Newmont Mining's Results Shine on Higher Gold Prices
May 7, 2003
DENVER -- Newmont Mining Corp. (NEM) rebounded to first-quarter profit from a year-earlier loss as it sold more gold at higher prices, thanks to investors seeking a safe haven amid economic and political turmoil around the world.
The gold producer Wednesday reported net income of $117.3 million, or 29 cents a share, in contrast to a net loss of $6.8 million, or three cents a share, for the first quarter of 2002.
Revenue surged 74% to $864.6 million from $495.8 million.
Gold sales accounted for most of the revenue increase, rising 48% to $714.6 million. Other revenue included sales of base metals, royalties, dividends, and a gain on the exchange of the company's 46% equity investment in Echo Bay Mines Ltd. for a 14% interest in Kinross Gold Corp. (KGC).
Newmont attributed its profit to a 20% increase in the price of gold, and a 22% increase in the amount sold. The company sold 1.8 million ounces of gold at an average price of $351 an ounce, compared with 1.5 million ounces at $292 an ounce a year earlier. Cash costs per ounce rose to $201 million from $195 million, and total production costs increased to $261 million from $257 million.
Newmont also cited the gain of $68 million, or 17 cents a share, on the exchange of equity in Echo Bay shares for Kinross Gold shares, as well as a gain of $42.2 million, or 10 cents a share, for a change in the value of certain gold derivative instruments.
Newmont recorded a charge of $34.5 million, or nine cents a share, for the effects of a change in accounting for asset-retirement obligations. Without that charge, Newmont said it earned $151.8 million, or 38 cents a share.
The company also booked charges totaling $20.5 million, or five cents a share, for other items, including a write-down related to its investment in Australian Magnesium Corp., and a loss of $13 million, or three cents a share, for debt retirement.
The company generated cash of $186.1 million during the quarter, and used $135.8 million of it to reduce debt.
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