Gold Miners Struggling with Costs, Gold Prices (NEM, ABX, GDX)

Lower prices for copper and gold hit Newmont Mining Corp. (NYSE:NEM) hard in the first quarter of 2009. Barrick Gold Corp. (NYSE: ABX) is also getting hit after its report, and all of this is acting to drag down even the Market Vectors Gold Miners ETF (NYSE: GDX).

Compared with the same period a year ago, Newmont’s EPS was cut in half, from $0.80 to $0.40. Excluding items, Newmont’s EPS came in at $0.44, better than estimates of $0.42.  Newmont topped revenue expectations of $1.4 billion, reaching $1.552 billion in the quarter, which was down from $1.943 billion in the same period a year ago.

The company sold 1.27 million ounces of gold in the quarter for $906/ounce. The outlook for 2009 is for total gold sales of 5,200-5,500 ounces of gold with cost applicable to sales of $400-$440/ounce.

Barrick Gold Corp. (NYSE:ABX) also reported EPS for the first quarter of $0.42, beating estimates of $0.27, but missing revenue estimates by more than 6%. Realized prices for gold were down from the same period a year ago, from $925/ounce to $912/ounce, and costs reached $484/ounce.

Gold prices are down to about $884/ounce in London today. Newmont shares are trading down about 2.5% at $39.67. The stock’s 52-week range is $21.17-$53.77.

Barrick is down a few pennies this morning, to $29.59. The company’s 52-week range is $17.27-$52.48.

The Market Vectors Gold Miners ETF (NYSE: GDX) is down over 2% at $33.15 in early trading, and its 52-week trading range is $15.83 to $51.84.

Paul Ausick
April 30, 2009