October 29, 2009 / 10:29 AM / in 9 years

UPDATE 2-Newmont's Q3 profit doubles, beats estimate

* Revenue up 50 pct to $2.05 bln

* Sees 5-10 pct more gold production in 2010 (Adds CEO comments, production data, outlook)

By Steve James

NEW YORK, Oct 29 (Reuters) - Newmont Mining Corp (NEM.N), the world’s No. 2 gold producer, said on Thursday its third-quarter profit doubled on higher gold prices and sales, handily beating Wall Street estimates.

The company expects gold production to improve by approximately 5 percent to 10 percent for 2010, primarily as a result of higher production its new Boddington mine in Australia and from Batu Hijau in Indonesia.

“Our continued focus on cost containment resulted in a 13 percent improvement in gold cost of sales per ounce,” said President and Chief Executive Officer Richard O’Brien.

He said the cost reduction, combined with higher metal prices, boosted gold operating margins by 41 percent during the quarter.

Net earnings were $388 million, or 79 cents per share, compared with $191 million, or 42 cents per share, a year earlier, the Denver-based company said. Revenue rose 50 percent to $2.05 billion.

Analysts on average were expecting earnings of 55 cents per share and revenue of $1.723 billion, according to Thomson Reuters I/B/E/S.

Equity gold sales — the amount owned by Newmont in joint operations — rose 4 percent to 1.33 million ounces at an average realized price of $964 per ounce.

Newmont also sold 64 million pounds of copper at an average realized price of $2.80 per pound.

During the quarter, gold rose from $907 per ounce to $1,009 and hit a record high of $1,070 earlier this month.

O’Brien noted the results were boosted by the first gold production from Boddington, where ramp-up efforts are continuing toward commercial production in the fourth quarter.

Due to the extended start-up of Boddington, Newmont estimates 2009 equity gold sales will be about 5.2 million ounces, at the lower end of its previously estimated range.

In September, it reported a “geotechnical failure” in the west wall of its open-pit Batu Hijau mine on Sumbawa island, Indonesia, which produces most of Newmont’s copper, along with a small amount of gold.

Earlier this month, a senior Indonesian government mining official said output might fall by 1.5 percent to 2 percent annually for the next five years.

But on Thursday, Newmont said the impact on 2009 gold and copper production there is expected to be minimal after mining activities resumed on Oct. 10. The company still expects equity gold sales from the mine of between 225,000 and 250,000 ounces and copper sales of 210 million to 230 million pounds.

Newmont also operates mines in North and South America and Ghana. (Reporting by Steve James; Editing by Derek Caney)

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