The Phaserl


If Other Gold Miners Can Do What Newmont Just Did, Look Out

by John Rubino, Dollar Collapse:

The past few years have been brutal for the gold miners, most of which brought it on themselves by starting new, high-cost mines just in time for the metal’s price to crater. The resulting write-downs and operating losses have made this without question the most unloved sector in the whole market.

The consensus among analysts has been that most miners’ costs are so structurally sticky that only slight reductions will be possible, making the industry a financial basket case until gold starts rising again.

Then Newmont, the second biggest gold miner, reported its first quarter earnings. Among other startling numbers, its all-in sustaining costs to produce one ounce of gold fell nearly 18 percent to $849 and its earnings rose by either 50% or 89% year-over-year, depending on the definition of profit being used (analysts were predicting a slight earnings decline). Free cash flow, meanwhile, soared to $344 million from the year-earlier $52 million.

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2 comments to If Other Gold Miners Can Do What Newmont Just Did, Look Out

  • Warp

    Two words: fuel prices.

    Their opex has gone down and will go down due to reduced fuel prices.

    • Beligerant

      @Warp : And don’t forget they are only mining their most profitable locations which is not a good long term solution.

      BTW: Whenever all of these blogs, which have done nothing but pump metals the past 5 years state the bottom is about to fall out, it’s guaranteed they’ll be wrong again. When have they ever been correct? This site just should be called the National Enquirer of investing. They don’t have a 2 headed Yeti as their mascot given their advice and record in gold and silver posts.

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