Newmont (NEM) Easily Beats Earnings Estimates on Rising Gold Prices

In a preview of what gold miners in the future will face, Newmont this time around was able to generate a healthy earnings gain because rising gold prices were able to overcome increased costs, resulting in earnings easily beating analysts' estimates.

Newmont of course has a strong copper exposure, so is more than just a gold miner. Even so, its earnings were generated by rising price of gold more than anything, although copper has been no slouch in that regard either.

First-quarter earnings, adjusted for some items, were $513 million, or $1.04 a share, compared with $408 million, or 83 cents a share, last year in the same quarter.

Sales jumped 10 percent to $2.5 billion, according to Newmont, which operates mines in North and South America, Africa, Australia and Indonesia.

Analysts on average were looking for adjusted earnings of 99 cents a share and revenue of $2.4 billion.

Production targets for the full year 2011 of 5.1 million to 5.3 million ounces of gold and 190 million to 220 million pounds of copper were kept in place by Newmont.

The Newmont board also approved a second-quarter dividend of 20 cents a share linked to the gold price, based on the net average realized price of $1,382 an ounce in the first quarter.

"The price link dividend is one that provides some certainty and flexibility in that upward pricing environment and there is an opportunity to share more with investors over time through that, should we choose to do so," said Chief Executive Officer Richard O'Brien.

Newmont Mining closed Thursday at $59.23, gaining $0.38, or 0.65 percent.

Iamgold's (IAG) 2011 Inflation, Costs Pressures

Gold miners like Iamgold (NYSE:IAG), while performing solidly, have been receiving attention from investors who are concerned over how the company will respond to higher inflation and rising costs.

Even coming off of great quarters, and Iamgold itself generating 39 cents a share on revenues of $495 million, which far surpassed analysts' estimations, there is still a sense of uncertainty for the year going forward.

In the case of inflation it's somewhat surprising, as well-run gold miners tend to do well in those circumstances, with gold prices usually pushed up as a result of money flowing into the sector for safety.

Concerns over higher costs in the case of Iamgold are well-founded, as they rose by close to $100 an ounce from last year in the same quarter, to $574 an ounce.

But high gold prices can be forgiving, and it appears that should continue on into 2011, helping negate that factor, although they'll perform lower than some of their peers.

Guidance for 2011 is for cash costs to range from $565 and $595 an ounce on production of 1.1 million to 1.2 million ounces of gold.

Iamgold recently raised its dividend to 8 cents a share.

Goldcorp (NYSE:GG) in Record Net Earnings, Gold Production

Goldcorp (NYSE:GG) reports record gold production and net earnings for 2010.

Adjusted net earnings of $1 billion or $1.37 a share were reported in 2010, up from net earnings of $588.2 million or 80-cents a share reported for 2009. Net earnings for 2010 were a record $1.6 billion or $2.14 ar share, compared to net earnings of $240.2 million or 33-cents/sh reported for 2009.

Goldcorp reported adjusted net earnings of $417.1 million or 57-cents per share in the fourth-quarter 2010, up from $182.7 million or 25-cents/sh reported in the fourth-quarter 2009. Net earnings in the fourth quarter of 2010 were $331.8 million, compared to $66.7 million in the fourth-quarter 2009.

Excluding the Pueblo Viejo operation, capital expenditures for 2011 are forecast to be $1.5 billion including $300 million each for Éléonore and El Morro, $200 million for Red Lake and $200 million for Cerro Negro.

Exploration expenditures are expected to be $170 million this year, of which one-half will be expensed, with efforts focused on replacing reserves mined throughout the year and on extending existing told zones at all of Goldcorp's prospective mines and projects.

Goldcorp reported record gold production of 2,520,300 ounces for 2010, up from 2,421,300 ounces mined in 2009. Gold production for the fourth-quarter 2010 was 689,600 ounces, up from 601,300 ounces for the same period of 2009. Gold production was higher during the fourth-quarter 2010, mainly due to record production at Marlin and Los Filos.





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Newmont Mining (NEM) Profits Soar, Shares Fall

The story of equities for now is going to continue to be guidance, as quarterly reports like the solid one turned in by Newmont Mining (NYSE:NEM) are no longer driving investor interest. The rearview mirror is no longer being used as a guide by investors.

Newmont Mining Corp., citing sharply higher copper and gold prices, reported Thursday a 46% jump in its fourth-quarter profit, topping Wall Street’s expectations.

