Newmont misses profit estimates on mining disruptions, higher costs

Since early June, Newmont’s operations at Penasquito mine in Mexico has remained suspended in response to a labor strike notice, hurting output.

Newmont last month told Reuters it declared a force majeure on deliveries of some metal products from the Mexican mine.

The company withdrew annual outlook for the mine on Thursday and said it could not estimate when the strike would be resolved.

“Newmont will likely find some compromise with the union; however, if there is a prolonged strike, this will be a major headwind in short term,” said CFRA Research analyst Matthew Miller.

Shares fell 5.2% in afternoon trading. The stock is down 9.5% so far this year.

Wildfires in Quebec had also temporarily halted operations at the company’s Eleonore mine in June.

Newmont’s quarterly attributable gold production fell 17.3% to 1.24 million ounces.

It expects production to be higher in the second half of the year, with fourth quarter carrying the most weight.

“Heavy-lifting will be required during the second half of the year to meet the mid-point, with full-year production in the lower half of the guidance range likely,” said brokerage TD Cowen Securities.

Newmont expects total annual output between 5.7 million ounces and 6.3 million ounces.

Its all-in sustaining cost for gold, a key metric that reflects total expenses associated with production, rose nearly 23% to $1,472 per ounce in the quarter.

Newmont, in the process of acquiring Australia’s Newcrest Mining, expects costs to improve through the remainder of the year.

It posted adjusted profit of 33 cents per share for the quarter ended June 30, compared with analysts’ average estimate of 44 cents per share, according to Refinitiv data.