Not impressed with a November bounce in the price of gold, analysts tracking
do not expect the company to establish an uptrend in earnings in the near future.
The consensus estimate calls for Newmont, which suffered a deficit of $2.13 per share in fiscal 2007, to recover to a gain of $2.15 a share this year before sliding in profitability to $1.76 per share next year.
Newmont's stock price, which peaked in the low $60s in 2006 and again approached that level early this year, slumped to the low $20s in late October. The share price has drifted in recent days with little indication of any buying enthusiasm for them. A gain in the price of gold from the $720-per-ounce range to the $815 level during November pulled the mining company's stock price back to $33.65 at month's end.
However, the price of gold in early December has declined to the $770-$780 per-ounce range. Forecasts of deflation from economists in the U.S. and elsewhere have muted enthusiasm for the yellow metal. Even worse, the worldwide slowdown in industrial production and residential construction -- with no near-term recovery in sight -- has driven spot quotes for copper down to $1.50-$1.70 per pound.
Because of the dismal prospects for precious and industrial metals, Newmont recently delayed the development of a major copper and gold project in Peru until at least the first quarter of next year.
With gold reserves of 86.5 million ounces spread across assets in the U.S., Australia, Peru, Indonesia, Ghana, Canada, Bolivia, New Zealand and Mexico, Newmont sold 6.2 ounces of the precious metal in 2007. That amounted for 78% of the firm's net revenue.
The firm's Nevada operations accounted for 38% of its gold sales last year. Of the remainder, 25% were from Peru, 19% from the Australia/New Zealand region, 8% from Indonesia and 7% from Africa.
Newmont sold 428 million pounds of copper last year, which amounted to 22% of its net revenue.
Competitors of Newmont include
Richard Widows is a senior financial analyst for TheStreet.com Ratings. Prior to joining TheStreet.com, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.