Newmont Mining swings to 2Q profit

Newmont Mining Corp., one of the world's largest gold producers, said Thursday it turned a profit in the second quarter as it sold more gold at higher prices.

The results were essentially in line with expectations and the stock closed up nearly 4 percent.

"They just basically benefited from stronger gold prices," Argus Research analyst Bill Selesky said. "Like everybody else in the industry, they are paying higher costs, nothing unusual there."

In a research note, JPMorgan analyst John Bridges said he is pleased to see Newmont has been making progress under Chief Executive Richard O'Brien, who took over last year and initiated a comprehensive review of projects.

For the April-June quarter, Newmont reported net income of $277 million, or 61 cents a share.

That compared with a net loss of $2.06 billion, or $4.57 a share, in the second quarter of 2007, when Newmont incurred $2.1 billion in one-time charges on the elimination of its merchant banking business and forward sales contracts.

Revenue rose 19 percent to $1.52 billion from $1.28 billion in the year-ago quarter.

Thomson Financial said analysts who were surveyed expected, on average, earnings of 47 cents a share on revenue of $1.5 billion.

The Denver-based company benefited from a 35 percent increase in the average realized price of gold, from $667 an ounce a year ago to $900 an ounce in the most recent quarter.

It also sold 1.27 million ounces of gold, up slightly from 1.25 million ounces a year ago.

However, rising operations and capital expenditures translated into higher costs applicable to sales, which totaled $440 an ounce compared with $417 in the year-ago quarter.

In the first six months, Newmont had net income of $647 million, or $1.43 a share, compared with a net loss of $1.99 billion, or $4.42 a share a year earlier. Revenue rose to $3.5 billion from $2.5 billion a year ago.

O'Brien credited the improvements to cost-control measures, a new mill at a mine in Peru and the opening of a power plant in Nevada. The 200-megawatt coal-fired power plant, which went into production on May 1, is expected to save up to $80 million in costs.

Newmont's shares rose $1.82, or 3.9 percent, to close at $48.77 a share Thursday.