Newmont and Goldcorp Report Impairment Charges

Newmont Mining and Goldcorp each reported major impairment charges in their second-quarter 2013 financial results, released in late July.

Newmont reported that as a result of lower gold and copper prices and in accordance with U.S. GAAP, its second quarter net income was adjusted by $1.8 billion, net of taxes and minority interest, for impairments and revaluation. Of that amount, $272 million was related to impairments of stockpiles and ore on leach pads. The remaining $1.5 billion was related to impairments of property, plant and mine development, and other long-term assets at Boddington and Tanami in Australia. The charges do not impact the company’s cash flow and are considered one-time charges. Goldcorp reported a non-cash, after-tax impairment charge of $1.96 billion, consisting primarily of impairment to the value of exploration potential at its Peñasquito operations in Mexico.

As a result of its impairment charge, Newmont reported a net second-quarter 2013 loss attributable to stockholders of $2 billion, compared to net income of $279 million during the second quarter of 2012.

Newmont President and CEO Gary Goldberg said, “I am pleased with our progress to improve our costs and operating efficiencies across our portfolio, which has resulted in a $362-million reduction in year-to-date spending compared to the first half of 2012. We are also on track to reduce our corporate work force by more than onethird, with similar efforts under way at our regional offices. At our operations, we performed in line with our plans. Excluding non-cash asset write-downs, we remain on track with our original outlook for gold and copper production, costs applicable to sales, and all-in sustaining costs.”

Newmont’s second quarter financial highlights included:

• Revenues of $2 billion;

• Attributable gold and copper production of 1.167 million oz and 34 million lb, down 1% and 11%, respectively, from second quarter 2012;

• Attributable gold and copper sales of 1.213 million oz and 37 million lb, up 6% and 23%, respectively, from second quarter 2012;

• All-in sustaining gold production costs of $1,136/oz, excluding stockpile writedowns, or $1,548/oz, reflecting stockpile write-downs;

• Average realized gold and copper prices of $1,386/oz and $2.66/lb, respectively; and

• Maintaining full-year 2013 attributable production outlook of 4.8 million to 5.1 million oz of gold and 150 million to 170 million lb of copper.

As a result of its impairment charge, Goldcorp reported a net loss in the second quarter of $1.93 billion compared to net earnings of $268 million in the second quarter of 2012.

Goldcorp President and CEO Chuck Jeannes said, “Gold production across the portfolio was as planned during the second quarter, but revenues and operating cash flows were significantly impacted by lower realized gold prices, timing of gold production, and a temporary increase in inventory at Red Lake. Almost half of our total quarterly gold and silver sales occurred in the month of June, which coincided with a period of particularly weak prices for the metals.”

Goldcorp’s second-quarter financial highlights included:

• Revenues of $889 million;

• Gold sales of 624,300 oz on gold production of 646,000 oz;

• All-in sustaining costs of $1,279/oz;

• Cash costs of $646/oz on a by-product basis and $713/oz on a co-product basis; and

• Reconfirmed 2013 production guidance of 2.55 million to 2.8 million oz at total cash costs of between $1,000 and $1,100/oz on an all-in sustaining cost basis, $525 to $575/oz on a by-product basis, and $700 to $750/oz on a coproduct basis.

As featured in Womp 2013 Vol 08 -