Newmont Corporation (NEM) on Q2 2022 Results - Earnings Call Transcript
Operator: Good morning, and welcome to Newmontâs Second Quarter 2022 Earnings Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Tom Palmer, President and Chief Executive Officer. Tom, please go ahead. Tom Palmer: Thank you, Operator. Good morning, and thank you all for joining Newmontâs second quarter 2022 earnings call. Today, I'm joined by Rob Atkinson and Nancy Buese, along with other members of our executive team. And we will be available to answer questions at the end of the call. Before I begin, please note our cautionary statement and refer to our SEC filings, which can be found on our website. Newmont delivered a solid second quarter as we continue to differentiate ourselves through our leading portfolio of assets and projects, our proven integrated operating model, and our balanced and disciplined approach to capital allocation. And most importantly, our values driven commitment to our purpose of creating value and improving lives through sustainable and responsible mining. Underpinned by these key differentiators and guided by our clear and consistent strategy, Newmont remain well positioned to safely manage through the evolving and unprecedented challenges that our industry and the world at large face. During the second quarter, Newmont produced 1.5 million ounces of gold, an increase of over 150,000 ounces from the first quarter and as expected. In addition, we produced more than 330,000 gold equivalent ounces from copper, silver, lead and zinc, bringing us to well over 1.8 million gold equivalent ounces for the quarter from our balanced global portfolio. We generated significant operating cash flow of $1 billion and free cash flow of $514 million, an improvement of more than $260 million from the first quarter. With $7.3 billion in total liquidity, we have maintained an investment grade balance sheet with a net debt to EBITDA ratio of three times. Preserving our financial flexibility, whilst we continue to invest in our most profitable organic project and return cash to shareholders. In June, we completed the acquisition of Sumitomoâs interest in Yanacocha, bringing Newmont's ownership in this operation and the exciting sulfides project to 100%. And last week, we declared a second quarter dividend of $0.55, maintaining an attractive dividend yield of between 3% and 4% for the last seven consecutive quarters. Set within our established industry leading framework and calibrated at $1,800 goal price, our second quarter dividend demonstrates our confidence in the strength of both our portfolio and our operating model to deliver sustainable long term value. In May, we published our second annual climate report, part of the suite of reports and our company's non-financial performance. To address climate change and make a real impact, we will need to leverage Newmontâs leading ESG practices, our integrating operating model and the scale and mine life of our global portfolio. These are all important components not only for creating long-term value, but also for addressing the critical issues that our industry must solve, none more important than the elimination of fatalities. Safety is a core company value, and it is at the very heart of operating any sustainable business. I expect it to be the first consideration before anyone begins work at any Newmont location, ensuring that our workforce returns home safely after each and every shift. We have continued our discipline and dedicated approach to safety, maintaining a clear focus on managing the critical controls that must be in place at all times to prevent fatalities. During the second quarter, we completed 155,000 conversations by leaders in the field that were focused on these critical controls. Two years ago, we commissioned mobile technology to gather consistent data globally around these important discussions, which we call critical control verifications. And I'm pleased to say that since then, our leaders have now completed more than 800,000 of these conversations. Over the last three years, Newmont has continued to evolve our approach to safety across our global business, improving our fatality risk management program to ensure it is as effective and as insightful as possible. By combining our learnings from significant potential events and critical control verification data, we are now able to gain a deep understanding of the fatality risks of each operation and importantly, what is needed to be done to reduce these risks. At Newmont, we have created a robust and diverse portfolio of operations, along with a pipeline of more than 20 organic projects with the scale and mine life to deliver strong long-term results. Newmont will produce more than 6 million ounces of gold each year and almost 2 million gold equivalent ounces from copper, silver lead and zinc. Combined, that is nearly 8 million gold equivalent ounces every year for at least the next decade, the most of any company in our industry. Among our 12 operating mines and two joint ventures, nearly 9% of our attributable gold production comes from top tier jurisdictions. Because we firmly believe that where we choose to invest and operate matters. And underpinning our portfolio is a robust foundation of reserves and resources, which combined with the gold industry's best organic project pipeline, provides the pathway to steady production and cash flow well into the 2040s. We are in a period of meaningful reinvestment as we continue to advance our near term projects, including the second expansion at Tanami in Australia's Northern Territory, the development of a Ahafo North in Ghana and the Yanacocha Sulfides project, the next exciting chapter in Newmontâs long and profitable journey in Peru. And in addition to our three near term projects, Newmont has a deep pipeline of longer term projects that represent growth opportunities for later in this decade and beyond. These projects and