeks or months,” Goldberg said. First production at the mine would probably begin about two years after construction starts, he said. Newmont’s board still needs to approve the project.
Newmont fell 2 percent to $40.62 at the close in New York. The shares have declined 34 percent in the past year. Gold for delivery in April dropped 1.2 percent to settle at $1,595.70 an ounce today in New York, and futures have declined 10 percent in the past 12 months.
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