Monday, April 25, 2011

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.

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