By Nicole Mordant
VANCOUVER, British Columbia (Reuters) - Newmont Mining Corp.
Chairman and chief executive Wayne Murdy declined to comment on a phalanx of rumors that the Denver, Colorado-based firm was readying to buy a large rival but he seemed to indicate a preference to focus on Newmont's existing operations.
"When we look at the kind of drilling opportunities and land positions we have, we think in this environment the best value-add we can give is exploration success," Murdy told analysts on a conference call.
Despite lower earnings, Newmont raised its quarterly dividend by 50 percent to 7.5 cents a share and Murdy promised further hikes as long as it remained prudent.
Newmont reported first-quarter net earnings of $86.7 million, down from $117.3 million in the year-before period.
Excluding an accounting change, Newmont earned $133.8 million, or 30 cents a share, down from $151.8 million, or 38 cents a share. The 2004 figure was below analyst forecasts of 34 cents a share.
Cash costs rose 15 percent to $231 an ounce as the miner took advantage of a sturdy gold price to mine lower-grade, higher-cost ounces, especially at its Nevada operations.
GOLD SLUMP SEEN TEMPORARY
Newmont stock closed a hefty 7 percent, or $2.72 weaker, at $37.47 in New York.
But the slump was in line with unexpected weakness across the gold board as the bullion price tumbled along with copper and other base metal prices on fears China's metals-hungry economy would slow down and stifle demand.
Spot gold fell to $384.25 from $398.40 late on Tuesday. "The gold market had a bit of a bad hair day today," said Newmont president, Pierre Lassonde, predicting that the slide would be temporary.
Lassonde, who is regarded by the market as something of a gold guru, said Newmont was sticking to its earlier forecast that bullion will remain strong this year, trading between $380 and $450 an ounce as the U.S. dollar stays weak.
Gold tends to strengthen when the dollar falls as the precious metals get cheaper to buy with other currencies.
Newmont jacked up its gold cash cost forecast for the year on Wednesday to between $225 and $235 an ounce from between $220 and $230 an ounce.
"A big part of (the increase in the cost forecast) is due to Nevada but it is also due to rising prices for consumables. Fuel's up, steel's up, everything's gone up," said Haytham Hodaly, a gold analyst at Salman Partners.
Newmont sold 1.81 million ounces of gold at a total cash cost of $231 an ounce, a cost increase of 15 percent on the first three months of 2003. The firm repeated a sales forecast for the year of between 7.0 million and 7.2 million ounces of gold.
(Additional reporting by Deepa Babington in New York)
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