Newmont Mining says 1st quarter profit climbed due to higher price of gold

Newmont 1Q profit doubles as gold prices rise

DENVER — Newmont Mining Corp. said Tuesday its first-quarter profits more than doubled as it fetched higher gold and copper prices and got a boost from production at a new Australian mine.

The results indicated pockets of improvement in the global economy, such as a stronger appetite for gold from investors and jewelry makers in China and India. Copper demand is picking up in Asian countries for wiring and pipes in construction and infrastructure projects, among other products.

“They’re till seeing positive market fundamentals going forward,” Argus Research analyst Bill Selesky said of Newmont.

Newmont earned $546 million, or $1.11 per share, up from $189 million, or 40 cents per share a year ago. Excluding gains from lower taxes and other items, it earned 83 cents per share. Analysts expected 79 cents a share excluding special items.

Revenue rose 46 percent to $2.24 billion from $1.54 billion a year ago — beating analysts’ estimates of $2.15 billion.

Newmont produced 1.3 million ounces of gold, compared with 1.27 million ounces a year ago. Its average price of gold was $1,106 per ounce during the quarter compared with $906 an ounce a year ago.

Costs for gold sales rose to $480 per ounce from $431 an ounce. The cost of producing it rose due to higher mining and milling expenses and lower production from mines in Nevada and Peru.

Newmont sells gold to refineries in the U.S., Australia, Europe and elsewhere, where it is sold to companies and bullion banks.

Gold prices are benefiting from the improving global economy plus historically low central bank sales, Newmont president and CEO Richard O’Brien told analysts on a conference call. Some countries are buying gold as well.

That has created a tighter supply, he said.

Newmont produced 90 million pounds of copper, compared with 43 million pounds a year ago. Copper prices averaged $3.33 per pound compared with $1.69 a pound a year ago. Newmont sells copper concentrate primarily to Japanese smelters.

Costs for copper sales fell to 78 cents a pound from 89 cents a pound.

Newmont produced 158,000 ounces of gold and 14 million pounds of copper from Boddington, its new Australian mine. It hopes to have the mine in full operation by the third quarter.

“In copper, we believe a strong pricing environment will continue to be driven by the revival of consumption in the West and China,” O’Brien said. “The copper supply will likely keep upward pressure on pricing.”

Newmont maintained its 2010 forecast for gold production between 5.3 million and 5.5 million ounces. It also has forecast a 15 percent decline in capital spending for the year.

Newmont shares rose 66 cents to $53.85 in afternoon trading.