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Newmont Profit Tops Estimates After Gold Prices Increase

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Feb. 22 (Bloomberg) -- Newmont Mining Corp., the largest U.S. gold producer, reported fourth-quarter earnings that beat analysts’ estimates after taxes were lower than expected.

Net income was $673 million, or $1.36 a share, compared with a loss of $1.03 billion, or $2.02, a year earlier, Greenwood Village, Colorado-based Newmont said yesterday in a statement. Earnings excluding an income-tax benefit and other one-time items were $1.11 a share, beating the 97-cent average of 18 estimates compiled by Bloomberg. Sales fell 11 percent to $2.48 billion.

“Upside to our model was primarily driven by a lower-than-expected tax rate of 15 percent versus our 32 percent estimate,” Brian Yu, a San Francisco-based analyst at Citigroup Inc., said in a note today. “This was somewhat offset by higher attributable gold cash costs.”

Newmont, which announced Dec. 3 that Chief Operating Officer Gary Goldberg will replace Chief Executive Officer Richard O’Brien March 1, is among gold producers seeking to curb rising costs. Average costs applicable to sales in the fourth quarter were $720 an ounce of gold and $2.61 a pound of copper, compared with $602 an ounce and $1.58 a year ago. The company said last month it expected costs of $700 to $715 an ounce of gold and $2.60 and $2.70 per pound of copper.

CFO Departure

Newmont also said yesterday that Chief Financial Officer Russell Ball will leave the company later this year. Ball will continue in his current role as the company seeks a replacement.

Newmont swung to a net loss in the fourth quarter of 2011 after taking a $1.61 billion asset-impairment charge on the Hope Bay project in Canada.

Gold, which has risen for 12 straight years, averaged $1,719.36 on the Comex in New York in the fourth quarter, 1.9 percent more than a year earlier and 3.8 percent higher than in the previous three months. Prices have fallen this year and reached a seven-month low yesterday as signs of economic improvement curbed demand for a protection of wealth.

Newmont, which has mines in the Americas, the Asia-Pacific region and Africa, said last month it produced 5 million ounces of gold and 143 million pounds of copper in 2012. Output this year is forecast at 4.8 million to 5.1 million ounces of gold and 150 million to 170 million pounds of copper.

Newmont rose 0.7 percent to $40.82 at the close in New York. The shares have declined 12 percent this year.

Barrick Gold Corp., based in Toronto, is the biggest gold producer by sales and market value.

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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