Newmont Mining (NEM) Misses Q4 EPS by 8c, Offers Outlook
Newmont Mining (NYSE: NEM) reported Q4 EPS of $0.04, $0.08 worse than the analyst estimate of $0.12. Revenue for the quarter came in at $1.82 billion versus the consensus estimate of $1.82 billion.
Outlook
Newmont updated its long-term outlook in December 2015. Guidance calls for AISC below $1,000 per ounce and profitable production of at least 4.5 to 5.0 million ounces per year through 2020.
Attributable gold production is expected to increase from between 4.8 and 5.3 million ounces in 2016 to between 5.2 and 5.7 million ounces in 2017, and remain stable at between 4.5 and 5.0 million ounces through 2020. New production at CC&V, Long Canyon Phase 1, Merian and the Tanami expansion are expected to offset the impacts of maturing operations at Yanacocha and mine sequencing at Batu Hijau. Projects that are not yet approved including Ahafo Mill Expansion, Subika Underground and Northwest Exodus represent upside of between 250,000 and 400,000 ounces of gold production beginning in 2018.
Attributable copper production is expected to be between 120,000 and 160,000 tonnes in 2016 and 2017 before decreasing to between 70,000 and 110,000 tonnes by 2018. The decline is due to the depletion of higher grade Phase 6 ore at Batu Hijau in 2018. Production at Phoenix Copper Leach and Boddington is expected to remain stable for the period.
Gold cost outlook – AISC is expected to improve from between $900 and $960 per ounce in 2016 to between $850 and $950 per ounce in 2017. 2018 costs are expected to remain below $1,000 per ounce despite higher stripping at Boddington and in Nevada and lower production at Batu Hijau. CAS is expected to be between $650 and $700 per ounce in 2016, and remain stable at between $650 and $750 per ounce in 2017 and 2018. Costs benefit from higher grades at Batu Hijau and Carlin underground mines through 2017, and from lower cost production at Tanami and Merian through 2018. Ongoing cost and efficiency improvements are expected to offset lower grades and throughput at Ahafo and maturing operations at Yanacocha. Full Potential savings and lower cost ounces from projects that have yet to be approved could further improve costs in the longer term.
Copper cost outlook – Copper AISC is expected to average between $1.50 and $1.70 per pound in 2016 with higher grade ore at Batu Hijau, and increase slightly to between $1.60 and $1.80 per pound in 2017, and to between $2.40 and $2.60 per pound in 2018. CAS is expected to be between $1.20 and $1.40 per pound in 2016 and 2017, and increase to between $1.80 and $2.00 per pound by 2018. The increase in costs over the period is mostly due to lower production volumes at Batu Hijau as Phase 6 ore is depleted as well as higher stripping at Boddington though 2018.
Capital – 2016 sustaining capital is expected to be between $700 and $750 million increasing to between $800 and $900 million in 2017 to cover equipment rebuilds, water treatment and tailings storage facilities. Technical and operational cost and efficiency improvements represent further upside. Sustaining capital is expected to remain stable at between $700 and $800 million to cover infrastructure, equipment and ongoing mine development in the longer term.
Debt – Newmont paid $200 million toward its existing term loan and $250 million toward project debt in Ghana and Indonesia in 2015. The Company expects to continue to repay project debt and will analyze opportunities to pay down other Corporate debt in 2016, targeting the highest rates and nearest-term maturities first.
