As Gold Falls, Copper Hits Newmont Mining

Shares of Newmont Mining (NEM) have dropped today as gold prices have slumped, but the damage hasn’t been as bad as to other big gold-mining stocks. Could it be that be that the good news about its gold production outweighed the bad news about its copper?

Reuters

Yesterday after the close, Newmont announced its production numbers for the third quarter. And while the gold numbers looked good–it mined 1.283 million ounces of gold–its copper production was weaker than expected, with 34 million pounds of copper mined. Newmont also said that it expects to produce just 134 million to 145 million pounds of copper this year, well below its previous guidance for 150 million to 170 million pounds.

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JP Morgan’s John Bridges and Anant Inani find the copper number surprising but are impressed with gold production. They write:

Expect a strong Q4 with increased production from Nevada and ounces from new mine Akyem. The new African mine Akyem is expected to deliver 50-100koz this year once it comes online in Q4. Nevada is forecast to produce 1.7-1.8moz this year implying a Q4 production of about 520koz.

Yanacocha delivered yet another good quarter this year with YTD production of 835koz which is about 86% of its midpoint guidance of 975koz for the year. We wonder whether Yanacocha guidance will rise with the Q3 results or whether NEM is simply borrowing from Q4 when the extra ounces from Akyem should allow the Peruvian mine to rest.

Copper grades at Batu Hijau disappoint. Reconciliation between blast hole drill samples and the milled grade should allow accurate forecasts of the stockpile material. Hence it's a little surprising that stockpile grades missed expectations.

Newmont has dropped 2.2% to $25.73 at 3:02 p.m. While that’s in-line with the Market Vectors Gold Miners ETF’s (GDX) 2.2% fall to 23.03, it’s better than the most heavily traded gold-mining stocks. Shares of Barrick Gold (ABX), for instance, have dropped 3.6% to $17.20, Gold Corp (GG) is down 3.1% at $23.54 and Eldorado Gold (EGO) has declined 3.9% to $5.82.