Lower output, high costs to pressure Newmont, Barrick earnings

By Arunima Kumar

(Reuters) – North American gold miners Newmont Corp and Barrick Gold Corp are expected to post lower quarterly profits as a fall in production and higher costs offset gains from strong prices of the precious metal.

Miners grappled with extreme weather, including heavy rainfalls in certain parts of the world, lower grade sequencing, labor shortages and supply chain constraints.

The challenges have overshadowed the price rise in the safe-haven asset that peaked over the $2,000-mark during the quarter ended March 31 on fears over the stability of the financial system after a banking crisis and a potential recession.

GRAPHIC: Gold prices hover around $2,000-mark https://www.reuters.com/graphics/GOLD-RESULTS/GRAPHIC/egpbyqygnvq/chart.png

“Despite rising 1Q gold prices, cost pressures and low volumes represent an overhang into financial results,” said analysts at RBC Capital Markets.

All-in sustaining costs (AISC), an industry metric that reflects total expenses, are set to rise for the miners.

“Despite a deceleration of input cost pressures, 2H22 inflation plus low 1Q volumes point to high costs this quarter,” RBC added.

Barrick expects first-quarter gold production to fall 15% sequentially, as a severe winter hampered the Canadian miner’s operations in northern Nevada and annual maintenance activity weighed on output at its Goldstrike mine.

Top gold miner Newmont, which is pursuing Australia’s Newcrest Mining Ltd for A$29.4 billion ($19.84 billion), is also expected to post lower production.

“We expect (Newmont’s) 1Q to be a lower production quarter, partly due to mine sequencing as well as low production at Tanami (Australia) due to weather related issues. We also anticipate costs to remain elevated,” Raymond James analyst Brian MacArthur said.

GRAPHIC: Q1 Gold production expected to decline for Newmont, Barrick https://www.reuters.com/graphics/MINING-PRODUCTION/GRAPHIC/gdpzqbqqovw/chart.png

Analysts expect Newmont’s attributable gold production to come in at 1.265 million ounces, lower than 1.34 million ounces the company reported a year earlier.

Newmont is expected to report quarterly results on April 27, and Barrick on May 3.

($1 = 1.4817 Australian dollars)

(Reporting by Arunima Kumar in Bengaluru; Editing by Shinjini Ganguli)