* Adjusted earnings beat Street estimate
* Incoming CEO to focus on cost control
* Company to proceed with only most promising new projects
By Julie Gordon
TORONTO, Feb 21 Newmont Mining Corp, the
No. 1 U.S. gold producer, said on Thursday that a more
disciplined approach to spending and cost cuts is its top
priority as leadership of the company shifts to Gary Goldberg,
who takes over as chief executive on March 1.
Newmont also reported a smaller-than-expected 4 percent drop
in adjusted fourth-quarter profit on lower metal production and
higher operating costs, which it vowed to bring under control.
Goldberg - whose promotion from chief operating officer to
replace current CEO Richard O'Brien was announced in December -
pledged to focus on reducing production costs at the global
mining company and said Newmont would only proceed with the most
promising opportunities in its portfolio.
The Denver-based miner has struggled in recent quarters with
declining production, rising operating and development costs,
and violent protests against its $5 billion Conga gold project
Newmont is planning some $2.1 billion to $2.3 billion in
capital spending in 2013, with about 40 percent of that on
development projects and the remaining 60 percent earmarked as
The company, which temporarily shelved the controversial
Conga development last year, will spend about $150 million on
the project in 2013 and expects to make a firm decision on the
future of the gold mine this year.
For now, Newmont is focused on finishing construction at the
Akyem mine in Ghana, with first production expected later this
The company is also advancing stripping work on Phase 6 at
its Batu Hijau mine in Indonesia, where it will continue to
process stockpiled ore until material from the new phase can be
used as feed for the mill.
Shares of gold miners were battered in 2012, after deals
made in 2010 and 2011 failed to live up to expectations as
capital costs soared and bullion prices stagnated.
But top producers, led by Canada's Barrick Gold Corp
, are showing the first signs of emerging from the funk,
having admitted their lavish spending was ill-advised and
pledged to throttle back costs to maximize shareholder returns.
Newmont increased its quarterly dividend by 21 percent to
42.5 cents per common share in the first quarter of 2013. The
company's dividend is linked to the bullion price.
Adjusted to remove one-time items, earnings dropped to $552
million, or $1.11 a share, in the quarter ended Dec. 31. That
compared with $577 million, or $1.17 cents, a year earlier.
Analysts, on average, had expected earnings of 97 cents a
share, according to Thomson Reuters I/B/E/S.
"It was a big EPS beat, but it looks like it was a fairly
low-quality beat," said Garrett Nelson, an analyst with BB&T
Capital Markets. "It was driven by higher 'other income' and an
unusually low tax rate."
Nelson noted that operating results were in line with his
Net income was $673 million in the quarter, compared with a
loss of $1.02 billion in the year-ago period, when it booked a
$1.6 billion non-cash impairment charge on its Hope Bay project
in Nunavut, a northern Canadian territory.
Newmont has struck a deal to sell the Arctic project to a
privately held Canadian company.
The company previously announced gold production of some
1.25 million ounces in the fourth quarter, compared with 1.3
million ounces in the fourth quarter of 2011. Copper output fell
to 35 million pounds, down from 45 million pounds a year ago.
Full-year gold production fell to 5 million ounces, down
from 5.2 million ounces in 2011. Newmont said it plans to
produce some 4.8 million to 5.1 million ounces in 2013.