Newmont CEO Upbeat on Mining Profits

O'Brien says the turn of fortune he sees for gold miners doesn't depend on any outlandish predictions. Rather, he cautiously forecasts prices for the metal should stay between $800 and $850 through 2008 barring any unforeseen financial or geopolitical shocks.

He also notes that since the huge run-up in gold prices from around $660 an ounce late in the summer to over $800 recently, there hasn't been any full quarter of earnings reported by any of the major gold miners.

As a result, investors don't know for sure how earnings will pan out.

What O'Brien does know is that much of the historical increase in costs occurred before the rally. And it's likely for that reason that the next couple of quarters could mark a change for the miners.

Still, he predicts 12% to 15% higher expenses across the industry in 2008.

Since taking the reins at Newmont, O'Brien hasn't wasted any time shaking up the sleepy giant. He has removed all the remaining gold hedges that were preventing shareholders from receiving the full upside of any gold rally.

The firm also raised $1.15 billion through a convertible debt offering to give the company the ready cash to invest in its businesses, and it has made moves to spin out its noncore and royalty assets.

Perhaps most importantly, the company made a bid for exploration company Miramar Mining(MNG) for $1.5 billion, a move meant to help replenish Newmont's dwindling reserves.

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