UPDATE 2-Newmont 1st-quarter earnings fall but costs down, output up

Thu Apr 24, 2014 7:40pm EDT

(Adds CEO comment, details on African, Indonesian operations)

April 24 (Reuters) - Newmont Mining Corp, which sources have said is in talks with Barrick Gold Corp on a merger, reported a steep drop in first-quarter earnings on Thursday as a result of lower gold and copper prices.

Newmont, the world's second-biggest gold producer after Barrick, managed to lower its gold production costs and slightly lift its gold output in the quarter, including a 40 percent increase in production at its Tanami mine in Australia.

"We are confident we can maintain this trajectory as the year progresses, as evidenced by our updated outlook for lower costs and higher production for Africa," Gary Goldberg, Newmont's president and chief executive said in a statement.

Newmont raised its production forecast for its African operations to between 790,000 and 870,000 ounces from 785,000 to 850,000 ounces as a result of "mine plan optimization" at its Ahafo operation in Ghana. It also lowered it cost outlook for its African operations.

The company, which also has mines in North and South America, and Asia, produced 1.21 million ounces of gold in the first quarter, up slightly from 1.17 million ounces in the same period in 2013. It produced 24,000 tonnes of copper against 20,000 tonnes a year ago.

All-in sustaining costs for gold were $1,034 an ounce in the quarter, down from $1,121 per ounce in the same quarter a year ago. Realized gold prices fell to $1,293 an ounce in the quarter from $1,631 per ounce in the first quarter of 2013.

Newmont maintained its production forecast for the year of between 4.6 million and 4.9 million ounces of gold. It also expects to produce between 160,000 and 175,000 tonnes of copper in 2014.

The company warned that continued delays in getting approvals for exports in Indonesia will force it to scale back production there and could mean it will not achieve its forecast output for 2014.

Exports from Newmont's Batu Hijua copper-gold mine in Indonesia have been halted since January when the Asian country slapped a new tax on exports in an attempt to force miners to process their raw minerals domestically.

Newmont said net income from continuing operations fell to $117 million, or 23 cents per basic share, in the quarter, from $314 million, or 63 cents per share, in the same period a year ago.

On an adjusted basis, Newmont reported a profit of 22 cents per share. Analysts expected Newmont to reported adjusted earnings of 19 cents a share, according to Thomson Reuters I/B/E/S.

Denver, Colorado-based Newmont and Toronto-based Barrick recently broadly agreed to a transaction under which Barrick would acquire Newmont in an all-stock deal.

Talks between the two sides, however, hit a snag and broke down last week, sources close to the situation have said. Some talks between representatives of both companies have taken place since but high-level talks between executives from both sides have yet to resume. (Reporting by Nicole Mordant in Vancouver; Editing by Steve Orlofsky, Lisa Shumaker and Andre Grenon)

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