Newmont profit up but shy of estimates

NEW YORK (Reuters) - Newmont Mining Corp (NEM.N), the world's second-largest gold miner, said on Wednesday that second-quarter profit soared on record high prices for the precious metal, but the results missed Wall Street estimates.

The company said it was increasing its quarterly dividend and maintained its full-year production target despite higher-than-expected costs at its flagship Australian mine.

Despite falling short of estimates, Newmont's second quarter "was in line from an operating standpoint," said analyst Tanya Jakusconek of Canada's National Bank Financial.

Lower realized prices for copper -- which Newmont produces as a by-product at some gold mines -- accounted for the reported earnings falling short of Wall Street expectations, she said in a research note.

Newmont said that during the quarter, it produced 1.3 million equity ounces of gold and 80 million equity pounds of copper at an average realized gold price of $1,200 per ounce and $2.33 per pound for copper.

Equity production is the amount accruing to Newmont in mines it jointly operates with other companies.

Jakusconek said the average spot price for copper in the quarter was $3.18 per pound. The price of gold reached an all-time high of $1,264 per ounce on June 21.

"On the positive front, Newmont announced an increase in its dividend," she wrote.

Newmont stock was off 42 cents at $55.36 in morning trading on the New York Stock Exchange.

Net earnings rose to $382 million, or 78 cents per share, from $162 million, or 33 cents per share, a year earlier, as the price of gold broke record highs, the Denver-based company said.

Excluding asset sales and impairment of assets, earnings were 77 cents per share, below the analysts' average estimate of 84 cents, according to Thomson Reuters I/B/E/S.

Sales rose about 34 percent to $2.15 billion from $1.6 billion, but fell short of Wall Street's expectation of $2.2 billion.

The board of Newmont, which operates mines in Nevada, Indonesia, Australia and Africa, increased its quarterly dividend to 15 cents per share from 10 cents.

"Today's announcement of a 50 percent increase of our regular quarterly dividend reflects the confidence we have in our ability to fully fund our project pipeline and exploration programs, keep the door open to value-creating acquisition opportunities and return capital to shareholders," Chief Executive Officer Richard O'Brien said in a statement.

He said Newmont still expected 2010 equity gold production of 5.3 million to 5.5 million ounces at a slightly narrower cost range of between $460 and $480 per ounce.

He said operating costs were higher than expected during the ramp-up at Newmont's vast Boddington mine in Western Australia, where the company was finding lower gold grades than modeled.

Analyst Adam Graf, of Dahlman Rose & Co, noted there was always an uncertainty with ore grades. "You never know what grade you are going to get."

(Reporting by Steve James; Editing by Lisa Von Ahn, Dave Zimmerman)