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Gold/Mining/Energy : Newmont Mining(NEM) & Newmont Gold(NGC) -- Ignore unavailable to you. Want to Upgrade?

To: SgtPepper who wrote (252)	6/12/1999 6:35:00 PM
From: Michael Olds	Read Replies (1) \| Respond to of 587

Excerpts from Prudential Securities; Newmont Mining, Company Update J. Clarence Morrison and Jim-Wah Ngan Hold: High Risk May 20 Earnings: 1999E: 0.35; 2000E 0.56 1. Low Gold Prices and unhedged position continue to hurt profits in first quarter. Newmont posted net income of $9.9 milllion ($0.06 per share) in the first quarter, compared with $30.2 million ($0.19 per share) in the same period a year ago. The 1Q99 results include after-tax startup costs of 3.1 million ($0.02 per share) at the Batu Hijau projecdt in Indonesia, whereas the 1Q98 results exclude a negative cumulative effect of accounting changes totaling $32.9 million ($0.21 per share), but include $1.1 million ($0.01 per share) for Batu Hijau startup costs. The first-=quarter results were in line with out and the First Call consensus' estimate of $0.06 per share. Earnings likely to increase gradually if costs remain low We are maintaining our earnings estiimates of gains of $0.35 per share for 1999, including the $0.02 startup cost, and the $0.56 per share for 2000. Our 2Q99 and 1999 estimates exclude the anticipated $10.5 million ($0.06 per share) after-tax gain on the sale of the True North exploration project in Alaska, and they also exclude the expected gain on the sale of Homestake's shares Newmont received during Homestake's acquisition of Argentina Gold. Both transactions will be recorded in the second quarter. Due to its mibnimal hedged position., Newmont's earnings remain very highly leveraged to the gold price. We estimate its earnings to be affected by about $0.17 per share for every $10 per-ounce change in the bullion price, and it needs a $275 per-ounce gold price to break even. Maintain Our Hold Rating on Shares Given its minimal hedged position, Newmont's profits are likely to be affected if the gold price stays at the current level of below $290 per ounce. Nevertheless, we believe that it could remain profitable in the coming quarters as long as it can retain its low-cost structure. We maintain our Hold rating on NEM shares, based on its high-quality assets and relatively attractive valuation at current levels. Gold may continue to be range bound in coming months. We expect the gold price to continue to fluctuate between $275 and 305 per ounce for the next few months, and to begin to trend higher in the latter part of the year. After the market absorbs the surprising news of the U.K.'s gold sales, we had expected the gold price to stabilize and we also believe that the planned gold sales by the IMF and Swiss central bank have already been accounted for in the current gold price. Newmont Plans to begin to pay down debt soon The company has a high debt level…much higher than the other major gold producers in North America. However, after completing the development of the huge Batu Hijau project, Newmont's capital expenditures are expeccted to decline in 2000 and on. Production from new mins should help offset the expected lower production at Carlin …While its offshore operations are likely to continue to perform well, production at its mainstay, the Carlin operations, is expected to drop… Construction of Batu Hijau near completion, with startup scheduled for fourth quarter A new underground mine on Carlin is under developm,ent Highlights: Lower gold prices and decreased production decreased the company's net income sharply in the quarter. The Company has only hedged about 125000 ounces of gold per year…at an average gold price of $454 per ounce. Total production dropped 7% Overall cash production costs reduced slightly to $181 from $184 per ounce. Exploration expense was $11.5 million in the first quarter, down 28%