2016 Outlooka
| Consolidated | Attributable | Consolidated | ConsolidatedAll-in Sustaining | ConsolidatedTotal Capital | |||||||||||||||||||||
| Production | Production | CAS | Costsb | Expenditures | |||||||||||||||||||||
| (Koz, Kt) | (Koz, Kt) | ($/oz, $/lb) | ($/oz, $/lb) | ($M) | |||||||||||||||||||||
| North America | |||||||||||||||||||||||||
| Carlin | 1,040 | – | 1,100 | 1,040 | – | 1,100 | $750 | – | $800 | $925 | – | $975 | $175 | – | $195 | ||||||||||
| Phoenixc | 180 | – | 200 | 180 | – | 200 | $825 | – | $875 | $975 | – | $1,025 | $20 | – | $30 | ||||||||||
| Twin Creeksd | 370 | – | 400 | 370 | – | 400 | $575 | – | $625 | $700 | – | $750 | $30 | – | $40 | ||||||||||
| CC&V | 350 | – | 400 | 350 | – | 400 | $525 | – | $575 | $650 | – | $700 | $120 | – | $130 | ||||||||||
| Long Canyon | $140 | – | $160 | ||||||||||||||||||||||
| Other North America | $5 | – | $15 | ||||||||||||||||||||||
| Total | 1,940 | – | 2,100 | 1,940 | – | 2,100 | $675 | – | $725 | $850 | – | $925 | $490 | – | $570 | ||||||||||
| South America | |||||||||||||||||||||||||
| Yanacochae | 630 | – | 660 | 310 | – | 350 | $820 | – | $870 | $1,100 | – | $1,170 | $70 | – | $90 | ||||||||||
| Merian | 120 | – | 140 | 90 | – | 100 | $430 | – | $460 | $650 | – | $700 | $210 | – | $250 | ||||||||||
| Total | 750 | – | 800 | 400 | – | 450 | $760 | – | $810 | $1,050 | – | $1,150 | $280 | – | $340 | ||||||||||
| Asia Pacific | |||||||||||||||||||||||||
| Boddington | 725 | – | 775 | 725 | – | 775 | $690 | – | $730 | $800 | – | $850 | $60 | – | $70 | ||||||||||
| Tanami | 400 | – | 475 | 400 | – | 475 | $550 | – | $600 | $800 | – | $850 | $150 | – | $160 | ||||||||||
| Kalgoorlief | 350 | – | 400 | 350 | – | 400 | $650 | – | $700 | $725 | – | $775 | $10 | – | $20 | ||||||||||
| Other Asia Pacific | $5 | – | $15 | ||||||||||||||||||||||
| Batu Hijau | 525 | – | 575 | 250 | – | 275 | $500 | – | $550 | $650 | – | $700 | $50 | – | $60 | ||||||||||
| Total | 2,000 | – | 2,225 | 1,725 | – | 1,925 | $600 | – | $650 | $760 | – | $820 | $275 | – | $325 | ||||||||||
| Africa | |||||||||||||||||||||||||
| Ahafo | 330 | – | 360 | 330 | – | 360 | $775 | – | $825 | $1,020 | – | $1,100 | $60 | – | $80 | ||||||||||
| Akyem | 430 | – | 460 | 430 | – | 460 | $560 | – | $600 | $700 | – | $750 | $40 | – | $50 | ||||||||||
| Total | 760 | – | 820 | 760 | – | 820 | $650 | – | $700 | $850 | – | $900 | $100 | – | $130 | ||||||||||
| Corporate/Other | $10 | – | $15 | ||||||||||||||||||||||
| Total Goldg | 5,450 | – | 5,945 | 4,825 | – | 5,295 | $650 | – | $700 | $900 | – | $960 | $1,155 | – | $1,370 | ||||||||||
| Phoenix | 15 | – | 25 | 15 | – | 25 | $1.70 | – | $1.90 | $2.10 | – | $2.30 | |||||||||||||
| Boddington | 25 | – | 35 | 25 | – | 35 | $1.90 | – | $2.10 | $2.30 | – | $2.50 | |||||||||||||
| Batu Hijauh | 170 | – | 190 | 80 | – | 100 | $1.00 | – | $1.20 | $1.40 | – | $1.60 | |||||||||||||
| Total Copper | 210 | – | 250 | 120 | – | 160 | $1.20 | – | $1.40 | $1.50 | – | $1.70 | |||||||||||||
| Consolidated Expense Outlooki | |||||||||
| General & Administrative | $ | 225 | – | $ | 275 | ||||
| Interest Expense | $ | 270 | – | $ | 290 | ||||
| DD&A | $ | 1,350 | – | $ | 1,425 | ||||
| Exploration and Projects | $ | 275 | – | $ | 300 | ||||
| Sustaining Capital | $ | 700 | – | $ | 750 | ||||
| Tax Rate | 35% | – | 39% | ||||||
For earnings history and earnings-related data on Newmont Mining (NEM) click here.