operations are managed through a proven, integrated operating model with a strong track record of delivering long-term value to all of our stakeholders. Newmont's operating model is built upon the fundamental principle that the whole is worth more than the sum of the individual parts. And it is strongly supported by our full potential continuous improvement program, a program that has been in place for over eight years and is more important today than it has ever been. Our team is taking the lessons learned during the pandemic to address the challenges that our industry faces today, including tight labor markets, inflation and supply chain disruptions. As the world is reacting to these pressures we are actively deploying strategies to reduce our exposure. Our global supply chain team is leveraging our scale and the strong partnerships we have developed over many years with our key suppliers and equipment manufacturers. As the industry leader, we have best in class pricing as well as sophisticated rise and fall formulas built into our long term contracts to reduce both volatility and mitigate logistical constraints in order to prevent disruption in our operations. And whilst we can't talk about specific contracts, several of our major equipment and parts suppliers have recently issued comprehensive price increases for the industry that range from 15% to 30%. However, through the efforts of our global supply chain team, we have negotiated lower price increases, in some cases of only 3% to 5% for the coming year. In addition to this, we are challenging the gold industry by implementing new technology to improve productivity and reduce labor risk, such as our transition last year to a fully autonomous whole truck fleet at Boddington. We are leveraging our full potential program, which has been instrumental in delivering value during these unprecedented times, helping to offset the impacts from current market conditions. And we are utilizing real time data and our global team has subject matter experts to share knowledge and talent across our global portfolio, providing critical insights and driving improved performance that our operating teams simply cannot achieve on their own. It's one of the most tangible examples of this. We have designed and implemented three operational support networks covering our core areas of mining, processing and asset management. These global networks bring together our technical experts from around the world providing 24 hour monitoring, coaching and support through a consistent platform. In the mining industry, we traditionally expect our frontline leaders to obtain their own data and insights as they manage everything involved in safely leading a team of people at the start, during and end of a shift. Through our support networks, we help our leaders by monitoring operational performance and providing insights into the areas that need their attention: saving time; improving focus; and removing the need for so many people at our mind sites. And by offering a more flexible work environment, Newman is able to attract the best talent from within and beyond our industry, creating a more diverse, motivated, and highly skilled team to coach and support not one, but all of our operations. In addition to our dedicated and disciplined approach to cost management, you can also expect that we will remain transparent about what we are experiencing today and what we are anticipating in the future from this unprecedented environment. Over the last eight months, we have observed cost pressures, including the impact from Russia's invasion of Ukraine and increasingly competitive labor market, and the highest global inflation rates our world has seen in nearly 40 years. As a consequence, we are anticipating an additional 7% of cost escalation this year. That is on top of the 5% we had already included in our full-year outlook we established last December. Around 1/3 of this increase is related to labor costs. We are seeing contracted services rates that are more than 10% higher than December last year, driven primarily by strong competition for specialized labor, higher levels of post pandemic accretion resulting in higher demand and the pass-through of higher commodity prices and transportation costs. The next 1/3 of the impact comes from an increase in prices for global commodities and raw materials. We're observing escalation in the range of 20% to 30% for certain items such as cyanide and explosives, which is being driven by the increase in the price of natural gas and the availability of ammonia. As well as an increase in the price of steel that is being used in our grinding media and spare parts. And the final third of the impact is coming from higher fuel and energy costs. As an example, diesel prices have increased by more than $50 per barrel, adding approximately $20 per ounce to our all-in sustaining costs compared to our original guidance. I'll now turn it over to Rob and then Nancy for a more detailed look at our operational and financial performance, and they will discuss how our second quarter results have been impacted by the current environment. I will then wrap up with an overview of our outlook for the remainder of this year, as we remain focused on implementing productivity improvements, and offsetting the impacts of these challenging market conditions. Over to you, Rob. Rob Atkinson: Thank you, Tom, and good morning, everyone. Turning to the next slide. Let's dive into our operations and projects starting with Africa. Our team delivered a solid performance in the second quarter due to higher ore grade and tonnes mined in addition to strong mill performance, and the team is working to complete an open pit layback, and we expect stripping to decrease in the third quarter as we begin to reach the ore, and create future optionality for both underground and open pit growth. Ahafo South delivered a strong second quarter performance increasing gold production