Shares of the largest gold producer in the U.S., Newmont Mining Corp. (NEM, Financial) jumped 0.6% to $40.77 on the heels of the miner's early 2018 financial results.
The stock is currently trading slightly lower than yesterday's levels. However, more upsides in market value are expected over the following days of trading since operating and financial results were robust in the first quarter.
The company produced 1.21 million ounces of attributable gold, a 2% decline on a year-over-year basis but in line with the company’s guidance of 4.9 to 5.4 million ounces for the year.
Gold costs applicable to sales of $748 per ounce (up 8.2% from 2017) and gold all-in sustaining costs of $973 per ounce (up 8% year over year) were also in line with guidance on costs. For the entire year of 2018, Newmont Mining guides gold CAS to range between $965 and $1,025 per ounce and gold AISC to range between $700 and $750 per ounce.
The company reports that Ahafo North in Ghana, Yanacocha Sulfides in Peru and Long Canyon Phase 2 in Nevada are on track for the following phase of a development study.
Newmont Mining closed the quarter with earnings per share of $35 cents, which was a 40% growth from the comparable of fiscal 2017 and beat consensus by $2 cents. Earnings were backed on a revenue of $1.82 billion. On a year over year basis, the U.S. miner reported a 7.7% increase in the company’s turnover, thanks to a higher price realized from the sale of 1 ounce of gold. Newmont Mining missed consensus on revenues by $20 million.
Newmont Mining Corp also mines and sells copper. The red metal business accounts for approximately 4 to 5% of total revenue.
The company also generated adjusted earnings before interest, taxes, depreciation and amortization of $644 million. That was a 12% growth from a year ago.
The first quarter of 2018 ended for Newmont Mining with an amount of cash on hand of $3.1 billion and net debt of $984 million.
CEO Gary J. Goldberg said that the performance of the first quarter was overshadowed by six fatalities that tragically occurred during the construction at Ahafo Mill Expansion in Ghana.
While the company recommenced production at Ahafo and Akyem in Ghana, the civil construction at the Ahafo Mill Expansion project will restart only when Newmont Mining and the local authorities are sure that operations can be safely resumed.
Goldberg added: “In the meantime, our priorities are to support the people who lost loved ones in the accident and cooperate with authorities to investigate its causes, and, with great humility and resolve, to renew our commitment to working safely.”
In addition, capital expenditures increased 28% year over year to $231 million in the first quarter of 2018 from the Ahafo Mill expansion project and other growth projects, which include Quecher Main and Subika Underground.
Newmont Mining is reporting 533.72 million shares outstanding for a market capitalization of $21.81 billion. So far this year, the stock in the U.S. miner has climbed 7%, outperforming the Van Eck Vectors Gold Miners ETF (GDX, Financial) by 12%:
The 52- week range is 31.42 to $42.04 per share
The recommendation rating is 2.4 out of 5.
(Disclosure: I have no positions in any stock mentioned in this article.)
