Gold mining giant Newmont Mining Corporation’s NEM first-quarter 2015 adjusted earnings of 46 cents a share surged roughly 91.7% from the year-ago quarter’s earnings of 24 cents a share. Earnings also beat the Zacks Consensus Estimate of 22 cents by a wide margin.

On a reported basis, the company posted net income from continuing operations of $175 million or 35 cents per share in the first quarter, up roughly 50% from net earnings of $117 million or 23 cents per share recorded a year ago. The bottom line was supported by lower all-in-sustaining costs (“AISC”) compared with the prior-year quarter.
 

Newmont's revenues improved nearly 11.8% year over year to $1,972 million in the reported quarter, marginally surpassing the Zacks Consensus Estimate of $1,968 million. Average realized gold and copper price was $1,203 per ounce and $2.34 per pound in the first quarter, representing a year-over-year decline of 7% and 6.4%, respectively.

Newmont's attributable gold production was almost flat year over year at 1.21 million ounces with higher production witnessed from Batu Hijau, Twin Creeks and Yanacocha. Copper production was 37,000 tons in the quarter, up 54.2% year over year, owing to higher grade phase 6 ore at Batu Hijau in Indonesia.

Gold and copper costs applicable to sales (“CAS”) were $609 per ounce and $1.33 per pound, representing a year-over-year decline of 19% and 51%, respectively. Gold and copper AISCs of $849 per ounce and $1.73 per pound in the quarter, were down roughly 18% and 53% year over year, respectively.

Regional Performance
 
North America
 
Attributable gold and copper production in North America in the first quarter was 405,000 ounces and 5,000 tons, respectively. Gold production in North America was flat year over year, while copper production was down almost 17% year over year.
 
Gold and copper CAS for this region in the reported quarter was $690 per ounce and $1.93 per pound, down 5% and 19% year over year, respectively. In the reported quarter, gold and copper AISC was $895 per ounce and $2.38 per pound, respectively, down 7% and 6% year over year.
 
South America
 
Attributable gold production in South America was 141,000 ounces, up 16% year over year. Gold CAS for this region fell 57% year over year to $461 per ounce, while AISC dropped 50% year over year to $707 per ounce in the reported quarter.
 
Asia Pacific
 
Attributable gold and copper production in the Asia Pacific region was 451,000 ounces and 32,000 tons, down 2% and up 78%, year over year, respectively. Gold and copper CAS for this region was $677 per ounce and $1.27 per pound, down 14% and 55% year over year, respectively. Gold and copper AISC was $818 per ounce and $1.67 per pound, down 15% and 59%, respectively, from the year-ago quarter.

Africa

The region produced 216,000 ounces of gold in the reported quarter, down 4% year over year. Gold CAS and AISC were $463 per ounce and $640 per ounce, respectively, up 8% and 4%, year over year.
 
Financial Position
 
Newmont had cash and cash equivalents of $2,598 million as of Mar 31, 2015, up 76.1% from $1,475 million as of Mar 31, 2014. The company's long-term debt increased roughly 1.2% year over year to $6,221 million.

During the quarter, Newmont prepaid $200 million from its current term loan. The company expects to pay its other liabilities in advance, including the PTNNT project debt facility, other regional and corporate debt, and potential term loan prepayments. Newmont also believes that it can fund all its growth projects and prepay $750 million of debt in 2015 from its cash flows and current cash balances.

Dividend

Newmont’s board of directors announced a quarterly dividend of 2.5 cents per share in the first quarter.

Project Update
 
The Waihi Correnso mine commenced commercial production in the first quarter with construction anticipated to be completed in mid-2015. Total capital cost involved in this project is around $30–$40 million.

The Turf Vent Shaft project at Nevada is all set to commence commercial production in late 2015 and is expected to add 100,000–150,000 ounces of annual production to Leeville. Out of the total capital costs in the range of $350–$400 million for the project, around $70–$80 million will be spent in 2015.
 
The Merian project is moving ahead of the scheduled time and budget, with average gold production expected in the range of 400,000–500,000 ounces on a 100% basis during the first five years. Respective CAS and AISC are estimated to be in the range of $575–$675 per ounce and $650–$750 per ounce. This project helps Newmont to expand in a new district with good potential. Capital cost for this region is anticipated to be in the band of $330–$360 million in 2015 and $150–$190 million in 2016. The project with its first production is expected in late 2016.

Outlook
 
Newmont reaffirmed its gold and copper production as well as CAS and AISC outlook for 2015. However, the company anticipates a 3% reduction in costs in the Asia Pacific region, partly offset by increased costs in Africa.

Newmont also expects lower CAS and AISC in Boddington and Tanami for 2015 compared with its previous guidance, owing to lower Australian dollar exchange rates and oil prices. Further, the company anticipates lower CAS in Africa and Akyem in 2015 due to ongoing cost and efficiency improvements.

The outlook for 2015 assumes increased capital spending for Long Canyon and additional power generation units at Ahafo and Akyem. Owing to this, the 2015 AISC guidance is unchanged at Akyem and up modestly at Ahafo.

Newmont also retained its outlook for 2016 and 2017, excluding the positive impact of the Long Canyon Phase 1 that was recently announced.

Newmont currently carries a Zacks Rank #3 (Hold).
 
Better-ranked companies in the gold mining industry include Gold Fields Ltd. GFI, Sibanye Gold Limited SBGL and AuRico Gold Inc. AUQ. While Gold Fields and Sibanye Gold sport a Zacks Rank #1 (Strong Buy), AuRico Gold carries a Zacks Rank #2 (Buy).