by more than 25% compared to the first quarter due to improved ore grades, higher underground and open pit ore tonnes mined and steady mill performance. And despite the challenges experienced during the first quarter from supply chain disruptions and global border closures, as a result of COVID, the team continues to successfully ramp up mining rates in the Subika underground, which Tom will discuss later on. We anticipate production at Ahafo to be weighted around 60% to the second half of this year as we continue to increase underground tons through increased development and reach higher grades, positioning Ahafo for a strong finish to the year. And finally, the team continues to progress engineering and procurement for the Ahafo North project. All of the permitting has been completed, and we are encouraged by our recent discussions as we continue the important stakeholder engagement work with local communities, traditional leaders, and regulators to ensure full land access, that it is properly cleared of all structures and quarters. As I have mentioned in previous updates, this will be an important milestone, which will give us the opportunity to update the remaining costs and schedule to develop this prolific ore body, ensuring that we can properly incorporate the impacts from this land access delay. As a consequence of working through this important activity, preliminary capital costs are expected to be approximately 15% higher than our original estimate. And we are anticipating a shift in commercial production from 2024 to mid 2025. We look forward to providing additional detail later this year, as we worked to add profitable production from the best unmined goal deposit in West Africa. And now turning to South America, Cerro Negro delivered another strong performance in the second quarter as a result of steady grade and ongoing improvements to mining rates and mill performance. The team continues to advance the first wave of expansions at Cerro Negro, including the expansion of the Marianas district and the development of the Eastern district to extend existing operations beyond 2030. The development of the San Marcos decline is progressing and we have successfully completed the first blast in the Eastern district in May of this year, an exciting accomplishment as we continue to explore and develop the district potential in Argentina. At Marion, the team delivered a steady performance despite very heavy rainfall in the second quarter, impacting mined sequencing and resulting in lower ore tonnes mined and milled in addition to lower grades. We anticipate higher production in the third and fourth quarter, as the rainy season comes to an end, improving mill performance and reaching higher ore grades in the second half of the year. And finally, Yanacocha continued to deliver solid production during the second quarter accelerating ounces from the re-leaching program and improving recoveries from the use of a richer leaching solution. We anticipate production at Yanacocha to be weighted around 55% to the first half of this year, as a site decreases Orton's mined and placed on the leach pads while we work to develop the first phase of the Sulfide project. Engineering is nearly 60% complete and procurement is around 45% complete with approximately one third of the local contracts already awarded. And as you can see in the picture here, the team is progressing the camp construction and early earth works as planned, ensuring we have in place proper accommodations for our construction workforce and for future mine operations. The project team is preparing for an investment decision in late 2022, and we currently expect capital spend to be around $2.5 billion from the full funds approval date with commercial production in mid-2026. We look forward to providing an update towards the end of the year, and we remain very excited about the opportunity to develop the Sulfide potential at Yanacocha. And now over to North America. Penasquito delivered another solid quarter as higher gold and silver grades helped to offset the impact from planned mill maintenance and higher costs associated with the workforce negotiation announced earlier this month. As part of the newly established profit-sharing agreement, Newmont Penasquito has agreed to pay an uncapped profit sharing bonus up to 10% of profits from the operation, with an expense of $70 million related to 2021 results, adding more than $65 per ounce to North America's second quarter all-in sustaining costs for gold and over $180 per ounce for coal product gold equivalent ounces. For 2022, we expect the profit sharing bonus to add additional costs of around $15 million at an $1,800 gold price, adding approximately $4 per ounce to North America's all-in sustaining costs for gold and $10 per ounce for coal product gold equivalent ounces. We reached this agreement with the workforce of Penasquito without interruption to the site, and we continue to build an aligned and valued relationship with union leadership to support the safe and viable operation of the mine well into the future. Looking ahead, costs are expected to stabilize as gold production from this large polymetallic mine increases in the third quarter due to higher grades delivered from the Penasco pit, whilst coal product grades from silver, lead and zinc begin to decline in the second half of the year as planned due to mine sequencing. Moving to Canada. Productivity and costs continued to be impacted by ongoing challenges stemming from a very competitive labor market. In addition to these challenges, Eleonore experienced COVID-related absenteeism during the second quarter as flight capacity restrictions and strict protocols remained in place to protect the health of our First Nation communities and workforce. Musselwhite and Porcupine both delivered an improved performance compared to the first quarter, increasing ore tonnes mined and processed with Musselwhite delivering its