Gold Majors Post Losing Q1 Earnings Season

On May 4, I published an article citing the fact that it is always difficult to project quarterly earnings for gold mining companies. Now that the majors have all reported, let's see how they performed versus consensus estimates.

There were some big surprises on both the up and down side. This earnings season Gold Fields Ltd. (GFI), and Goldcorp Inc. (GG), IAMGOLD (IAG), and Yamana Gold (AUY) surprised to the upside.

Surprising analysts to the downside were Harmony Gold (HMY), Eldorado Gold (EGO), Kinross Gold Corp. (KGC), Agnico-Eagle Mines (AEM), and Buenaventura (BVN).

Barrick Gold (ABX), AngloGold Ashanti (AU), Newmont Gold (NEM), and Randgold (GOLD) were all within 10 percent of consensus estimates.

Overall, major gold miners lost this quarterly earnings season with 4 companies outperforming consensus estimates, 5 missing estimates , and 4 companies were within 10 percent of consensus estimates.

The story for those companies that outperformed expectations was very similar: (1) increased production and (2) lower costs. This was just as I expected.

The table that follows provides actual reported earnings per share and consensus estimates.

Gold Miner Earnings Calendar, Actuals & Forecasts for Q1 2009

(click to enlarge)

Gold miners that can increase production through improved operations or development while controlling costs are the ones that will be successful through this rising price of gold environment.

Tune in next quarter to see how the gold majors fare!

Best,

The Gold Stock Strategist