Newmont downgraded on Boddington concerns

Zacks Investment Research on Monday, despite the excellent first-quarter 2011 results provided by Newmont Mining Corporation, downgraded its recommendation from Outperform to Neutral based on a number of challenges that the company faces at the Boddington mine.

Newmont reported adjusted net income of $513 million or $1.04 per share, up from last year’s $408 million or $0.83. Total revenue was $2.5 billion, up 10% year over year.

Dailymarkets reports:

However, Newmont’s direct mining costs are increasing due to declining grades, increased royalties, equipment maintenance, waste removal, pit dewatering, and labor and fuel costs. The company’s non-mining costs are also increasing driven by legal expenses for environmental degradation lawsuits and government claims. Moreover, due to increases in gold prices and a higher Australian dollar rate, the company lifted its cash cost guidance range to $485– $500 per ounce of gold from the initial forecast of $460 to $480 per ounce.