best monthly performance in over 3 years. Productivity and ore grades at both sites are expected to continue improving in the second half of the year as mining in Musselwhite progresses to the north in the PQ deeps area, and Porcupine reaches higher grades from Hoyle and Borden beginning in the third quarter. And finally, at CC&V, the site delivered improved production compared to the first quarter due to higher ore tonnes mined and processed at our leach facilities. And as Tom will discuss later on, the mine is now operating as a leach facility with steady production from optimized work placement and declining per unit costs for the remainder of the year. And now turning to Australia. As mentioned during the first quarter earnings call, the Western Australian border was reopened in early March, resulting in significantly higher case counts, ongoing testing requirements and strict close contact protocols throughout the state. Approximately 1/3 of the Boddington workforce and half of the Tanami workforce tested positive for COVID in the second quarter and high levels of absenteeism from positive cases close contact isolation protocols continues to challenge productivity at both sites. In addition, Australia is experiencing a tightening of the labor market as the competition for skilled workers and contracted services has intensified in recent months. Yet despite these challenges, Boddington delivered a strong second quarter performance. The team reported an increase in gold and copper production of more than 25% compared to the first quarter as higher mill throughput and grade more than offset lower tonnes mined due to inclement weather. Performance from Boddington's fleet of fully autonomous haul trucks continues to improve each quarter. And for the remainder of the year, Boddington will focus on achieving record mill throughput rates and increasing tonnes mined from this cornerstone asset. At Tanami, the site also delivered improved production with an increase of more than 25% compared to the first quarter due to higher ore grades, an increase in tonnes mined and improved mill performance, helping to offset the impacts from higher contracted services costs in a very competitive labor market. With the ongoing challenges of securing specialized labor and contracted services, the team continues to successfully progress the second expansion at Tanami, a project that will extend mine life beyond 2040. Nearly 90% of the project engineering and procurement has been completed protecting the project from a number of inflationary pressures. During the third quarter, the team will complete the reaming of the 1.5 kilometer deep, 5.5-meter wide shaft and the installation of the head frame and hoisting infrastructure, which, as you can see here, is nearly 95% complete. And as I have mentioned in previous updates on this project, this will be an important milestone as we evaluate the remaining schedule and cost to complete the project with the key work remaining involving the concrete lining of this production shaft. This process will also ensure that we properly incorporate the significant impacts from COVID-related restrictions and protocols and the current market conditions for labor and materials. We continue to operate in a very competitive labor market in the Northern Territory with significant demand from mining competitors and infrastructure initiatives throughout Australia. Based on our preliminary view, we expect capital costs to be approximately 25% higher than our prior estimate and a shift in commercial production from 2024 into early 2025. We look forward to providing additional detail later this year, and we remain excited to deliver significant pounds, cost and efficiency improvements at this world-class asset. And with that, I'll turn it over to Nancy on the next slide. Nancy Buese: Thanks, Rob. Let's start with a look at the financial highlights. Newmont delivered a solid performance in the second quarter with $3.1 billion in revenue at a realized gold price of $1,836 per ounce, adjusted EBITDA of $1.1 billion and solid free cash flow of $514 million. Our strong cash flow generation allows Newmont to provide superior shareholder returns, largely to our industry-leading dividend framework. Last week, we declared a regular quarterly dividend of $0.55 per share, calibrated at $1,800 per ounce, demonstrating our confidence in our future outlook and our commitment to leading returns. And as Tom mentioned earlier, we're in a period of meaningful reinvestment, an essential component in growing production, improving margins and extending mine life. In the second quarter, we invested more than $600 million through capital, exploration and advanced project spend as we continue to progress our near-term projects and invest in our future. In July, we paid $34 million in advanced project spend, part of our initial $100 million commitment to Caterpillar, as we work to develop autonomous battery electric haul trucks for our open pit CC&V and our underground mine at Tanami. Compared to the first quarter, adjusted net income declined more than $0.20 on due to the macroeconomic factors that Tom mentioned earlier, in addition to lower realized metal prices for gold, copper, silver, lead and zinc. We sold 46% of our metal in the month of June at an average gold price of $1,834 per ounce, substantially decreasing our average realized gold price for the quarter compared to the LBMA gold price of $1,871 per ounce. Average realized metal prices were also impacted by $105 million of unfavorable mark-to-market adjustments on provisionally priced sales due to a sharp decline in metal prices on June 30. These impacts alone resulted in a reduction to net income of approximately $0.19 per share compared to the first quarter, largely offsetting a 12% increase in gold sales volumes due to higher production from our operations in Australia and Africa. In addition, we experienced an increase of approximately $80 million from higher labor and materials costs and nearly $50 million from higher diesel and energy prices compared to the first quarter. And as Rob mentioned, we incurred a $70 million expense in the second quarter related to the Penasquito profit-sharing agreement. These impacts, along with smaller, less meaningful items, resulted in second quarter adjusted net income of $362 million or $0.46 per diluted share. Despite the current market environment, our capital allocation priorities remain unchanged with a clear strategy: to reinvest in our business through exploration and organic growth projects; to maintain financial strength and flexibility in our balance sheet and to continue to provide industry-leading returns to shareholders. In the first half of this year, we delivered on each of these priorities by progressing our profitable reinvestment into the business with the advancement of our near-term projects and an ongoing commitment to our robust exploration strategy, enhancing our ownership of world-class assets and proven mining jurisdictions through the acquisition of the remaining interest in Yanacocha and the Sulfides project. Maintaining our industry-leading dividend of $2.20 per share on an annualized basis and sustaining a strong balance sheet with $7.3 billion in liquidity and a net debt-to-EBITDA ratio of 0.3x, preserving Newmont's financial flexibility with no debt due until 2029. As we look towards the second half of the year, we remain confident in our ability to continue delivering strong results and free cash flow to maintain our disciplined approach to capital allocation and creating long-term value for the business and all of our stakeholders. With that, I'll hand it back to Tom to talk about what to expect for the remainder of 2022. Tom Palmer: Thanks, Nancy. And turning to the next slide. During our first quarter earnings call in late April, we provided an update on the impacts to our managed operations as a consequence of safely managing through the Omicron surge over the first 4 months of this year. We also discussed the emerging impacts from Russia's invasion of Ukraine, combined with the ongoing impacts from the global pandemic on labor markets and global supply chains, and as a consequence, input costs. We advised that we are closely monitoring these matters during the second quarter and would provide an update with our Q2 earnings in July. As a consequence of this work, we have decided to update our full year guidance to incorporate the following items. First, as we discussed in our earnings call in April, ramp-up mining rates at our new Subika underground mine at Ahafo South have been impacted by supply chain disruptions that have delayed the delivery of the required production drills and global border closures that have impacted labor availability of the key talent necessary to develop this new mine and train our operators. As also discussed in April, I can now confirm that we are advancing the development of a third production level at Subika, which will add optionality for this mine and minimize future disruptions. We expect first ore from this new third level around the middle of next year. Second, as we discussed in April, with the pending conclusion of our contracts to supply concentrate from Cripple Creek & Victor to Nevada Gold Mines, we stepped back to assess our operating strategy at Cripple Creek & Victor to determine if there was the potential for a simpler, higher-value, longer life, leach-only operation that does not carry the complexity and cost of running a mill to process a relatively small amount of the ore mine. This work has now been completed, and we have made the decision to put the mill into care and maintenance and move to a heap leach-only operation reducing production levels into the second half of this year and beyond as a consequence. Third, as Rob discussed, we continue to be impacted by the ongoing challenges associated with safely managing through the global pandemic. These challenges are particularly pronounced in Canada and Australia where we continue to adhere to strict close contact isolation protocols and test requirements impacting productivity and increasing costs. And finally, as I discussed earlier, the impact on our input costs from escalation in the 3 key areas of labor, material and consumables and fuel and energy. These impacts to our managed; operations have been built into our second half forecast as we work to address the critical global issues we face today and deliver on our updated guidance. So for 2022, we now expect to produce 6 million ounces of gold, which is within our original guidance range, but now incorporates the following changes from the impacts I just described. 80,000 ounces at our Ahafo South operation, 50,000 ounces across our Canadian operations, 40,000 ounces at Cripple Creek & Victor and 30,000 ounces across our Australian operations. The impact from these lower production volumes, coupled with higher input prices from inflationary pressures, has also increased our gold all-in sustaining cost for this year for $1,150 per ounce. We remain within guidance for sustaining capital. However, we anticipate our spend to be weighted around 55% to the second half of this year due to global supply chain delays in the first half and higher input costs. The unprecedented and evolving market environment has also impacted our expectations for development capital since we established our guidance in December last year. As a consequence, we have reduced our estimate for development capital for this year to $1.1 billion, incorporating delays in spending primarily associated with Ahafo and Yanacocha sulfides. In addition, over the next few months, we will pass through the land access milestone for Ahafo North and the completion of Shaft Remy milestone for the Tanami expansion and be in a position to clearly evaluate the remaining cost in schedule to complete both these important projects. Building