Newmont Mining’s earnings beat estimates
Newmont Mining (NEM) released its Q1 2019 earnings on April 25 before the market opened. It held a conference call the same day at 9:00 AM EST. The company beat analysts’ EPS estimates of $0.27 by $0.06. Its revenues, however, missed by $10 million, coming in at $1.8 billion.
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NEM’s operating performance
NEM’s gold production rose by 2% YoY to 1.23 million ounces. This improvement was due to the full quarter of mining at Subika Underground and higher grades at Merian and Yanacocha. Its all-in sustaining costs (or AISC) declined by 4% YoY to $907 per ounce due to higher production, leach pad inventory adjustments, and the favorable exchange rate. The improvements in production and costs were offset by lower gold prices (GLD). The average realized gold prices (IAU) during the quarter averaged $1,300 per ounce, 2% lower as compared to Q1 2018.
Newmont also updated investors on its project pipeline, which remains robust. All the projects are going as scheduled and are within budget. Newmont maintained its guidance for 5.2 million ounces of gold production in 2019, 4.9 million ounces in 2020, and between 4.4 million and 4.9 million ounces in the longer term. This guidance excludes the development projects that have not been approved yet and the volumes from Goldcorp after its merger with NEM. As far as costs are concerned, NEM expects its AISC to decline from $945 per ounce in 2019 to $830 per ounce in 2025.
Newmont’s underperformance YTD
Newmont Goldcorp’s (NEM) stock has fallen 1.5% year-to-date as of April 26. It has slightly outperformed the SPDR Gold Shares (GLD) and the VanEck Vectors Gold Miners ETF (GDX), which have returned -3.6% and -3.9%, respectively, over the same period. It, however, has underperformed peers (NUGT) Yamana Gold (AUY), Agnico Eagle Mines (AEM), and IAMGOLD (IAG), which have returned 0.5%, 43.1%, and 16.3%, respectively.