Miner Newmont Corp. reported its second-quarter profit on Monday, missing Wall Street expectations due to weaker gold prices and inflationary pressures. The company also increased its annual cost outlook.
In the three months that ended in June, gold prices saw their worst quarter since the beginning of 2021 as a strong dollar and aggressive rate hikes from central banks to control inflation reduced demand for the non-yielding asset.
The company has had to raise its yearly all-in sustaining costs, an industry term that shows total spending related to production, from $1,050 per ounce to $1,150 per ounce due to higher operational costs related to labour, energy, and other inflationary pressures.
In the second quarter that concluded on June 30, prices increased by about 16% to $1,199 per ounce of gold.
According to Newmont, higher fuel and energy costs of roughly $50 million as well as about $80 million in charges due to rising labour and material costs had a negative impact on the company’s quarterly earnings.
Additionally, the business recorded roughly $70 million in expenses for bonus payments made to employees at its Penasquito mine in Mexico.
Shares of the business dropped 3.3 percent to $49.71 in premarket trading as it also reduced its
The business also cut its yearly output target to 6 million ounces from a previously stated 6.2 million ounces, citing operational problems and a competitive labour market in Canada and Australia. Shares of the company dropped 3.3 percent to $49.71 in premarket trade as a result.
The higher ore grade processed at Australia’s Tanami and Boddington mines contributed to boost gold production in the June quarter, which increased by around 3.44 percent to 1.5 million ounces from the same period last year.
However, from $640 million, or 80 cents per share, a year earlier, net income from continuing operations decreased to $379 million, or 48 cents per share.
According to Refinitiv IBES statistics, Newmont’s adjusted profit of 46 cents per share fell short of analysts’ average estimate of 63 cents per share.