on the trends that Rob just described, we'll be in a position to provide additional detail on both these projects later this year. As we look ahead, we expect that inflationary pressures and the impacts from a competitive labor market will persist into 2023, resulting in production levels and unit costs that will be similar to this year. We are actively working on our 2023 business plan and look forward to providing you additional detail on our long-term outlook when we deliver our annual guidance in early December. We will continue to be transparent regarding the challenges we are managing as a mining industry, and we remain firmly committed to advancing the initiatives that are most important to our business, including climate change. In May, we published our second annual climate report, providing stakeholders with a more comprehensive understanding of how we manage the impacts of climate change at our operations and projects. We believe that climate change is one of the greatest existential threats to our way of life. And this report outlines Newmont's climate-related risks and opportunities, our strategic planning around various climate change scenarios and the specific actions we are taking to reduce our carbon footprint. In addition to our climate report and our annual sustainability report published in April, we will launch Newmont's inaugural tax transparency report during the third quarter, which will provide an overview of the taxes we paid as part of the value we create in the countries where we operate. In closing, we have a tremendous opportunity to address the challenges of our dynamic and changing world from inflationary pressures and global supply chain disruptions to climate change and reducing fatalities in the mining industry. Guided by our clear and consistent strategy, we believe that Newmont has the size, scale, leadership and experience to navigate these challenges as we continue into our next 100 years of sustainable and responsible mining. And we are both ready and excited for what is ahead. And with that, I'll turn it over to the operator to open the line for questions. Thank you, operator. Operator: Thank you. Our first question comes from Mr. Lawson Winder from Bank of America. Lawson Winder: I wanted to start on the dividend. In light of everything that's happening in terms of cost inflation and as well as your comments and plans to spend quite a bit on capital projects in 2022, '3, '4 and perhaps even beyond during this period of meaningful investment when free cash flow could be sort of pressured by these 2 factors, I mean is the current dividend sustainable? And then secondly, you've commented, Nancy, in the past that the dividend payout levels are assessed each quarter. And I'm curious, when you think about that assessment and you go through that process, is it the yield that you're focusing on? Or is it the payout ratio? Tom Palmer: Thanks, Lawson. I'll pick up and Nancy, if you want to chip in, I'll pass across to you. Lawson, the key aspect of our dividend framework is gold price, and we look back at gold price over an extended period of time, not necessarily any volatility you may see in a particular quarter and look at the gold price over an extended period of time and we sit down and have that discussion with our Board to ultimately decide the dividend that we pay and determine the cash that we've generated and our capacity to pay a dividend. If you look back over a 6-month, 9-month, 12-month period, gold price is averaging around between $1,850 an ounce over that period of time. So it's the gold price, which drives our dividend framework. And then we look at our capacity to pay in terms of a percentage of the free cash flow we're generating based upon that gold price. Nancy, you might want to comment on yields more gold price in Newmont. Nancy Buese: Yes. It's certainly around gold price and margins much more. We're not solving for a particular deal. I would also indicate, too, we've been on the more conservative side with the 40% payout at 1,800 as we were entering this period of reinvestment. And the other piece I would note was when we put the framework in place several years ago, we started and have continued to enjoy quite high cash balances. And we indicated at that time that, that gives us quite a glide path if prices were to change. So we have a great deal of conservatism built into the framework and the ability to continue to consider and evaluate based on those cash balances and our ongoing outlook. Tom Palmer: Thanks, Nancy. To build on that, we also recognize that as a long-term business that will reinvest from time to time, you'll have periods of greater reinvestment and lower reinvestment over year-on-year or over a period of time. So we take that long-term view into consideration as we look at the spend profile of development capital. Lawson Winder: Maybe I would ask it, just 1 follow-up along the lines of the dividend, which is when you speak of your capital allocation framework, which is reinvest in the business and maintain the balance sheet and then 3 was industry-leading returns. Should we think of it as being 1, 2, 3? So reinvesting first, strong balance sheet second and then sort of if there's capital left over, that then goes into the dividend? Or is there a bit of give and take there, for example, could you sort of delay some of these projects in order to maintain a sort of more competitive dividend? Nancy Buese: Yes. So the gold that we have is a long-term stability of the business, and that absolutely requires reinvestment in these significant capital projects. So that will continue to be a very high priority for us. And certainly, our investment-grade ratings and our balance sheet stability are also important. So we will endeavor to maintain our margins, so we can deliver on all 3 of those priorities. But certainly, the long-term value of the business is very important to us. So we'll continue to calibrate