Newmont Mining’s Q2 2017 Earnings Preview: Subdued Gold Prices And Higher Costs To Weigh On Earnings

July 24th, 2017 by Trefis Team
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Newmont Mining will release its second quarter earnings results and conduct a conference call with analysts on July 25. [1] Though the company’s result in Q2 2017 is not directly comparable with that in Q2 2016 (due to the divestment of the company’s interest in the Batu Hijau mine), we expect a slight increase in costs to negatively impact the company’s earnings for the quarter.

London Fix Gold Prices, Source: Kitco

Gold prices were at elevated levels in April as a result of the uncertainty pertaining to the outcome of the French presidential elections. Gold is considered a safe-haven investment and macroeconomic or geopolitical uncertainty tends to drive up the prices of the metal. However, prices fell considerably in May in the wake of Emmanuel Macron’s electoral victory. For the whole of Q2 2017, gold prices averaged the same as in Q2 2016.

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With prices remaining at similar levels between the two time periods, higher costs in Q2 2017 are expected to weigh on the company’s results. Higher operating costs as a result of weather-related disruptions at some of the company’s mines and higher exploration spending are expected to boost the company’s all-in sustaining cost (AISC) metric in 2017. The following table summarizes our expectations from the company’s Q2 result.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Newmont Mining

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Notes:
  1. Newmont Announces Second Quarter 2017 Earnings Call, Newmont Mining News Release [↩]