Newmont shares drop as cost struggles undermine gold profit surge -
MINING.COM
Newmont shares drop as cost struggles undermine gold profit surge - MINING.COM
The Denver-based company is the first major gold producer to post results in an earnings season where investors have been anticipating bumper profits from bullion producers. Gold is among the best-performing metals this year, surging more than 30% since the start of January and setting repeated record highs.
“The street expectations were too high,” said Carey MacRury, a mining analyst at Canaccord Genuity. “It was negative, no doubt, but I don’t think it’s as negative as what the market’s telling us today.”
Despite the missed expectations, Newmont posted its highest quarterly profits in five years — raking in $922 million in net income attributable to shareholders for the quarter.
Gold miners have struggled with higher labor and energy costs over the past few years. Newmont said its capital expenses rose 10% due to expansion projects in Australia and Argentina. But some of the company’s higher expenses came from major assets it picked up through last year’s $15 billion takeover of Newcrest Mining Ltd. Newmont posted 55% higher all-in sustaining costs at its Lihir operation in Papua New Guinea in the third quarter compared to the prior period.
The higher expenses are largely due to specific operational issues at Newmont mines, according to MacRury.
“We don’t see the cost miss as inflation read-through to the broader industry,” he said.