But the world’s second-largest gold producer also lowered again its 2011 production forecast and warned of rising costs, which took the shine off its latest results and sent its shares tumbling nearly 4% to $56.82 at the open.

Denver-based Newmont (NEM) said its fourth-quarter net income attributable to stockholders rose to $812 million, or $1.61 a share, from $558 million, or $1.13 a share, in the year-ago period.

Adjusted to exclude one-time items, the company’s quarterly earnings rose to $574 million, or $1.16 a share, from $561 million, or $1.14 a share.

The per-share results topped the $1.14 analysts surveyed by FactSet Research had been looking for.

Consolidation in the gold mining sector is sure to pick up as production estimates continue to be lowered and organic growth not able to keep up with demand.




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Barrick (ABX) Looking for Another Strong Year

Coming off an impressive year in 2010, Barrick Gold (NYSE:ABX) is poised for another, expecting gold production to reach up to 8 million ounces in 2011.

Barrick easily exceeded earnings estimates in the fourth quarter, as the company made 95 cents a share, 11 cents above consensus of 84 cents a share. That was 55 percent above the same quarter last year.

Revenue for the quarter surged to a new high of $2.95 billion at cash costs of $486 an ounce. Net costs came in at $326 an ounce. Net costs are determined by subtracting sales of byproduct metals of the mines.

Guidance for 2011 is for cash costs to be from $450 to $480 an ounce, or net $340 to $380 an ounce.

Costs will be slightly higher in 2011 because of the boost in price in raw materials and the lower quality grades encountered as some of Barrick's mines.

The gold miner is keeping their quarterly dividend at $0.12.

Barrick closed Thursday at $50.64, up $0.92, or 1.85 percent.

Newmont's (NYSE:NEM) 2010 Gold, Copper Production Up

Gold production for Newmont Mining Corp. (NYSE:NEM) rose in 2010, according to the company, adding their operating margins related to gold also rose.

Chief Executive Officer Richard O'Brien said, "Our gold operating margin also increased from $566 per ounce in 2009 to $737 per ounce in 2010 ... highlighting our increasingly attractive gold price leverage in a rising metal price environment."

The amount of gold production surpassed their previous estimate in the early part of November of 5.3 million ounces, coming in at 5.4 million ounces.

Copper production for Newmont really soared, increasing by 45 percent over production levels of 2009, growing to 327 million pounds.

In their latest quarter, Newmont produced 1.4 million ounces of gold, selling 1.3 million ounces at an average price of $1,368. They sold 57 million tons of copper in the fourth quarter for $4.52 each.

Newmont closed Thursday at $55.71, gaining $0.25, or 0.45 percent.

Ventana Gold (TSE:VEN) Soars Over 38 Percent on Buyout Offer

The leading shareholder in Ventana Gold (TSE:VEN) made an offer to acquire the company, pushing the stock up by over 38 percent on Wednesday.

The offer from EBX values Ventana at close to $1.47 billion. EBX is owned by Brazilian billionaire Eike Batista.

EBX owns its current stake 20 percent stake in Ventana via its subsidiary 63X Master Fund. They hold almost 21 million shares of Ventana at this time.

Production estimates for the flagship project, La Bodega, based in Colombia, is 347,000 gold equivalent ounces annually at a cash cost of $322 an ounce.

Ventana closed Wednesday at $13.90, surging $3.87, or 38.58 percent.

African Barrick Gold (LSE:ABG) Becoming a Disaster

African Barrick Gold (LSE:ABG), the spin-off from Barrick Gold (NYSE:ABX), is becoming a disaster, as poor management and what appears to be a grossly incompetent human resources department are causing the company to lower production forecasts for the second time in the last 60 days or so.

The inability to protect their assets and hire good people has caused the gold miner to lower their gold production estimates from 800,000 to 850,000, down to 716,000. That was in relationship to the original numbers.

Gold production targets had been downwardly revised to 750,000-800,000 ounces in between that time.

Allegedly a criminal syndicate infiltrated the Buzwagi mine and stole fuel from the facility. Consequently 60 workers were suspended, along with several contractors.

Responding far too optimistically in our opinion, Numis Securities analyst Cailey Barker said in a research note, "We remain cautious in the short term on ABG but still remain firm on the longer term re-rating prospects from a low 1.1xNAV (net asset value), making this one of our key picks in the mid-tier gold sector."

