Newmont Mining Corp. shares declined for a second day Thursday, after the gold miner said production costs might run higher than expected in 2007, while reserves are depleting.

Shares traded as low as $43.78, down 2.5 percent, before recovering some of the loss. In afternoon trading, the stock was down 57 cents, at $44.33, after giving up 6 percent Wednesday.

Newmont on Wednesday said costs in 2007 might exceed its previous estimate of $375 per ounce to $400 per ounce, and warned it might not be able to replace its proven and probable reserves, since its mines are aging.

Goldman Sachs analyst Oscar Cabrera, in a client note, said costs might average closer to $417 per ounce of gold. The analyst expects the company will produce about 5.4 million ounces in 2007.

The company has reserves of 93.9 million ounces at the end of 2006, and an inability to replace reserves will limit the company’s organic growth prospects, he added.

Meanwhile, the company is still dealing with operational challenges, wrote Cabrera, who has a “Neutral” rating on shares.

Bear Stearns analyst Michael Dudas was more positive on the stock, and said shares are underpriced due to concerns about operational challenges.

The share price is not factoring in strong gold prices, which have been trading well above $700 an ounce lately, or anticipated improvements from Newmont’s new management team, wrote Dudas.

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