July 20, 2016 / 8:52 PM / in a year

UPDATE 2-Gold miner Newmont cuts cost forecast, beats market

(Recasts; adds analyst comment, copper outlook details)

By Nicole Mordant

July 20 (Reuters) - Newmont Mining’s adjusted net income in the second quarter blew past market expectations on Wednesday and the world’s second biggest gold miner by value also cut its gold cost forecast, sending its shares higher after hours.

Greenwood Village, Colorado-based Newmont kicked off the reporting season for large North American gold miners, which are expected to have benefited from a rise in bullion prices this year.

Newmont, which also mines copper, said adjusted income rose to $231 million, or 44 cents a share, in the quarter ended June as gold output rose and costs fell.

That compared with $131 million, or 26 cents a share, in the same period a year ago and was well ahead of analysts’ expectations, on average, of 29 cents a share, according to Thomson Reuters I/B/E/S.

Newmont’s stock rose to $40.20 after hours from a $39.29 close. The miner’s stock has risen 130 percent since January helped by a 24 percent gold price jump.

“It looks like solid results from the company. It’s a deep beat relative to our numbers and the street,” BMO Capital Markets analyst Andrew Kaip said.

Newmont, which has mines in the Americas, Africa, Australia and Asia lowered its forecast for gold all-in sustaining costs - the industry benchmark - to between $870 and $930 an ounce in 2016.

Its previous range was $880 to $940 an ounce. It left unchanged its 2017 forecast at between $850 and $950 an ounce.

The company also gave new forecasts for gold and copper production excluding its 48.5 percent stake in the Batu Hijau mine in Indonesia, which it is selling for up to $1.32 billion. The sale is expected to close in the third quarter.

Newmont expects attributable gold production of between 4.7 million and 5.0 million ounces in 2016 and rising to between 4.9 million and 5.4 million ounces in 2017. Production is expected to remain stable at 4.5 million to 5.0 million ounces through 2020.

However, it slashed its copper production forecast to between 40,000 and 60,000 tonnes in 2016 from 120,000-160,000 tonnes due to the exclusion of Batu Hijau. Copper costs will also rise for the same reason.

In the second quarter, attributable gold production rose to 1.3 million ounces from 1.2 million a year ago while all-in sustaining costs improved to $876 an ounce from $909. Copper output, however, dropped to 38,000 tonnes from 42,000 tonnes.

Newmont kept its quarterly dividend unchanged at 2.5 cents. (Reporting by Nicole Mordant in Vancouver; editing by Marguerita Choy and Bernard Orr)

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