I wouldn't touch this stock until the obvious corruption in the company is completely rooted out.

One step taken was to appoint a new general manager at the mine with 28 years of experience in mining, Boyd Timler.

But at this time it's not an experience issue, but a character issue. If African Barrick doesn't completely clean house, this will happen over and over again. Somebody is obviously turning their head the other way and allowing it to happen.

Eldorado (NYSE:EGO) and Low Cost Benefits

Eldorado Gold (NYSE:EGO) received a lot of attention recently when they were named as the fastest growing company in 2010 by Fortune, but growth isn't the only strengh of Eldorado, as their low operational costs puts them in an enviable place.

The two major benefits of any company with low costs advantage are the flexibility it has and the ability to navigate its way through difficult economic times.

In gold mining, and mining in general, that's one of the major differentiators and moats separating the miners as a quality investment.

Even though Eldorado suffered some negative media coverage when they were openly outbid for Andea Resources by Goldcorp (NYSE:GG), all it revealed is what everyone already knew: they aren't able to successfully wage a bidding war against the major miners.

But as Eldorado CEO Paul Wright noted recently, they have two solid in Turkey and China, with another in the permitting stage in Greece. That will keep them busy for several years even if nothing else happens.

Wright wasn't concerned over the major miners' strength to outbid them on companies either, as most the time they don't end up interested in the same assets.

While Wright has said he would be open to another potential acquisition, it would have to be a very opportunistic one. Much of that is related to geographic preferences for the company they want to work in.

In his mind it'll probably be a couple of years before they start looking in the acquisition area again.

Over the long term Wright says he making decisions on the assumption the price of gold will continue rising, and being one of the top low cost miners in the industry, can do well in strong and weak economic environments.

The cash cost for gold production in the latest quarter for Eldorado was $375 an ounce.

Barrick (NYSE:ABX), Newmont (NYSE:NEM) Drive Nevada Mining Costs Lower

Even though gold production in the state of Nevada fell for the first time in ten years, the state remains the sixth-largest gold producer in the world, still led by mining giants Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM).

Nevada, which lags behind only China, South Africa, Australia, Russia and Peru in gold production, ended 2009 producing $5.1 billion in gold and silver combined.

Barrick and Newmont also helped push down the cost of production as well for the state, falling from $525 an ounce in 2008 to $508 an ounce in 2009.

The amount of ounces produced in 2009 was 5.64 million, according to the Natural Resource Industry Institute at the University of Nevada, Reno, economist John Dobra.

Only one downside has been found in Nevada gold production, and that was the amount going into exploration, which fell from $158 million in 2008 to $110 million in 2009.

Most of that is attributed to tight credit markets rather than lack of opportunity and interest.

Dobra concluded concerning provable and probable reserves, that even if all the gold in Nevada has been discovered, they could continue mining at current levels until at least 2023.

But even with less exploration, a number of new deposits have been found, and the future continues to look bright for Nevada gold mining and the companies who have a large stake in the state.

In case it ever does slow down, gold producers in Nevada have been keeping their richest deposits on hold for times when that may be all they have to produce. It's unlikely they'll have to employ that strategy for decades to come.

Credit Suisse (NYSE:CS) Raises Agnico (NYSE:AEM) Price Target

Agnico-Eagle Mines (NYSE:AEM) had its price target raised by Credit Suisse (NYSE:CS), increasing it to $79. Agnico was up to $64.74, gaining gaining $0.03, or 0.05 percent, at 3:21 PM EDT.

Credit Suisse had a price target of $75 a share on the gold miner before their increase.

In a note to clients, Credit Suisse said, "On Sept. 8, 2010, AEM provided an update on its 2010 exploration program. Our target price of $79.00/sh has been revised upwards from $75.00 based on increase to our DCF to $52.54 a share from $49.81 a share previously. The DCF revision results from additional ounces mined in our model. We apply a target P/NAV multiple of 1.5 times our DCF. We have revised our 2010 EPS upward to $1.46 from $1.40 as a result of marking to market our commodity prices, partially offset by an increase in exploration expense. Our 2011 and 2012 EPS were revised to $1.69 and $2.64 from $1.79 and $2.72 based on higher exploration expense."

Credit Suisse said AEM has been held back by the ignoring of its exploration over the past 18 months, saying start-up issues have for the most part now been taken care of.

