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Soaring Gold Price Ignites the Majors: Record Q3 Gains
October 28, 2011 by prospectingjournal · Leave a Comment
COMMENTARY—ProspectingJournal.com—With the world financial system in what is now a reliable state of disarray, it’s once again time to look at how the gold giants are doing. Overall, not surprisingly, reports from the sector are largely positive as the strong gold price fends off margin hikes, merciless shorters and a market that has basically stopped making sense. For the North American majors, it’ll take a lot more than the “you can’t eat gold” mantra to crash share prices. After all, you can’t eat debt—but it, in turn, will devour your savings.
With 2011 Q3 earnings now circling the media, investors are tallying up their stake in Canadian and US major gold miners, with some big surprises. A sampling of the results are as follows:
Barrick Gold [ABX – TSX] reported record net earnings of 45% to CAD $1.37 billion ($1.37 per share) for the 3rd quarter, up from $942 million ($0.96 per share) in the 2010 period. Adjusted for “certain one-time items,” earnings have risen 52% to $1.39 billion, or $1.39 per share.
Goldcorp [G – TSX], which keeps its books in US dollars, announced record 3rd quarter earnings of $459 million, or $0.57 per share, compared to $244 million and $0.33 per share in 2010. This represents a whopping 48% revenue increase to $1.3 billion on gold sales of 571,500 ounces.
Newmont Mining [NMC – TSX] also announced record 3rd quarter revenue of US$2.7 billion and $7.6 billion for the year to date, which is an increase of 6% from the prior year’s quarter. This includes a record cash flow from continuing operations of $1.3 billion, up 48% from the prior year quarter. President and Chief Executive Officer Richard O’Brien summed up the mood: “We are pleased to announce record revenue and operating cash flow for both the quarter and year-to-date.”
And then . . .
Agnico-Eagle [AEM – TSX] reported a 3rd quarter net loss of $81.6 million (a loss of $0.48 per share), compared to a net income of $121.5 million or $0.71 per share in 2010. This result includes the $161.1 million ($0.95 per share) after-tax write off of the Company’s Goldex operation.
So not all the majors are laughing—but most are. The gold price has steadily regained its recent drop, while silver continues to slog up the long hill it keeps rolling down towards the $50 base camp. The macroeconomic events of the world have become more ridiculous, with the latest market euphoria quickly fading as investors realize that the Greece “solution” is now the equivalent of telling your credit card company that you will only pay half of what you owe. Meanwhile, Italy has decided to start its own implosion, while announcing a rather pathetic “austerity” plan that consists of raising retirement by two years in 15 years and finding a measly 5 billion euros a year from privitizations. And China and India . . . telling their citizens to buy gold . . . currency wars heating up and fiat value fading . . . My 4th quarter prediction?
Bullish for gold.
Chris Devauld
ProspectingJournal.com
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Disclaimer: The author of this article (sadly) does not own shares in any of the companies mentioned above.
