Gold producer Newmont Mining has posted a net income of $387m for the second quarter 2022, a decrease of $263m or 40.4% from $650m in the same quarter in the previous year, primarily due to increased costs applicable to sales (CAS).

The higher CAS was mainly due to the impacts of inflation and unrealised losses on marketable and other equity securities.

However, the firm said that the reduction was partially offset by reduced income tax expenses.

Newmont reported adjusted EBITDA of $1.1bn for the quarter, a 28% cut compared with $1.6bn in the same period last year due to declining metal prices.

Revenue, however, remained stable at $3.1bn. This was said to be driven by ‘lower average realised co-product metal prices’ that offset increase in gold sales volumes and spike in average realised gold prices, the firm said.

Newmont’s earnings were also negatively impacted due to increased costs related to labour, materials, consumables, fuel and energy.  

The firm said in a statement: “In addition, lower realised metals prices, including unfavourable mark-to-market adjustments on provisionally priced sales, impacted earnings by approximately $225m compared to the first quarter.”

For the second quarter ending 30 June 2022, the company’s cash from continuing operations rose 4% year-on-year to $1bn while free cash flow stood at $514m.

The reduced free cash flow was due to higher development capital expenditures, which was partially offset by higher operating cash flow.

The firm also declared $0.55 per share of second quarter dividend and is planning a $1bn share buyback programme in 2022.

At the end of Q2 2022, its consolidated cash was $4.3bn and debt was $5.57bn.

Newmont president and CEO Tom Palmer said: “Newmont delivered a solid second quarter performance, producing 1.5 million gold ounces and generating $514m in free cash flow.”

In its updated 2022 outlook, the firm projected reduced production due to the competitive labour market in Australia and Canada.

The firm said its development capital would be $1.1bn for this year.