Gold miner Newmont Mining Corp. (NEM) shut down work at the Yanacocha gold mine in Peru to ensure worker safety as a result of protests in the area.
Newmont took the action at the Yanacocha mine after protesters blocked a road leading to the site and set earth-moving equipment ablaze.
The mine which is also owned by Peruvian precious metals miner Buenaventura stated that the drastic measure to suspend work was taken to ensure the safety of its employees.
The protests were over compensation payments being sought by the local residents as Newmont and Buenaventura pursue a $4.8 billion expansion for Yanacocha. Protesters were trying to pressure the mine to sign a community relations pact that would give local communities 200 million soles ($72 million).
Yanacocha is one of Latin America’s largest gold mines and produced about 1.6% of the world’s output in 2010.
In July 2011, Newmont released its financial results for the second quarter of 2011. The company’s adjusted net income rose to $445 million or 90 cents per share in the second quarter from last year’s $377 million or 77 cents per share. The result was below the Zacks Consensus Estimate of $1.00 per share.
Total revenue was $2.4 billion, up 11% year over year, below the Zacks Consensus Estimate of $2.5 billion.
Newmont reported attributable gold and copper production of 1.2 million ounces and 44 million pounds, respectively, in the quarter at costs applicable to sales (CAS) of $583 per ounce, and $1.34 per pound on a co-product basis.
In the second quarter of 2011, capital expenditures were $618 million versus $319 million in the prior-year quarter. Operating cash flow was $412 million versus $753 million in the second quarter of 2010. Cash and cash equivalents were $1.9 billion as of June 30, 2011 versus $4.1 billion as of March 31, 2011.
In the quarter, the Board of Directors of Newmont also approved a third-quarter 2011 gold price-linked dividend of $0.30 per share, an increase of 50% over $0.20 paid in the second quarter of 2011, and an increase of 100% over the third-quarter 2010 dividend. This is based on the company’s net average realized gold price of $1,501 per ounce in the second quarter of 2011.
For fiscal 2011, the company reiterated its previous expectation of attributable gold production of approximately 5.1 million to 5.3 million ounces, with attributable copper production of 190 to 220 million pounds. Costs applicable to sales are expected between $560 and $590 per ounce for gold. Costs applicable to sales are anticipated between $1.25 and $1.50 per pound of copper.
The company currently plans to spend $2.1 to $2.5 billion in attributable capital expenditures in 2011, or $2.7 to $3.0 billion on a consolidated basis. Approximately 40% of 2011 consolidated capital expenditures are expected to be related to major project initiatives, including further development of the Akyem project in Ghana, the Conga project in Peru, Hope Bay in Canada, and the Nevada project portfolio, while the remaining 60% is expected to be for growth and sustaining capital.
The company faces stiff competition from Barrick Gold Corporation (ABX) and AngloGold Ashanti Ltd. (AU).
