Gold miner Newmont warns on costs after profit beats estimates

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Visitors speak with a representative at the Newmont Corp booth at the Prospectors and Developers Association of Canada (PDAC) annual conference in Toronto, Ontario, Canada March 1, 2020. REUTERS/Chris Helgren

July 22 (Reuters) - Newmont Corp (NEM.N) on Thursday topped Wall Street estimates for second-quarter profit thanks to slightly higher gold prices, but the top gold miner said rising costs for materials and labor could persist through next year.

Bullion averaged about $1,814 in the second quarter, a marginal increase from the first, as a weak dollar and safe-haven buying due to COVID-19 pandemic-related uncertainty underpinned prices.

Newmont said its average realized gold price jumped 4.1% to $1,823 per ounce in the quarter. Its gold production fell marginally to 1.45 million ounces sequentially, but was up 15% from the last year.

The Denver, Colorado-based miner said its all-in sustaining costs (AISC) for the quarter, an industry metric that reflects total costs associated with production, fell to $1,035 per ounce from $1,039 per ounce in the Jan-March period.

However, CEO Tom Palmer said the miner sees rising costs for materials, energy and labor in the year's second half and into 2022.

"We are seeing both in Canada and Australia quite hot labor markets for mining," he told analysts. Aggregate costs are seen rising about 5% when steel, fuel and oils are factored in, he said.

Newmont's shares, which are up 0.8% so far this year, edged lower in line with subdued gold prices.

The company's adjusted profit rose to $670 million, or 83 cents per share, in the quarter ending June 30, from $594 million, or 74 cents per share, in the previous quarter.

Analysts on an average expected a profit of 78 cents per share, according to Refinitiv IBES data.

Palmer said Newmont would look to engage with the new government in Peru where it aims to make a final investment decision for its Yanacocha Sulfides project December.

Rival Barrick Gold Corp (ABX.TO) is scheduled to report its quarterly earnings on Aug. 9.

Reporting by Sahil Shaw in Bengaluru and Jeff Lewis in Toronto; editing by Uttaresh.V, William Maclean

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