(NEM) Newmont Mining Starts Exploration Project

Newmont Nusa Tenggara, a unit of U.S. miner Newmont Mining Corp. (NEM)  in Indonesia will start exploration work on a new gold and copper block in Sumbawa, West Nusa Tenggara. The company expects drilling to commence in September 2011.

The exploration area is within the 87,000 hectares of forest land granted to the company by the Indonesian government in 1986.

Recently the company released its financial results for the second quarter of 2011. The adjusted net income rose to $445 million or 90 cents per share in the second quarter from last year’s $377 million or 77 cents per share. The result was below the Zacks Consensus Estimate of $1.00 per share.

Total revenue was $2.4 billion, up 11% year over year, below the Zacks Consensus Estimate of $2.5 billion.

Newmont reported attributable gold and copper production of 1.2 million ounces and 44 million pounds, respectively, in the quarter at costs applicable to sales (CAS) of $583 per ounce, and $1.34 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 between $560 and $590 per ounce for gold. Costs applicable to sales are anticipated 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 Barrick Gold Corporation (ABX) and AngloGold Ashanti Ltd. (AU).

Newmont has a short-term (1 to 3 months) Zacks #3 Rank (Hold’) and a long-term Neutral recommendation.

BARRICK GOLD CP (ABX): Free Stock Analysis Report

ANGLOGOLD LTD (AU): Free Stock Analysis Report

NEWMONT MINING (NEM): Free Stock Analysis Report

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