Newmont’s profit grows 9% despite Peru’s Conga Mine project difficulties
Newmont Mining Corp. (NYSE and TSX: NEM) reported a 9% increase in first-quarter profit to $561 million, or $1.13 a share, despite the ongoing troubles with its hindered $4.8 billion copper-gold project in Peru, the Conga mine.
The multinational gold miner raised revenue for the quarter by 9%, to $2.7 billion, in spite of higher labour and power costs at its operations.
CEO Richard O'Brien said the company had increased its gold operating margin by 29%, which outperformed the 22% in the same period last year.
Newmont produced 1.3 million ounces of gold, down by 2%, while copper production fell 35% to 35 million pounds.
O'Brien added the company could add about 90 million ounces of gold to its reserves over the next eight years.
In an earnings call with analysts held on Friday, he also warned that if Conga can’t be developed "in a safe, socially and environmentally responsible manner" while also earning shareholders "an acceptable return," Newmont will "reallocate that capital to other development projects in our portfolio, including opportunities in Nevada, Australia, Ghana, and Indonesia," reported The Associated Press.
Conga faces strong opposition from residents of the gold-rich northern state of Cajamarca (photo), who say they fear for their water supply, especially after a group of international experts, hired by the Peruvian government, concluded that Conga’s environmental impact statement (EIS) needed “substantive improvements”, including the expansion of a series of water reservoirs.
Newmont owns 51.35% of Conga. The Colorado-based company had previously said it hoped to begin production either in 2014 or 2015, generating between 155 and 235 million tons of copper a year at the site, if it gets permission from the Peruvian government.
The miner stopped construction in November last year, after violent protests forced Peru’s government to declare a state of emergency in the area.