I'm no fan of NEM.
Newmont Mining Corporation Cash Flow Per Share Increased 58% in First Quarter
DENVER, Apr 27, 2000 /PRNewswire via COMTEX/ -- Newmont Mining Corporation
(NYSE: NEM) earned $6.6 million, or 4 cents per share, in the first three months
of 2000, compared with $9.9 million, or 6 cents per share, in the first quarter
of 1999. Operating cash flow of $86.9 million, or 52 cents per share, rose 58
percent from $55.2 million, or 33 cents per share, over the same period. Before
working capital changes, operating cash flow increased 29 percent to $103.1
million, or 61 cents per share.
"Each of our core assets performed well during the quarter with income of $18.9
million, or 11 cents per share, partially offset by an after-tax loss of $8.1
million, or 5 cents per share, at Batu Hijau in Indonesia, and a non-cash charge
of $4.2 million, or 2 cents per share, for hedge-related accounting. Last year,
Batu Hijau's start-up loss was $3.1 million, or 2 cents a share," said Ronald C.
Cambre, Newmont's chairman and chief executive officer. "With higher production,
lower costs and the continued successful ramp up at Batu Hijau, we should see a
significant quarter-by-quarter increase in earnings and cash flow as the year
progresses."
Gold sales of $358.5 million during the latest quarter were up 10 percent from
$327.1 million a year ago, as production rose to 1.07 million equity ounces of
gold from 956,000 ounces. The company's realized gold price was $288 an ounce,
after amortization of put premiums, versus $293 in the 1999 quarter.
Total cash costs declined $5 an ounce to $176 per equity ounce produced, while
total production costs, including depreciation, depletion and amortization,
declined $6 to $230 an ounce.
"Looking ahead, we expect production for the year to exceed earlier projections
of 4.5 million ounces," Mr. Cambre said. "We now expect to produce approximately
4.7 million equity ounces of gold in 2000 at a total cash cost of $170 an ounce
and a total production cost of $225 an ounce. This represents a 12 percent
increase in production from 1999's record of 4.2 million ounces and a 3 percent
decline in cash costs. As a result, we will generate cash flow from operations
approximately 15 percent higher than last year's $402 million, at today's gold
price."
North American production of 650,400 ounces of gold was essentially unchanged
from 655,100 ounces produced a year earlier. Total cash costs averaged $220 an
ounce versus $205 in the 1999 quarter as higher-cost refractory ore generated 61
percent of Nevada production, up from 49 percent a year earlier, and production
from lower-cost heap leach operations declined 22 percent. Production also
declined at the Mesquite mine in California.
Increased high-grade ore from the Post open pit mine at Carlin, Nevada, in the
second half of the year and continued optimization of processing facilities
throughout Nevada are expected to lift total North American production above 2.9
million ounces in 2000 from 2.7 million in 1999. Total cash costs are projected
to be below last year's $208 an ounce.
Overseas operations produced 417,600 equity ounces of gold during the first
quarter, up 39 percent from 301,000 ounces in the year earlier period. Total
cash costs dropped sharply to $101 per ounce from $130. Production at Minera
Yanacocha in Peru increased 28 percent to 433,500 ounces (222,600 equity
ounces). Higher production and productivity coupled with the conversion from
contract to owner mining reduced the total cash cost to $88 an ounce from $114.
The Zarafshan-Newmont operation in Uzbekistan posted a 15 percent increase in
production to 126,600 ounces (63,300 equity ounces) as an inventory adjustment
to recognize higher recovery rates resulted in a decline in total cash costs to
$118 an ounce from $183. The Minahasa mine in Indonesia produced 99,700 ounces,
up 38 percent, as total cash costs declined 8 percent to $119 an ounce. A tax
dispute with the local government at Minahasa was settled favorably in
mid-April.
For all of 2000, overseas production is expected to reach 1.8 million equity
ounces, including 1 million ounces from Yanacocha, at a total cash cost of
approximately $100 an ounce. In 1999, Newmont's overseas operations produced
1.47 million equity ounces of gold at a total cash cost of $114 an ounce.
The Batu Hijau ramp up is proceeding ahead of schedule. In its first full
quarter of operations, sales totaled 110.1 million pounds of copper (61.9
million pounds for Newmont's 56.25 percent economic interest), and 57,000 ounces
of gold (32,000 equity ounces). Total cash costs were 65 cents per pound of
copper, after gold credits, and total production costs were 81 cents. The
average copper realization during the quarter was 80 cents per pound. Mining
averaged 340,000 tons per day during the quarter, up from 81,000 in the fourth
quarter of 1999, while processing averaged 104,000 tons per day, or 87 percent
of rated capacity.
Current projections are that Batu Hijau will produce 540 million pounds of
copper (300 million equity pounds) and 325,000 ounces of gold (180,000 equity
ounces) in 2000 at a total cash cost of under 55 cents per pound of copper. The
project is expected to contribute to earnings in the second half of the year.
During the 2000 quarter, exploration spending increased $2 million from a year
earlier to $13.5 million as drilling at Yanacocha intensified. Interest expense
rose $2.5 million to $20.9 million with elimination of capitalized interest at
Batu Hijau. However, general and administrative expenses declined slightly to
$12 million, or $11 an ounce.
Capital expenditures of $47.4 million, which includes 100 percent of expansion
costs at Yanacocha, and an investment of $91.8 million in Batu Hijau to increase
the truck fleet and complete a waste water management system, lifted total
investments for the quarter to $139.2 million versus $76.7 million a year
earlier.
Newmont ended the quarter with long-term debt of $1.12 billion, up $85 million
from year-end, and cash and equivalents of $90.7 million, up from $55.3 million
on December 31. With expected strong operating cash flow in the second half of
the year, the company is on target to reduce total debt in 2000 below last
year's $1.04 billion. |
