Investors take chunks out of Newmont after big loss, reserves cut

Shares in Newmont Mining (NYSE:NEM), world number two gold producer, were hammered on Friday after the company reported fourth quarter earnings well shy of expectations.

In midday trade the Denver-based miner was trading down 5.7% at $23.06 in New York, off its lows for the day.

Around 12.7 million shares in the $11.5 billion company had changed hands by 12:30 pm EST on Friday already surpassing the counter's daily average.

Newmont shares are flat year to date, in contrast with peers like Barrick Gold (TSE:ABX) which is up 18% in 2014, Goldcorp (NYSE:GG), up 26% and Anglogold Ashanti (NYSE:AU) which has rocketed more than 50% so far this year.

Newmont said adjusted net income of $0.33 a share – versus expectations of $0.44 – was negatively impacted by impairments of stockpiles and ore on leach pads.

Revenues at the company dropped 12% year on year to $2.17 billion, despite increased Q4 gold production of 1.4 million attributable ounces.

Full year output jumped to 5.1 million ounces, at the high end of its 2013 guidance.

Newmont, first incorporated in 1921, announced it reduced its gold reserves by 11% to 88.4 million ounces due to lower gold prices and reported a 15% drop in copper reserves.

A bright spot in the results was a 14% reduction in all-in sustaining costs for gold at $1,032 an ounce.

During the quarter the company with mines in seven countries and 40,000 employees, commenced commercial production at its Akyem mine in Ghana and Phoenix Copper Leach project in Nevada.

Newmont expects gold output of 4.8 million to 5.2 million ounces in 2015 and 2016 while at the same time cutting all-in costs thanks to a $600 million to $700 million efficiency drive.