Continuing Operations Generate $1.8 Billion Revenue
DENVER, CO - Gary Goldberg, President and Chief Executive Officer of Newmont said, “The company continues to expect total attributable gold production of between 4.6 to 4.9 million ounces. We are building on the momentum we established in 2013 with strong cost and production performance in the first quarter of 2014. Our team drove down all-in sustaining costs by $82 million compared to the prior year quarter through sustainable cost and efficiency improvements.
I am proud of the progress we made to improve our social, environmental and economic performance and define clear strategic directions, particularly in light of the many changes we made within the organization, and the exceptional volatility we faced in the marketplace. Newmont achieved the best safety performance in the company’s history in 2013, reducing injury rates by 28 percent compared to 2012.”
Attributable gold production at Carlin, in Nevada, decreased 1 percent from the prior year quarter, primarily due to planned lower grades at Mill 6. CAS per ounce increased 4 percent due to planned stockpile and leach pad inventory adjustments, partially offset by lower operating costs.
Attributable gold production at Phoenix, in Nevada, increased 4 percent from the prior year quarter due to slightly higher grade at the Phoenix mill. Copper pounds produced increased 71 percent due to production from the Phoenix Copper Leach operation, which entered commercial production in the fourth quarter of 2013. Gold CAS per ounce decreased 48 percent due to higher ounces sold and a higher allocation of costs to copper with the copper leach facility in production. Copper CAS per pound decreased 25 percent due to higher copper pounds sold as a result of the new copper leach facility.
Attributable gold production at Twin Creeks, in Nevada, decreased 3 percent from the prior year quarter due to lower production following the sale of Midas, partially offset by higher mill throughput at the Autoclave.
In March 2014, Newmont entered the final phase of this initial permitting process at Long Canyon, in Nevada, in response to a Plan of Operation submitted in 2012, the Bureau of Land Management (BLM) released a Draft Environmental Impact Statement (DEIS). The release of the DEIS commenced a 45-day public comment period during which community members are invited to offer input that will ultimately help shape the development of the project.
While it’s not always possible to incorporate changes recommended by the public into design plans, Long Canyon offered unique opportunities to collaborate on potential solutions. As a result, if the plan is ultimately approved, Newmont will follow through on its commitment to take measures to avoid or limit potential impacts to cultural resources (Native American archaeological artifacts), visual resources (the appearance of the mine from an adjacent Interstate highway), air quality (dust from trucks), socioeconomics (local employment), and recreation (hunting, hiking, etc.). In aggregate, these and other planned improvements minimize the project’s footprint and, according to the BLM, reduce its environmental impact.
The Company reported attributable net income from continuing operations of $117 million. The Company reported adjusted net income of $108 million. In the first quarter the company generated revenue of $1.8 billion with a cash flow from continuing operations of $183 million compared with $439 million.
Newmont has been pouring gold in Nevada for nearly 50 years along a 100-mile stretch of highway in the north section of the state. The Nevada properties operate as an integrated unit, and together, they boast the widest variety of processing methods of any gold mining complex in the world. This allows us to maximize economic recovery of gold from a wide range of ore types and grades. Operations include 11 open-pit and 8 underground mines and 13 processing facilities.
The company also reported attributable gold production at Yanacocha, in Peru, decreased 25 percent from the prior year quarter mainly due to the planned stripping phase at the Tapado Oeste pit. Production is expected to increase in the second half of 2014 as mining returns to higher grade ore at Tapado Oeste.
In Australia the attributable gold production at Boddington decreased 2 percent from the prior year quarter, primarily due to lower grades. Copper production was in line with the prior year quarter. Boddington realized record-setting throughput levels this quarter due to sustainable process improvements implemented through the Full Potential program. Copper CAS increased 12 percent per pound, primarily due to planned stockpile inventory adjustments. Tanami, in Australia, had attributable gold production increase of 40 percent from the prior year quarter, primarily as a result of higher grades from the Auron ore body and lower mining dilution from improved mining practices. CAS per ounce decreased by 45 percent. The attributable gold production at Jundee, in Western Australia, decreased 17 percent from the prior year quarter primarily as a result of lower ore grade milled. Attributable gold production at Waihi, in New Zealand, decreased 10 percent from the prior year quarter primarily as a result of lower ore grade milled and a build-up of gold in circuit inventory, partially offset by higher throughput. Attributable gold production at KCGM increased 15 percent from the prior year quarter primarily as a result of higher grades and tons milled.
Attributable gold and copper production at Batu Hijau, in Indonesia increased 14 percent and 11 percent, respectively, from the prior year quarter due to higher ore grade and recovery for both gold and copper. However, the Company was unable to export approximately 2 thousand attributable ounces of gold and 2.5 thousand attributable tonnes of copper as a result of new export regulations imposed in January 2014 by the Indonesian government.
At the Ahafo in Africa, attributable gold production at Ahafo decreased 16 percent from the prior year quarter due to lower processed ore grade. Gold AISC in Africa was $616 per ounce this quarter, a decrease of 45 percent over the prior year quarter due to new production at Akyem and lower exploration and advanced project expense and sustaining capital.
Cash from continuing operations was $183 million. The Company also received cash of $57 million from the sale of its Midas operation and $25 million from the sale of its investment in Paladin Energy. At quarter end, the Company held $1.5 billion of consolidated cash on its balance sheet.
The Company also recently closed on a term loan of $575 million. The term loan provides for a single, delayed drawdown through July 15, 2014, with a maturity date five years from drawdown. The loan is intended to retire the $575 million of convertible debt maturing July 2014. The Company now expects a lower 2014 interest expense of between $325 to $350 million. Concurrent with closing the term loan, the Company also renewed its $3.0 billion corporate revolving credit facility, extending the maturity date two years to March 31, 2019. At March 31, there were no outstanding borrowings under the facility.
Total capital spent in the first quarter was $235 million. Capital expenditures in North America during the first quarter of 2014 were primarily related to the development of the Turf Leeville vent shaft in Nevada. Capital expenditures in South America, Australia and New Zealand, Indonesia, and Africa were primarily for sustaining capital.
The Company continues to manage its wider project portfolio to maintain flexibility to address the development risks associated with its projects including permitting, local community and government support, engineering and procurement availability, technical issues, escalating costs and other associated risks that could adversely impact the timing and costs of certain opportunities.