Newmont Mining Corp. (NEM, Financial) released operating and financial results for the second quarter of fiscal 2017 on July 25.
The gold miner closed the quarter with EPS of 46 cents, a 58.6% year-over-year increase, and beat analysts’ expectations by 19 cents.
Revenue came in at $1.875 billion, a 12.3% increase from the comparable quarter of fiscal 2016.The company beat revenue estimates by $110 million.
The increase in revenue was due to increased gold sales compared to the prior-year quarter even though the miner realized a lower price – on average – from the sale of one ounce of gold. During the quarter, Newmont Mining sold 1.35 million ounces of attributable gold – 11.8% higher than in second-quarter 2016 – at an average gold price of $1,250 per ounce. The latter was seven cents per ounce lower than in the comparable quarter last year.
Copper sales, which usually account for approximately 4% to 5% of total revenue, yielded 14,000 tons of copper sold during the quarter – an 8% increase from the second quarter of 2016 – at an average realized price per pound of $2.46, which represents a 23% increase year over year.
The higher volumes of gold sold was due to increased production. During the quarter, the miner produced 1.352 million ounces of gold, an increase from 1.193 million ounces in second-quarter 2016.
Newmont’s second-quarter production benefited from the addition of the Merian and Long Canyon mines. The two mines' contribution to production offset the negative effects of mining the metal from lower-grade deposits at Tanami and Yanacocha.
Thanks to higher sales volumes, Newmont Mining reported an improvement in gold cash applicable to sales, from $661 per ounce in the second quarter of 2016 to $664 per ounce in the second quarter of 2017. The all-in sustaining cost (AISC) per ounce of gold sold decreased from $913 in second-quarter 2016 to $884 in second-quarter 2017.
The company closed the quarter with $3.1 billion in cash and securities, a 12.7% increase from the previous quarter, and $4.623 billion in total debt, of which 14.3% represents the portion of short-term debt Newmont has to refund during the third quarter corresponding to 1.625% bearing interest senior notes valued at $575 million. On July 18, the company proceeded with the withdrawal of these notes without replacing them with any corporate loan refinancing. Because of the expiration of the corporate loan, the total debt now amounts to approximately $4.05 billion, of which 85% is not due before 2022. The remaining 15% corresponds to 5.125% bearing interest senior notes that are due in October 2019.
For full fiscal 2017, Newmont Mining forecasts gold production of 5 million to 5.4 million ounces. This is an improvement from the production of the previous year as a result of bringing Merian and Long Canyon into commercial production. Concerning the guidance on gold production for fiscal 2018, Newmont Mining leaves it unchanged at between 4.7 million ounces and 5.2 million ounces.
For fiscal 2017, the gold miner guides an improvement in the gold cash to applicable sales per ounce, which is expected to range between $675 and $715, and in the AISC, which is expected to range between $900 per ounce and $950 per ounce. The guidance on capital expenditures for the year has been revised downward to between $890 million and $990 million. For fiscal 2018, capital expeniture guidance was left unchanged at between $900 million and $1 billion.
Newmont Mining closed at $36.24 per share on Tuesday, up $2.34 or 6.90% from the previous trading day. The company has a market capitalization of $19.32 billion, a price-book (P/B) ratio of 1.79, a price-sales (P/S) ratio of 2.66 and an EV/Ebitda ratio of 13.47.
Disclosure: I have no positions in Newmont Mining Corp.
