Gold Settles Lower: Are Investors Losing Hope for a Rebound?
Gold prices (GC) for COMEX futures August delivery were down by 0.38% after a period that was characterized by rising negative trading sessions.
After a week of falling prices for gold, silver, and other precious metals, the last trading day was marginally good for silver as it rose 0.7%. The other metals stayed on a downward route.
Gold futures contracts on COMEX fell close to 6.78% in the last trading month. Although gold prices have fallen, they’ve certainly seen more down days than up days.
Newmont’s outperformance is mainly due to the strengthening of Newmont’s balance sheet as a result of non-core asset sales and unit cost reduction.
Newmont Mining’s (NEM) stated strategy is portfolio optimization. It’s disposing of high-cost, non-core assets and acquiring low-cost assets with long mine lives in safer jurisdictions.
Newmont Mining (NEM) faces challenges in Indonesia. It’s working with the Indonesian government to effect modifications to its contract of work and renew its export permit.
Newmont Mining’s (NEM) project pipeline remains one of the strongest among its peer group. Its three main projects are running concurrently and on schedule.
Prepaying debt and strengthening its balance sheet is Newmont Mining’s (NEM) top priority. It plans to repay $750 million in 2015.
Newmont is focusing on a lower cost outlook. Its overall cost guidance for full year 2015 has been lowered by 4%, from $960–$1,020 per ounce to $920–$980 per ounce.
Newmont Mining (NEM) revised its production guidance upward. This is mainly to reflect the continuing strong performance and the impact of recent acquisitions.
Newmont Mining’s (NEM) attributable gold production for 2Q15 was 1.24 million ounces. This is higher by 0.2 million ounces compared to the same quarter last year.
In its 2Q15 earnings release, Newmont Mining (NEM) reported net income attributable to shareholders of $131 million, or $0.26 per share. This compares to $101 million, or $0.20 per share, in 2Q14.
Newmont Mining (NEM) announced its 2Q15 results on July 22. It reported adjusted EPS of $0.26 and adjusted EBITDA of $692 million.
Metal shares bear the brunt whenever there’s a global turmoil in the markets. China’s slowdown could continue to weigh heavily on metal companies like Freeport.
In Freeport-McMoRan’s (FCX) 2Q15 earnings conference call, CEO Richard Adkerson remarked that “all options are on the table,” given the falling commodity prices.
Freeport-McMoRan’s energy strategy includes continuing to make capital investments in its oil and gas business despite lower energy prices.
Freeport is pursuing the Cerro Verde mill growth project in Peru. Freeport owns a 53.56% stake in Cerro Verde. It’s expected to become the world’s largest copper concentration capacity.
Freeport’s net debt was negative in 4Q12. But the company had to borrow heavily to acquire its energy assets, which increased its debt levels.
Even though Freeport managed to bring down its unit production costs, it was clearly not enough to offset lower commodity prices that are falling at a much faster pace.
Freeport’s average realized copper prices fell 14% in 2Q15 on a year-over-year basis. Lower commodity prices took a toll on Freeport’s 2Q15 profits.
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