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Analysts predict steady 2Q performance for Newmont Mining; await update on projects

By Sandy Shore, AP Business Writer
On Wednesday July 22, 2009, 11:21 am EDT

DENVER (AP) -- Newmont Mining Corp., one of the world's largest gold producers, is scheduled to release second-quarter earnings Thursday before the market opens. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: The Denver-based company last month completed a $1 billion acquisition of the remaining 33.3 percent interest in an Australian mine that it did not own from AngloGold Ashanti Ltd.

Newmont expects one-time expenses of about $60 million in the second quarter related to the purchase. The Boddington open-pit project, about 80 miles southeast of Perth, is the largest gold mine in Australia.

Newmont also worked to complete negotiations on the divestiture of a 17 percent stake in its Indonesian subsidiary, Newmont Nus Tenggara, as required under a contract with the government.

During the quarter, the average price of gold was $922 an ounce, about 1 percent higher than the first quarter, according to UBS Investment Research estimates. The average price of copper jumped 39 percent to $2.13 a pound from the first to the second quarter.

BY THE NUMBERS: Analysts surveyed by Thomson Reuters have predicted, on average, earnings of 47 cents a share on revenue of $1.64 billion.

ANALYST TAKE: Analysts have forecast second-quarter production to be similar to the 1.27 million ounces of gold Newmont produced in the January-March period. Higher copper prices are expected to boost overall revenue.
Production costs also should be lower as the cost of raw materials such as chemicals and fuel has dropped, Argus Research analyst Bill Selesky said.

Investors also are awaiting more details on the startup of Boddington, which had been forecast in mid-2009, and the Indonesian divestiture talks, RBC Capital Markets analyst Stephen Walker wrote Tuesday in a research note.
WHAT'S AHEAD: Newmont has forecast 2009 equity gold sales, of 5.2 million ounces to 5.5 million ounces.

STOCK PERFORMANCE: Shares of Newmont fell 8.7 percent during the quarter, closing at $40.87 on June 30.