(Recasts with comments on Indonesia and dividend policy from
Jan 31 Gold and copper producer Newmont Mining
Corp might curtail operations in Indonesia unless its
dispute with the government over a new export tax is resolved in
the next couple months, Chief Executive Gary Goldberg said on
Goldberg, speaking on a call with analysts and investors,
also said Newmont is reviewing its dividend policy, and will
update investors on its plans in February. Newmont's dividend is
linked to gold prices, which have dropped sharply.
Newmont said last week it is considering legal action and
other options in Indonesia, where the government has imposed a
new tax on exports of metal concentrates. The company exports
concentrate from its Batu Hijau copper and gold mine in the
"We're in a position in the next couple of months to look,
if we aren't able to reach agreement - to have to curtail
operations," Goldberg said.
Freeport, the other major U.S. miner with significant
operations in Indonesia, has already said it is deferring some
production because of its conflict with the government over the
Both miners have agreements with the Indonesian government
that they say exempt them from new taxes. The companies pay
corporate income taxes, royalties and other fees, but no export
Newmont scheduled Friday's call to discuss its
fourth-quarter production figures and its forecasts for 2014,
which were released late on Thursday.
Shares fell in early trading as the production forecasts
came in below expectations, and RBC Dominion Securities analyst
Stephen Walker downgraded the stock to "underperform" from
LOOKING AT DIVIDEND
Moody's Investors Service put Newmont's credit ratings under
review for a possible downgrade last week. During Friday's call,
Goldberg was asked about Newmont's gold price-linked dividend in
light of the potential downgrade.
He said he would discuss dividend plans in more detail on
Newmont's next call, in February, but noted that the dividend
"clearly sits as one of the items that we're taking a look at as
we really focus on free cash flow from the business and how we
Moody's said it was reviewing Newmont's ratings because it
expected earnings, cash flow and debt protection measures to
deteriorate at current gold prices.
A steep decline in the price of gold has cut into miners'
earnings and cash flow. Gold miners are expected to take more
asset writedowns as they report fourth-quarter results in the
Newmont said late on Thursday it expects consolidated gold
production of between 5.0 million and 5.3 million ounces and
copper output of between 160,000 and 175,000 tonnes in 2014.
RBC Dominion Securities analyst Walker wrote in a note to
clients that the company's 2014 forecast was lower than he had
expected: "In Nevada a number of mines are likely entering
lower-grade waste-stripping phases," he wrote.
Credit Suisse analyst Anita Soni wrote that the gold
production forecast fell short of her estimate.
BMO Capital Markets analysts said Newmont's 2014 copper
production estimate was slightly lower than they had expected,
but called the production forecasts "essentially in line" in a
note to clients.
Newmont's shares dropped 6.7 percent to $22.50 on Friday on
the New York Stock Exchange.
(Reporting by Allison Martell; Editing by Peter Galloway)