Gold prices are down nearly 2% today and gold mining stocks are taking their lumps right along with the yellow metal. Today’s U.S. jobs report has pumped some air into the greenback, which is up about 0.75% against the euro and 0.5% against the Japanese yen. Black gold (crude oil) is also down about 2% today. The gold mining companies have been hit even harder.

Over the course of the past year, gold prices are nearly flat, down about 0.7%, but from highs around $1,800 an ounce to lows around $1,525 an ounce, but volatility has been hard on miners.

The other major impact on gold mining profits has come from rising costs due primarily to labor costs and lower grade ores. The lower grade ores mean the companies have to dig up more ore, although they get some relief in the form of lower fuel costs and a strong dollar. Strikes in South Africa have closed some mines for weeks and that will also add to costs.

Barrick Gold Corp. (NYSE: ABX) reported fiscal third quarter EPS of $0.85 on revenues of $3.44 billion yesterday, badly missing consensus estimates for EPS of $0.99 and $3.61 billion in revenues. The company’s average realized price for gold totaled $1,655 an ounce and net cash costs came in a $592 per ounce. The company lowered its production guidance and raised its cash cost guidance as well, so the stock took a beating yesterday and is down again today.

Goldcorp Inc. (NYSE: GG) reported third-quarter results last week and beat the EPS estimate of $0.45 by $0.09. On a co-product basis, the company’s total cash cost per each ounce of gold produced was $670. Goldcorp’s average realized gold price for the quarter was $1,658 per ounce. Production grew by 2% year-over-year, mainly the result of higher grade ores. The current fourth quarter estimate calls for EPS of $0.57 on revenue of $1.58 billion.

Newmont Mining Corp. (NYSE: NEM) has seen its EPS estimates fall from $1.04 to $0.91 in the last 3 months. Unfortunately, when the company announced results this morning, even the new estimate was too high. The story is the same: lower production, higher costs, shrinking profits.

AngloGold Ashanti Ltd. (NYSE: AU) has seen its EPS estimate collapse in the last 90 days, from $1.06 to $0.76. The company last week settled strikes at three of its South African mines, but three other mines remain shut down because of the labor actions. At the end of September, the company’s production totaled 1.03 million ounces of gold for the three-month period, well short of the estimated production range of 1.07 to 1.1 million ounces. The cash cost range at the higher production estimates had been $835 to $865 an ounce. The company reports earnings again on November 8th.

Yamana Gold Inc. (NYSE: AUY) reported third-quarter EPS of $0.18 on revenue of $611.8 million. The EPS estimate for the fourth quarter is $0.23, and for the full-year EPS is estimated at $0.93. In the third quarter Yamana’s co-product cash costs came to $531 per ounce of gold, and the company produced 310,490 of gold equivalent ounces (266,374 of gold). The average realized price for gold for the third quarter was $1,680 an ounce.

Comex gold futures are down about 1.8% at around $1,684 an ounce. Gold prices above $1,700 an ounce for the current quarter would really help miners meet or beat fourth quarter estimates.

Newmont stock is down more than 6% at $50.00 in a 52-week range of $42.95 to $72.42, while Goldcorp’s shares are down 3.7% at $43.71 in a 52-week range of $31.54 to $54.14.

The Market Vectors Gold Miners ETF (NYSEMKT: GDX) is down 3.3% at $50.28 in a 52-week range of $39.08 to $63.70.

The SPDR Gold Shares Trust (NYSEMKT: GLD) is down 1.8% at $163.03 in a 52-week range of $148.27-$175.46.

Paul Ausick

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