Once investors realize that they see the share price rising to the estimated level.

Will Yamana Gold (NYSE:AUY) Every Recover?

Yamana Gold (NYSE:AUY) continues to be the gold mining stock that could and should, but doesn't.

Investors have lost interest in Yamana when it started to downwardly revise production targets, and while recovering some, it still remains flat, and seemingly undervalued.

If you acquired shares in Yamana in November of 2008, you would be happy, as it had dropped to $3.60, and closed Friday at $10.14. But if you would have bought it in November of 2006, you would have taken a loss after holding it for four years.

Considering the amount of proven resources in the ground, it remains puzzling as to why Yamana doesn't have a higher valuation or amount of investor interest.

Taking into consideration the price of gold alone, and not their copper resources, this stock should be much higher.

It could be that gold investors consider other mining stocks as better positioned to take advantage of rising gold prices.

Either way, Yamana is definitely worth watching and investigating further, as the share price should catch up with its resources sooner or later.

Barrick (NYSE:ABX) CFO Projects 9 Million Gold Ounces Annually

In a webcast covering the UBS Best of the Americas conference, Barrick Gold (NYSE:ABX) CFO Jamie Sokalsky said the company has an annual gold production target of 9 million ounces within five years.

A two-part strategy to reach that level will be implemented. They will continue to work on expanding existing projects, while developing new projects they already have a stake in. That combination should bring the desired gold production results Barrick is looking for.

At this time they're not thinking in terms of acquiring new projects, as the high price of gold has caused the cost of gold assets to soar.

This year Barrick estimates production will be about 8 million ounces of gold on the higher end, but could come in as low as 7.6 million as well.

The gold miner has been battling to reverse their gold production slide, which last year plummeted to 7.4 million ounces.

Projects targeted for expansion or development, include Turquoise Ridge in Nevada, which they own a 75 percent stake in with Newmont Mining (NYSE:NEM). At this time the underground mine is producing between 150,000 to 200,000 ounces a year.

Scheduled to begin production in the fourth quarter of 2011 is the Pueblo Viejo project. In 2013 the Pascua Lama mine will start production. Cerro Casale, in Chile, is also included in the projected 9 million ounce production goal of Barrick.

Allied Nevada's (NYSE:ANV) Hycroft Mine Production Profile Larger Than Thought

An updated scoping study of the Hycroft mine of Allied Nevada (NYSE:ANV) found it can support a much larger production facility than the original study indicated.

CEO Scott Caldwell said, "This mine is expected to support an operation with a much greater production profile than was originally presented in the April scoping study."

Allied said in August it had a measured and indicated resource of eight million ounces of gold and 259.2 million ounces of silver at Hycroft mine.

Annually the gold miner projects gold production of 610,000 ounces, and silver production of 27 million ounces.

The enlarged project will now cost Allied about $1.1 billion.

They should be able to generate $500 million of that on their own by 2015, with the remaining $600 million to be raised.

AngloGold Ashanti (NYSE:AU) Expanding Existing South African Mines

In what appears to be a move to increase gold and uranium production at lower costs, AngloGold Ashanti (NYSE:AU) will reportedly work on expanding its existing mines in South Africa.

AngloGold is also investing in large projects in other places, making it important to attempt to tap into existing resources in hopes of keeping minimum annual gold production at about 1.75 million ounces over the next five years, according to executive vice president for South Africa, Robbie Lazare.

The company did say it'll be difficult to accomplish because of the major projects, which over the next decade or so will increase production for the giant gold miner.

Also benefiting in the short term will be its uranium assets, which AngloGold said will increase from 1.3 million pounds to 2 million pounds in annual production.

With demand for uranium ready to explode, that should be a solid benefit for the miner. About 1.4 million pounds of uranium is expected to be produced this year.

IAMGOLD (NYSE:IAG) Earnings Fall in Second Quarter

IAMGOLD (NYSE:IAG) has followed the path of a number of gold miners this quarter, falling in earnings even though gold prices had soared during the quarter, pointing to higher costs.

Net earnings came in at $35.7 million, or $0.10 a share, down from the same quarter last year, when they earned $44.1 million, or $0.12 a share.

Adjusted net earnings reached $39.1 million, or $0.11 a share, a gain of 24 percent over last year when they had adjusted net earnings of $31.5 million, or $0.09 a share.

