Newmont shares jump on upbeat forecast

Newmont Mining (NYSE:NEM) was the best performer on a generally positive day for gold stocks on Thursday after the company provided an upbeat assessment of its operating and financial future.

The Denver-based company, worth $9.4 billion on the New York Stock Exchange after a 5% surge,  is one of only a handful of gold producers which have managed to stay in positive territory for the year despite the slide in the gold price.

Newmont, the world’s number two gold mining company in terms of output, said its gold all-in sustaining costs (AISC) is expected to improve from between $900 and $960 per ounce in 2016 to between $850 and $950 per ounce in 2017 with costs remaining below $1,000 through to the end of the decade.

Cash costs is expected to be between $650 and $700 per ounce in 2016, and remain stable at between $650 and $750 per ounce from 2017 to 2020 but the company believes “potential savings and ramp-up of profitable projects represent upside that could lower portfolio costs.”

Newmont forecast gold production to rise to between 5.2 and 5.7 million ounces by 2017 as its newly acquired Cripple Creek & Victor mine and Merian and Long Canyon operations more than offset declines at Batu Hijau in Indonesia, Yanacocha in Peru and the Twin Creeks mine in Nevada.

These output figures puts Newmont within shouting distance of top gold miner, Toronto’s Barrick Gold, but Newmont expects longer term “steady and profitable production” to fall back to between 4.5 to 5.0 million ounces per year through 2020.

Newmont said 2016 sustaining capital is expected to be between $700 and $750 million (out of total capital of between $1.2 billion and $1.4 billion) and longer term sustaining outlays of between $700 and $800 million per year. The primary development capital expense through 2018 includes capital for the construction of Merian in Suriname and the US Long Canyon and Australian Tanami expansion projects.

Attributable copper production is expected to be between 120,000 and 160,000 tonnes in 2016 and 2017 before decreasing to between 70,000 and 110,000 tonnes by 2018 according to the release.

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