Newmont lifts gold production by 9%

World number two gold producer Newmont Mining  (NYSE: NEM) announced first quarter 2017 results on Monday that show adjusted net income of $133 million or $0.25 per diluted share and a 20% jump in year on year earnings to $566 million.

The Denver-based company increased net operating cash flow from continuing operations to $379 million and free cash flow to $199 million, up $322 million from the prior year quarter helping the company reduce net debt to $1.7 billion, ending the quarter with $2.9 billion cash on hand.

The Subika Underground mine will produce 1.8 million ounces of gold over an 11-year mine life, and access ore grades that are three times higher than Newmont's surface mines

Attributable production expanded by 9% to 1.23 million ounces. Production from Merian and Long Canyon more than offset geotechnical issues at Carlin according to the company while exceptional weather also affected operations in Australia and South America.

Reported cash costs was in accordance with previous guidance of $687 per ounce while all-in sustaining costs (AISC) came in at $900 per ounce. Last year Newmont produced 4.9m ounces of gold, a 6% increase over 2015, at an all in cost of $912 per ounce.

Newmont approved the Subika Underground and Ahafo Mill Expansion projects in Ghana during the first quarter, which is expected to improve volumes beginning in 2018, improve costs beginning in 2020, with additional development capital in 2017-2019.

It's been a busy Q1 for Newmont, the company also announced agreement to secure rights to develop a prospective new gold district in the Yukon with Goldstrike Resources. The company also said it is on track for commercial production at the Tanami Expansion Project in Australia mid-2017.

"We generated strong financial results this quarter and approved plans to invest in profitable growth in Ghana and a prospective gold district in the Yukon,” said Gary Goldberg, President and Chief Executive Officer:

“We increased free cash flow by more than $320 million and adjusted EBITDA by 20 percent to $566 million compared to the prior year quarter. Our teams in Australia and South America overcame significant weather events safely and efficiently and we remain well on track to meet our 2017 outlook. Permits, funding and resources are in place to build the Subika Underground mine – which will produce 1.8 million ounces of gold over an 11-year mine life, and access ore grades that are three times higher than our surface mines – and the Ahafo Mill Expansion. Our cost and capital discipline, combined with our industry-leading balance sheet, gives us the means to continue self-funding projects, growing margins and improving the quality and life of our Reserves, with a goal to deliver sustainable value for our shareholders.”

Shares in Newmont fell just over 1% during regular trading hours in New York on Monday and was trending lower in after hours dealings amid weakness in the gold price. Newmont stock is worth $18.2 billion after gaining 8% in value over the past year.