Most of the drop in earnings came from closing its Doyon mine in December 2009. Other major factors were the lower quality of ore grade at Yatela, Rosebel, Sadiola and Mupane, which lowered production but raised costs.

Gold production for the quarter was 190,000 attributable ounces at an average cash cost of $623 an ounce. That was down 24 percent from last year.

Guidance for gold production was raised from 940,000 to 1,000,000 ounces at a cash cost between $490 and $510 an ounce to a range from 980,000 and 1,010,000 ounces at a cash cost between $530 and $550 an ounce.

Niobium production estimates were also increased to a range of 4.5 million to 4.7 million kilograms.

Revenue for the quarter dropped to $214 million, a 5 percent decline from last year as gold sales fell.

IAMGOLD closed at $17.32 in New York, dropping $0.57, or 3.19 percent.

Gammon (NYSE:GRS) Earnings Rise on Increased Gold Prices and Production

Higher gold prices continue to be the story for most gold miners during the earnings reporting season, and Gammon Gold (NYSE:GRS) (TSE:GAM) also had earnings increases from higher gold prices, and from higher production as well.

Earnings from the quarter rose to $11.4 million, or 8 cents a share, an increase over the $3.4 million, or 3 cents a share last year in the same period.

Revenue for the quarter increased from $57 million, a gain of 32 percent. That was driven by the average price of silver and gold for the quarter.

Gold price averaged $1,201 an ounce, while silver had an average price of $18.47 an ounce.

Gold production in the quarter increased to 52,506 gold equivalent ounces, in contrast to 50,814 ounces in the same quarter last year.

The company did take a big hit from the suspension of their El Cubo mine in Mexico, taking a net loss of $180.3 million, or $1.30 a share on that.

New Gold (AMEX:NGD) Turns it Around in Second Quarter

New Gold (AMEX:NGD) turned things around for the second quarter of 2009, where they has a net loss of $199.3 million, or $0.77 a share. This quarter they generated net earnings of $17.4 million, or $0.04 a share.

Included in the net earnings in the latest results was a pre-tax gain of $5.5 million in relationship to foreign exchange translation.

Revenue for the quarter was $112.4 million, almost double the $59.2 million last year in the same quarter.

Increases in revenue were attributed to the rising gold sales from the Mesquite mine, along with higher gold prices, which increased from $926 last year to $1,147 in the second quarter this year.

Gold sales for the quarter soared by 56 percent to 82,402 ounces, in comparison to 2009's 52,890 ounces.

Gold production increased t 89,919 ounces, an increase of 62 percent, up from 55,633 ounces last year.

Randgold (Nasdaq:GOLD) Plunges on 39 Percent Increase in Costs

No matter how hard Randgold (Nasdaq:GOLD) Chief Executive Officer Mark Bristow tried to deflect attention away from the 39 percent increase in costs, he couldn't do it, and the gold miner took a beating, even though other numbers were decent in their last quarter.

The cost issue came from power outages at their Loulo mine in Mali. That resulted in the cost increases, and in dollars it came to $665 an ounce of gold. Gold price for immediate delivery for the quarter were at $1,196.53 an ounce.

Consequently, gold production in the next quarter had to be downwardly revised, and will come in at best, about 5 percent within the target range of 477,000 ounces.

Bristow said about the Mali situation, “We’re at a point where we have identified the issue. By the fourth quarter we should be settled.”

Net income rose from the $14.9 million last year in the same period, to $34.4 million in the second quarter this year.

Randgold dropped to $86.96, a decline of $3.54, or 3.91 percent.

Alamos Gold (TSE:AGI) Earnings Down on Lower Production

Alamos Gold (TSE:AGI) earnings dropped about 7 percent on lower production in the quarter, missing analysts' estimates.

Earnings in the second quarter reached $12.1 million, or 10 cents a share, down from $13 million, or 12 cents a share last year in the same quarter.

Analysts had expected on average for Alamos to earn 12 cents a share, excluding one-time charges.

As expected, revenue increased 13 percent, coming in at $47.5 million. The higher revenue was from gold prices rising 30 percent in the quarter.

Alamos had to have had a margin and cost problem, as the higher gold prices should have pushed their earnings up, even with the lower production, which was primarily the result of delays and drought at their flagship Mulatos mine in Mexico.

Going forward, Alamos kept its full-year production estimates of 160,000 ounces to 175,000 ounces, saying production should increase in the second half.