Friday, July 23, 2010

Big Profits Expected For Big Gold Mining Companies

As reported in Reuters, North American major gold producers are expected to show big profit jumps because of gold averaging about $1,200 in the second quarter. However, some companies aren't going to benefit to the extent of pure plays because they aren't - and prices for byproducts like copper fell in the quarter.
"Shareholders are going to be looking for gold companies to achieve the higher profits that they have promised, because they no longer have the excuse of the gold price not outpacing cost inflation," said Dahlman Rose analyst Adam Graf.

However, it is a common mistake to assume that the higher gold price will automatically translate into higher profits, as taxes and royalties would also rise along with higher revenue, Graf said.

Newmont Mining, Goldcorp and Agnico Eagle will kick off the flurry of reports on Wednesday, with the world's largest producer, Barrick Gold, and mid-tier miner Eldorado Gold posting results on Thursday.

While all major North American gold producers are expected to outpace results from a year earlier, top-rated analysts expect Goldcorp and its smaller rival Kinross to handily beat current consensus expectations of 28 cents a share and 16 cents a share, respectively....

This jump has been expected by some gold analysts for some time. Despite those numbers coming, gold stocks haven't been doing all that well lately. Reagrding Kinross: of all the names above, it's up the most on the day.

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