Feb. 21 (Bloomberg) -- Barrick Gold Corp., Newmont Mining Corp. and Goldcorp Inc., the world's largest gold producers by market value, reported fourth-quarter earnings that beat analysts' expectations because of surging bullion prices.
Barrick posted per-share profit excluding certain items of 57 cents, topping the 56-cent average estimate of 14 analysts surveyed by Bloomberg. Newmont reported profit excluding one-time items of 51 cents a share, beating a 41-cent average projection. Goldcorp's per-share profit excluding items of 25 cents exceeded an 18-cent average estimate.
Gold prices were 28 percent higher on average in the quarter than a year earlier and reached a record $958.40 an ounce today as a slumping U.S. dollar and rising commodity costs increased the appeal of the precious metal as an inflation hedge. Bullion has soared faster than most miners' costs, which have climbed as companies race to boost production and develop new mines.
"In the final quarter there were substantially higher prices," Andrew Pullar, who helps oversee $900 million in mining stocks at London-based Baker Steel Capital Managers LLP, said in a telephone interview. "The fact that we're seeing proper margin expansion in the sector is very encouraging."
Barrick, the world's largest producer, rose 30 cents, or 0.6 percent, to C$51.12 at 4:10 p.m. in Toronto Stock Exchange trading. Newmont, the second-largest gold producer by volume, fell 51 cents, or 1 percent, to $50.64 in New York. Goldcorp climbed C$1.23, or 3.1 percent, to C$40.75 in Toronto.
Barrick Rises
Barrick's net income climbed 28 percent to $537 million, or 61 cents a share, from $418 million, or 48 cents, a year earlier, the Toronto-based company said today in a statement. Sales jumped 42 percent to $1.92 billion from a year earlier while gold production fell 12 percent to 2.14 million ounces, the company said.
Barrick also said it agreed to buy the 40 percent of its Cortez joint venture it doesn't own from Rio Tinto Plc for $1.7 billion to add lower-cost production of the precious metal.
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Newmont, based in Denver, had a net loss of $289 million after output fell and it reduced the value of some assets. The loss of 63 cents a share compares with net income of $223 million, or 49 cents, a year earlier, the company said in a statement.
Excluding one-time items including $1.12 billion in costs to write down the value of the company's exploration assets, Newmont had profit of about 51 cents a share.
Chief Executive Officer Richard T. O'Brien, who stepped into the top job at Newmont last year, sold the company's royalty business last year to focus on mining as he tries to halt production declines and cost increases.
'The Surprise'
"The surprise here is Newmont," Tom Winmill, managing director of Midas Management Corp., which invests in gold stocks, said in a telephone interview. "I see earnings doubling and a lot of their worries going away."
Goldcorp's profit almost quadrupled to $256.5 million, or 36 cents a share, from $66 million, or 11 cents, a year earlier, the Vancouver-based company said in a statement. Sales jumped 42 percent to $679.8 million.
Goldcorp, the world's second-largest gold producer by market value after Barrick, is expanding the Red Lake mine in Canada and developing five new projects, including Penasquito in Mexico, to benefit from surging precious-metal prices.
Gold averaged $792.70 an ounce in New York in the fourth quarter, 28 percent more than a year earlier. Silver was on average 13 percent higher in the quarter at $14.325 an ounce. Gold has risen for seven straight years on the Comex division of the New York Mercantile Exchange and climbed 14 percent this year.
"For producers this is going to be a strong run," Winmill said. "As long as the gold price hangs in there, the companies are going to do well."
To contact the reporter on this story: Stewart Bailey in New York at sbailey7@bloomberg.net.
Last Updated: February 21, 2008 17:24 EST |
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