and balance across all 3 of those imperatives, but I would say reinvestment is certainly quite critical. Lawson Winder: And then just maybe sort of a conceptual maybe a bit of a longer-term question. But I mean, when you look at the cost pressures that you're facing and particularly the labor difficulties, I mean, does this create an imperative to accelerate your automation program and do what you did at Boddington with a greater number of mines? And to what extent can you accelerate that? Tom Palmer: Yes. Thanks, Lawson. Good question. I think technology is clearly part of the lever you have as a mining company to improve productivity and optimally reduce costs. And Rob, you might want to comment. I think we have significantly benefited from having autonomous haulage in place at Boddington, probably less so from the cost pressure at this point in time, a loss more directly as opposed to the productivity, given what West Australia has seen in terms of the introduction of the virus to that state over the course of the second quarter. But Rob, I think if we had -- still had conventional people operating trucks at Boddington, they would have been quite a significant impact through the second quarter. I think some mining companies who have conventional fleets in Western Australia will have experience through the second quarter of this year. Rob Atkinson: With Tom and the unpredictability of the virus not knowing who's going to turn up each day would have really impacted to have 36 trucks guaranteed running day in, day out has really delivered certainty but continued productivity. So it's been a good news story. Tom Palmer: And Lawson -- thanks, Robert. Lawson, we actually moved -- we have that's a control room that these fleet of autonomous trucks in the latter part of last year, knowing that Borders would eventually open up in Western Australia. We actually built a fall back control room. So on the village on the Boddington mine side, we had several rooms set up from within which you could control the mine of Boddington so that if we did end up with a case of some of the cooperators testing positive, they could continue to isolate and manage the mine from the comfort of their room in the village. And so we're well positioned to use technology in this particular instance. But I think it will be a key driver in the mining industry when we think about how we can manage some of the cost and inflationary pressures that we're experiencing in certain jurisdictions. Lawson Winder: I'm going to ask 1 more. I apologize to my colleagues if I've asked too many questions here, but I just wanted to get your thoughts on buy versus build. Just given the CapEx inflationary pressures here, is there an incentive here to perhaps look at additional M&A opportunities and particularly larger, more meaningful M&A opportunities? And I'll leave it there. Tom Palmer: Thanks, Lawson. And for those waiting in line, we'll stay on the call until with the amount of information we've shared this quarter. We'll start on the call and work through everyone's question. Lawson, our strategy doesn't change. We are very much focused on running our business and investing back in our business. The best investments you can make here back within the projects that you know very, very well. So that is our main focus, delivering value from that well-managed operations and bringing on and developing our organic project pipeline. But that doesn't mean that our radar isn't turned on. And if an opportunity presented where we could pick up an asset or a portfolio that met Newmont's criteria around size, scale, cost profile and jurisdiction, then we would run the ruler over that. If we felt that we could add more value with that asset or portfolio sitting within our operation. But to be frank, 99% of the people who work at Newmont are focused on delivering value from the portfolio that we are managing today. Operator: Our second question comes from Fahad Tariq from Credit Suisse. Fahad Tariq: First, on the labor shortage that you're seeing, particularly in Australia and Canada. Can you just touch on the steps you are taking to address that shortage going forward? Tom Palmer: Thanks. I'll kick off, and Rob, you might want to build on both of those countries. So if you think about labor, it's the -- our workforce, the people who are Newmont employees is relatively stable. We're seeing turnover or voluntary attrition that is at higher levels than we've maybe seen in the past towards the high level but still within manageable levels of what we've seen in the past. So the inflationary pressure is really coming from the contracted services or the particular technical expertise that we see. So the labor you need to bring in to do large shutdowns or to repair specialized equipment or to do particular contracted services work. And there's the additional costs that we're starting to see as people bid for work, for the work that we send that way, that is an area that we're watching very carefully. But the area that equally is important to me, if not more important to me, is actually having the people you need to do the work. So we have a scope of work we need to do for our shutdown of a mill that you might take down, say, a couple of times a year. And if we can't get all of the people that you need and how are we thinking about the scope of work to ensure that when we button that mill up and recommission it that we can run reliably until its next shutdown. So there's the cost pressure. But probably more important for me is that ensuring that we get the right people working on the equipment to ensure that it's maintained at the right level. Rob, do you want to build on that in Australia and Canada? Rob Atkinson: Yes. I'll just give 1 example, Fahad, at the last Bollington shut, we were 260 contracts to shore and literally, we had some companies defaulting on entire packages of work. So that really means that we -- we're spending a lot more time