Newmont Mining Expects Strong 4Q

Newmont Mining Corp. (NEM), one of the world's top gold producers, is expected to report record revenue and earnings per share for the fourth quarter as higher selling prices for gold offset decreased production and increased costs.

The Englewood, Colo.-based miner reports its fourth-quarter and full-year results Friday before U.S. markets open.

Analysts surveyed by Reuters expect revenues of around $2.74 billion; in the fourth quarter of 2010, Newmont reported revenue of $2.55 billion. Earnings per share are expected by analysts to be $1.26, an 8.62 percent rise from year-ago result of $1.16 per share.

Last month Newmont said it anticipates costs in the 2011 fourth quarter of $606 per ounce for gold and $1.58 per pound for copper compared with the year-earlier quarter's costs of $513 per ounce for gold and 95 cents per pound for copper. Although the gold costs for the 2011 fourth quarter are higher than the fourth quarter of 2010, they are lower than the third quarter of 2011, which were $622 per ounce.

The average realized gold price for gold in the fourth quarter is expected by Newmont to be $1,670 per ounce in the 2011 fourth quarter compared with $1,368 in the fourth quarter of 2010. The averge realized copper price in the 2011 fourth quarter is expected to be $3.41 pound compared with $4.52 per pound in the fourth quarter of 2010.

Newmont said it expects attributable gold production for the 2011 fourth quarter of 1.3 million ounces compared with 1.4 million ounces in the 2010 fourth quarter. Cooper production is expected to be 48 million pounds compared with 74 million pounds in the fourth quarter of 2010.

Among key events in the fourth quarter was the company's decision to suspend construction activities at its Conga project, a huge venture in Peru that has faced anti-mining opposition. The company halted construction for the safety of employees and community members.

The company's Hope Bay project in the Canadian Arctic could also weigh on results.

We expect it to be a messy quarter as NEM takes a $1.6B write-down on its Hope Bay asset, which will make for a negative headline EPS number. Cash cost containment and updates NEM's growth projects will continue to drive the story forward, Credit Suisse analyst Anita Soni wrote in a research note earlier this month.

She also the development of a political situation in Peru would affect the company's fortunes, writing additional clarity on the prospects of Conga going ahead will be of primary concern given the Peruvian protests over the past several months.

Heartening analysts is a positive report from industry bellwether Barrick Gold (ABX), the world's largest gold producer, which last week surpassed analyst revenue expectations and reported a spike of 7.9 percent in year-over-year earnings per share.

The share price fell to $60.01 on Dec. 30, 2011, from $62.95 on Sept. 30, 2011.