Newmont Mining Corp's (NEM.N) fourth-quarter profit rose sharply, beating Wall Street estimates, and the company increased its gold reserves by 2 percent.

But it forecast slightly less gold production in 2011 because of lower ore grades at its flagship Boddington mine in Australia, and a big drop in the amount of copper it expects to mine this year.

Meanwhile, the Denver-based company increased its attributable gold reserves by 1.7 million ounces to 93.5 million ounces and said it has budgeted $360 million for its exploration program in 2011.

The world's No. 2 gold producer said on Thursday that net earnings were $812 million, or $1.61 per share, compared with $558 million, or $1.13 per share, in the same quarter of 2009.

Adjusted for certain items, earnings per share were $1.16, which beat analyst estimates of $1.14, according to Thomson Reuters I/B/E/S.

Sales rose to $2.55 billion from $2.52 billion, said the company, which operates mines in South and North America, Africa, Australia and Indonesia. Spot gold gained 8.5 percent during the fourth quarter of 2010, rising from $1,309.05 per ounce on October 1 to $1,419.45 on December 31.

In the fourth quarter, Newmont produced 1.4 million ounces of gold and 74 million pounds of copper. It sold 1.3 million ounces of gold at an average realized price of $1,368 per ounce and 57 million pounds of copper at $4.52 per pound.

Full-year 2010 gold production rose slightly to 5.4 million ounces, from an early November forecast of 5.3 million to 5.4 million. Copper production rose 44 percent to 327 million pounds in the year.

But for 2011, Newmont lowered its gold production target to 5.1 million to 5.3 million ounces while copper production is expected to be 190 million pounds to 220 million pounds, mostly because of reduced production at Batu Hijau in Indonesia.

Although 2010 gold production of 728,000 ounces at its Western Australia mine, Boddington, was within the targeted range, it was lower than Newmont's original estimate of 750,000 to 825,000 ounces. For 2011, Boddington is expected to produce about 750,000 to 800,000 ounces.

Newmont said the lower-than-expected gold production at Boddington was primarily attributable to lower gold ore grade and lower expected mill throughput, while higher operating costs are expected from the lower production volumes.

We continue to review our ore grade and processing models to identify opportunities to optimize and improve our future production and operating costs at Boddington, the company said.