Newmont's Indonesia Strike Ends - Analyst Blog
23 November 2011 - 5:53PM
Zacks
Workers at Newmont Mining Corp.’s (NEM)
Indonesian unit ended their strike at the Batu Hijau copper and
gold mine. The 400 workers reached an agreement with unions on a
dispute over shifts.
As per the company, workers have settled their differences
regarding the calculation of overtime compensation. With the
win-win solution, operation of the Batu Hijau mine in Sumbawa
Island has returned to normal.
However, the country's longest-running mining dispute still
continues at Freeport-McMoRan Copper & Gold's
(FCX) Grasberg mine in Indonesia. Miners at Grasberg, the world's
second-biggest copper mine, have been on strike since mid-September
2011, leading Freeport to declare a force majeure on concentrate
shipments last month. This decision releases Freeport from some of
its contractual obligations, such as supplying buyers metal
produced at Grasberg.
Recently, Newmont released its third-quarter 2011 results. The
company’s adjusted net income rose to $635 million or $1.29 per
share in the third quarter from last year’s $533 million or $1.08
per share. The result exceeded the Zacks Consensus Estimate of
$1.24 per share.
Total revenue was $2.7 billion, up 6% year over year. Newmont
reported attributable gold and copper production of 1.3 million
ounces and 58 million pounds, respectively, in the quarter at costs
applicable to sales (CAS) of $622 per ounce, and $1.10 per pound on
a co-product basis.
For fiscal 2011, the company reiterated its previous expectation
of attributable gold production of approximately 5.1 million to 5.3
million ounces, with attributable copper production of 190 to 220
million pounds. Costs applicable to sales are expected to be
between $560 and $590 per ounce for gold. Costs applicable to sales
are anticipated to be between $1.25 and $1.50 per pound of
copper.
The company currently plans to spend $2.1 to $2.5 billion in
attributable capital expenditures in 2011, or $2.7 to $3.0 billion
on a consolidated basis.
Approximately 40% of 2011 consolidated capital expenditures are
expected to be related to major project initiatives, including
further development of the Akyem project in Ghana, the Conga
project in Peru, Hope Bay in Canada, and the Nevada project
portfolio, while the remaining 60% is expected to be for growth and
sustaining capital.
The company faces stiff competition from Posco
(PKX) and Arcelor Mittal (MT).
Newmont has a short-term (1 to 3 months) Zacks #2 Rank (Buy) and
a long-term Neutral recommendation.
FREEPT MC COP-B (FCX): Free Stock Analysis Report
ARCELOR MITTAL (MT): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis Report
POSCO-ADR (PKX): Free Stock Analysis Report
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