Newmont Mining (NEM
) shares fell nearly 4% on Sept. 27, after the Denver-based company warned of lower gold sales.
Newmont expects to have equity gold sales -- those produced in its own mines -- of between 5.6 and 5.8 million ounces for 2006. The company had said in July that it would have between 5.9 and 6.2 million ounces, according to press reports.
The company blamed its shortfall on government expropriation of its 50% interest in the Zarafshan-Newmont joint venture in Uzbekistan. Newmont plans to keep fighting the expropriation through international arbitration, but anticipates taking a $94 million, non-cash write-off of the venture. The company also noted nationwide power shortages that dented its production in Ghana, among other things.
Newmont's stock price sank 3.8% to $42.34 per share in early afternoon trading on the New York Stock Exchange.
Newmont expects gold sales in 2007 of between 5.2 and 5.6 million ounces. The company has suffered development delays amid power shortages at its Akyem project in Ghana. At Yanacocha in Peru, production will be lower than expected and costs are rising.
"With the higher commodity and energy prices impacting the industry, and lower gold production at Yanacocha, we expect gold sales to reach a low point and costs to peak in 2007," said Chairman and Chief Executive Officer Wayne Murdy in a press release.
But he sees better times ahead. He thinks gold sales will increase after development projects in Nevada, Ghana and Australia achieve full production rates in 2008 and 2009. But Murdy didn't pin a target number on the prospective boost in the recent press release.