Newmont Takes $1.77 Billion Writedown After Gold Falls

(Corrects writedown in headline and first paragraph.)

Newmont Mining Corp. (NEM), the second-largest gold producer, reported a surprise loss after taking a $1.77 billion writedown on the value of stockpiles and two Australian mines following a slump in bullion prices.

The second-quarter net loss was $2.02 billion, or $4.06 a share, compared with net income of $279 million, or 56 cents, a year earlier, the Greenwood Village, Colorado-based miner said today in a statement. The loss, excluding impairments and other one-time items, was 10 cents a share, compared with the average of 17 estimates compiled by Bloomberg for a profit of 42 cents.

Gold mining companies have announced at least $15 billion of writedowns in the past two months after the precious metal’s steepest quarterly drop in more than nine decades. Newcrest Mining Ltd. (NCM) said June 7 it may take a charge of as much as A$6 billion ($5.6 billion) and Goldcorp Inc. (G), the biggest gold producer by market value, said yesterday it took a writedown on the value of assets of $1.96 billion.

The second-quarter results were released after the close of regular trading in New York, where Newmont rose 1.1 percent to $29.93.

Newmont said it was taking impairment charges on its Boddington and Tanami mines in Australia, and writing down the value of stockpiles and ore on leach pads.

The producer said it reduced spending by $362 million this year, from the first half of 2012, to lower costs. “We are also on track to reduce our corporate work force by more than one third,” Chief Executive Officer Gary Goldberg said in the statement.

Job Cuts

About 80 jobs, including some vacant positions, from a workforce of 1,870 will be cut by the end of September at the Boddington mine in Western Australia, the company said today in a separate statement.

Newmont said second-quarter sales fell to $1.99 billion from $2.23 billion. The average of seven estimates was for $2.09 billion.

Gold futures in New York rose 0.7 percent to settle at $1,329.50 an ounce yesterday. The metal has dropped 31 percent from a record $1,923.70 in September 2011.

(Newmont scheduled a conference call for 10 a.m. New York time today. U.S. callers should dial 1-888-566-1822, international callers 1-312-470-7116. Pass code: Newmont.)

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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