(Bloomberg) — Shares of Newmont Corp. suffered their biggest decline in more than two years after investors were disappointed with earnings results. This suggests top gold producers are struggling to control mining costs and capitalize on soaring bullion prices.
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Shares fell as much as 9.1% in New York on Thursday, the biggest intraday decline since July 2022. The stock drop came a day after Newmont reported third-quarter results that missed analysts’ estimates for adjusted revenue, costs and revenue. Newmont fell short of expectations after spending more to mine precious metals from mines in Australia, Canada, Peru and Papua New Guinea.
The Denver-based company is the first major gold producer to post results during earnings season, when investors are expecting huge gains from bullion producers. Gold has been one of the best-performing metals this year, surging more than 30% since the beginning of January and continuing to hit record highs.
“Expectations on the street were too high,” said Carey MacRury, mining analyst at Canaccord Genuity. “Of course it was negative, but I don’t think it was as negative as the market is telling us today.”
Despite unexpected expectations, Newmont posted its highest quarterly profit in five years, generating $922 million in net income attributable to shareholders for the quarter.
Gold miners have been struggling with high labor and energy costs for the past few years. Newmont said its capital costs increased 10% due to expansion projects in Australia and Argentina. But some of the company’s higher costs come from key assets it acquired through last year’s $15 billion acquisition of Newcrest Mining Ltd. Newmont had overall sustainment costs at its Lihir, Papua New Guinea site 55% higher in the third quarter compared to the previous quarter. Previous period.
According to MacRury, the cost increase is primarily due to certain operational issues at the Newmont mine.
“We don’t see cost losses as inflation impacts the broader industry,” he said.
(Adds analyst comments in fifth paragraph, updates stock)
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