Gold miner Newmont misses profit estimates on mining disruptions, higher costs

By Sourasis Bose

(Reuters) -Newmont missed Wall Street estimates for second-quarter profit on lower production and higher costs, dragging down shares of the world’s largest gold miner in morning trade on Thursday.

Since early June, Newmont’s operations at Penasquito mine in Mexico has remained suspended in response to a labor strike notice, hurting output.

Newmont later last month told Reuters that it has declared a force majeure, unforeseeable circumstances that prevent from meeting contract obligations, on deliveries of some metal products from the Mexican mine.

The company withdrew annual outlook for the mine on Thursday and said it could not estimate when the strike in the country would be resolved.

Shares of Newmont fell 4.6% to $43.08. The stock is down 8% so far this year.

Wildfires in Quebec had also temporarily halted operations at its Eleonore mine in June.

Denver, Colorado-based Newmont’s quarterly attributable gold production fell 17.3% to 1.24 million ounces.

The company expects production to be higher in the second half of the year, with improving costs seen through the remainder of the year.

“Heavy-lifting will be required during the second half of the year to meet the mid-point, with full-year production in the lower half of the guidance range likely,” said brokerage TD Cowen Securities.

Newmont expects total annual output between 5.7 million ounces and 6.3 million ounces.

Its all-in sustaining cost for gold, a key industry metric that reflects total expenses associated with production, rose nearly 23% to $1,472 per ounce in the quarter.

On an adjusted basis, Newmont posted a net income of 33 cents per share for the quarter ended June 30, compared with analysts’ average estimate of 44 cents per share, according to Refinitiv data.

Newmont, in the process of acquiring Australia’s Newcrest Mining, said it was on track to achieve full-year targets.

(Reporting by Sourasis Bose in Bengaluru; Editing by Savio D’Souza and Shilpi Majumdar)