Newmont Mining brings out 2014 guidance and drops by 10%

Newmont Mining (NYSE :NEM) is the world’s second largest gold producer and as of Friday, was trading at $21.68 per share; which is said to be a more than a 10% drop. This happened after releasing it’s 2013 gold production results, and 2014 guidance where they announced that they might curtail Indonesian operations.

Not all the news was bad though.

Newmont Mining reported that the 2013 gold production was at the top end of it’s guidance range of an overall 5.1 million ounces of gold.

In it’s 2013 reserve calculation and asset impairment testing, Newmont Mining will apply a gold price estimate of $1,300 per ounce, which is lower than the previous year which was $1,400 per ounce. These figures could result in non-cash impariment charges in the company’s financial fillings which are due next month.

Newmont Mining gold price estimate is more optimistic than the world’s biggest gold producer Barrick, which said last week it would recalculate it’s reserves under a gold price estimate of $1,100 per ounce.

Newmont Mining reported an average of realized prices for the upcoming year, of an estimate of $ 1,393 per ounce of gold and $2.96 per pound of copper, compared with $1, 661 per ounce and $3.43 per pound in 2012.

Throughout the year, Newmont Mining divested more than $600 million of non-core assets through the year and measures were put into place which included laying off an estimate of 300 employees at Newmont Mining Ghana operations.

Newmont Mining Akyem mine in Ghana began a commercial production in the last quarter of the year and exceeded it’s guidance by producing 129, 000 ounces of gold.

2013 has not been an easy year for the gold miners. Newmont Mining earned the distinction of the second worst performing stock on the S & P 500, when the company lost more than 50% of it’s value. Investors were told that Newmont Mining is reviewing it’s dividend policies, which is linked to gold prices.

On the high end for 2014, Newmont Mining sees a slight uptick in gold and copper output for a total of 5.3 million ounces and 175 thousand tonnes respectively. Newmont Mining also expects stable costs and a 20% reduction in overhead expenses.

Sterne, Agree and Leach’s gold forecast is 5.5 million ounces, and according to the AP, Newmont Mining is well below that forecast. RBC Capital investment analysts downgraded the gold miner from ‘sector perform’ rating to ‘underperform’ rating.

Dragging down Newmont Mining share price was the news received on Friday that the miner might curtail it’s Indonesian operations due to a dispute with the government over the new export tax. Goldberg was quoted as saying that Newmont Mining is in a position to curtail the Indonesian operations in the next few months if they are not able to come to an agreement.

SOURCE

Barron’s Blog | CitiGroup’s Brian Yu 2014 guidance

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