-->RENO-- (Mineweb.com) Newmont President Pierre Lassonde declared Wednesday that the nomination of Dr. Ben Bernanke as the Chairman of the Federal Reserve is probably the most important recent event as far as gold is concerned.

During a conference call to discuss Newmont's third-quarter financial results, Lassonde described Bernanke as a"reflationist" with a Chicago School-economist orientation (The Chicago School is renown for its belief in the power of markets).

Lassonde predicted that there will be a slowdown in the U.S. economy, which will motivate the Fed to become"accommodative," which will be good for gold. Meanwhile, he noted,"China continues to defy expectation" in terms of demand.

Gold"supply continues to be challenged," Lassonde forecast as the production of Newmont and other international gold mining companies is down. As a result, he predicted the gold price will reach $525 an ounce before the beginning of next year.

Interestingly, Newmont Mining's refinery partnership is going gang-busters, thanks to higher metals prices. Newmont Vice President of Merchant Banking David Harquail told analysts that the gold refinery was operating at"full capacity" and is booked three to four months in advance. He added that the partners are looking at expanding their refinery capacity to Switzerland to keep up with"the extremely strong physical demand for gold."

Although Newmont realized higher gold prices during the third quarter of 2005, third-quarter net income dropped to $126 million (28-cents per share) compared with net income of $129 million (29-cents per share) for the third quarter of 2004. For the first nine months ending September 30, 2005, Newmont reported a net income of $260 million (58-cents per share), up from $250 million (57-cents) reported for the same period of 2004.

Newmont Senior Vice President of Operations Tom Enos noted that poor ground conditions, an underground labor shortage, increased commodity prices and higher underground service costs were impacting Nevada operations." Experienced miners, particularly in underground mines, remain in short supply in Nevada, with labor rates increasing in line with the shortfall," according to Newmont.

Enos added that the Zarafshan-Newmont JV in Uzbekistan is also experiencing a decrease in ore grade, and a 27% increase in costs because of lower production and higher energy costs.

Meanwhile,"significant increases in energy costs occurred following hurricanes in the Gulf Coast of the United States in mid-2005" are also taking its toll on production costs, according to a Newmont news release. Manager of Investor Relations Randy Engel told analysts that fuel prices used to be 15% of costs, but now are 20% of cost. Overall, energy used to be 20% of costs, but is now pushing 25%, he added. Newmont Chairman and CEO Wayne Murdy told analysts that he has appointed Senior Vice President of Administration Robert Bush to"focus solely on energy management" as tire, diesel and commodity costs climb.

However, Murdy expects improving margins in the fourth quarter of this year because of higher gold prices.

Despite the problems, Murdy declared that Newmont expects 8.6 million ounces of consolidated gold sales and 625 million pounds of consolidated copper sales this year. Exploration expenditures are anticipated to be in the range of $145 million to $150 million, while advanced projects and R&D expenditures may to range from $60 million to $70 million. Exploration will remain focused on Ghana, Peru, Nevada and Australia. Consolidated capex is expected to be $1.1 billion to $1.2 billion for 2005. The projected tax rate is expected to range between 28% to 32% at an average $450/oz gold price.

As of September 30, 2005, Newmont reported cash and cash equivalents, marketable securities and other short-term investments of $2 billion. On Wednesday the Board of Directors of Newmont declared a regularly quarterly divided of 10-cents per share, payable December 20, 2005.

-->aus Die Welt

http://www.welt.de/data/2005/10/29/795623.html


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