Top U.S. gold miner Newmont Mining Corp (NEM.N) on Friday posted a $2 billion second-quarter loss after a sharp drop in bullion prices and an impairment charge related to two Australian mines.
Newmont said the one-time $1.8 billion charge was primarily tied to two of its Australian mines, Boddington and Tanami, where sinking gold and copper prices have lowered the value of property, plant and mine development.
Shares were down 1.3 percent at $29.54 just after midday.
The Colorado-based miner had a loss attributable to common shareholders of $2 billion, or $4.06 per share. That compared to a net profit of $279 million, or 56 cents per share, a year earlier.
Gold miners have announced billions in writedowns over the last two years. Newmont rival Goldcorp Inc (G.TO) posted a $2 billion charge this week related to the lower exploration value at its Penasquito mine in Mexico. And Newcrest Mining Ltd (NCM.AX) warned last month it may write down asset values by up to $6 billion on gold's decline.
The bullion price has fallen sharply this year, hitting a near 3-year low of about $1,180 an ounce in late June. That has prompted gold producers to slash capital spending, exploration expenses and other costs.
When asked in a conference call with analysts about hedging gold or copper to protect against price drops, Newmont's chief executive Gary Goldberg said the option had been discussed, but was not currently being contemplated.
"Sure, there are cycles happening in the prices," he said. "But looking to hedge our gold or copper prices is not something we're considering taking on at this time."
Gold hedging, once a popular practice among producers, all but dried up in the mid-2000s, as miners spent billions to unwind forward sales and regain full exposure to rising bullion prices.
Newmont, which is trying to improve operating efficiency throughout its business, said a plan to reduce its corporate workforce by one-third was on track and a similar effort was under way at its regional offices.
Cost-cutting has resulted in a $362 million reduction in year-to-date spending, compared with the first half of 2012, the company said.
Newmont, which pays a quarterly dividend linked to the price of gold, declared a payout of 25 cents a share, down from 35 cents in the previous quarter, as its average realized gold price slid 13 percent to $1,386 per ounce.
Adjusted to remove one-time items, Newmont's loss was 10 cents per share. Analysts had expected a profit of 42 cents per share, according to Thomson Reuters I/B/E/S.
Earnings were hit by lower output and higher costs at certain mines, along with the drop in the gold price.
The company said $1.5 billion of its non-cash impairment charge was related to the Australian mines, with a $272 million charge tied to stockpiles and ore on leach pads.
Attributable gold production was down 1 percent at 1.17 million ounces, while sales rose 6 percent to 1.2 million ounces. Copper output fell 11 percent to 34 million pounds, while sales rose 23 percent to 37 million pounds.
Total revenue fell 11 percent to $2 billion.
All-in sustaining costs were $1,136 an ounce in the quarter, and Newmont said it remained on track for full-year all-in costs of $1,100 to $1,200 an ounce.
All-in sustaining costs are a new measurement that includes the cost of sustaining capital and other general and corporate expenses not included in traditional cash costs. (Additional reporting by Vijay Vishwas in Bangalore; Editing by David Cowell, Jeffrey Benkoe and Gunna Dickson)