with our contractors and our business partners to make sure that we're aligned with those ones, not only for the short term, but also for the long term and continuing to deepen those relationships. And I think just going back to what Tom said about our own employees is that the value proposition that Newmont offers with the safety aspect or environmental credentials as well as the leadership and the working conditions, that is very, very attractive to many people, both inside our company and outside. So it really is around our contracting partners where we're spending most time and most work to deepen those relationships. Tom Palmer: Just to build a little more on that, Fahad, in my remarks, I talked about 1 of the measures we've got in place to mitigate some of these inflationary pressures are our operational support networks, one of those is in asset management, which is obviously around how we do our maintenance work. And through that asset management program, we are now looking at our maintenance shutdowns across our 12 managed operations around the globe. And looking at how we can smooth out the timing of those shutdowns and when we do the different scopes of work. So as there are particular specialist skills that are rare around the world, we're ensuring that we're able to balance their use across our various operations to ensure that we mitigate that risk of not having that critical resource available to do important maintenance work. Fahad Tariq: And just my second question, switching gears to Yanacocha Sulfide. I noticed the CapEx estimate didn't change in this press release. Just curious if that is going to -- if a CapEx review is done quarterly or monthly or if we should expect something as part of the investment decision? And if the CapEx review was done and the estimate wasn't changed, what's different about the dynamic improved versus other parts of the world where you're seeing labor and materials inflation? Tom Palmer: Yes. Thanks, Fahad. So where we're at with the Sulfides project is, weâre past through the 50% engineering mark, and which means thatâs pretty -- a project of this size â any mining project thatâs a significant amount of engineering completed at this stage of a project. We are dropping out the quantities right as we speak through this quarter as we build towards investment decisions and using those quantities to determine both the definitive schedule and the definitive estimate. The key amount of work that -- or material that's still to come with sulfides, if you recall, we've actually ordered a number of long lead time items. So the autoclave shells themselves, specialized steel involved with that, oxygen plants, key electric mill miners and the like. So we have derisked that project because both about cost and schedule by ordering some of those critical components and managing their lead times. So looking forward, there are 2 key components. It's all the -- what we call the bulks or stick still to build a plant and all the steel involved in fabricating the tanks and pipes that you have around this processing facility. So there's the cost of steel by specialists steel and standard steel for that work and labor. Now in the Peruvian context, we'll direct higher labor is something that we've got a lot of control to be able to manage, and it will be a very much a local workforce. So the risk is in the escalations that the world is seeing around the cost of steel. So in giving an indication in this update of $2.5 billion from the point of full funds approval, we are incorporating an early look into some of the escalation we're seeing in steel for that go-forward number from full fund. So there is some consideration for that Fahad as we're right in the middle of doing our definitive estimate and schedule as we speak. Operator: Our next question comes from Jackie Przybylowski from BMO Capital Markets. Tom Palmer: Jackie, are you there? Operator: Jackie, unfortunately, we are not receiving any audio from you. Can you please make sure that you are unmuted locally. Tom Palmer: Operator, we'll take the next question. We have Jackie to see where to get that line connected. So let's go to the next caller, and we'll pick Jackie up again. Operator: Of course. Our next question comes from Josh Wolfson from RBC Capital Markets. Josh Wolfson: Back to the topic of capital allocation, Tom and Nancy. On the theme of the dividend, the existing policy in place, I think, had talked about $300 gold price increments being the key factor determining what the payout was going to be. And Nancy, I believe you mentioned that there had been some conservatism incorporated in there. We're seeing in the current environment, gold prices come off and still cost inflation be meaningful. So does the current policy still maintain its relevance? Or is there some sort of additional thoughts that we should sort of be thinking about rather than strictly that $300 increment determining payout? Tom Palmer: Yes. Thanks, Josh. I might pick up that to the start and Nancy you build on it. I think -- we don't -- our dividend policy is deliberately set up to be stable and robust over the longer term. So although we're seeing some volatility in gold price during the last few weeks, we need to see how that plays out going forward. And I mean there's lots of condoscent authorities that us views on what gold price may do or not do. So we will continue to follow that framework, look back at the gold price over an extended period of time, the cash we've generated and are generating and make judgments within our framework. I think the area that as we look forward in terms of the dividend framework is the debate we're having around what the floor is in the gold price. And then ultimately, what gold price we used for doing our mine planning and for determining our reserves and resources and picking up the conversation we had on last earning calls and conversations we have had since then. So if we were -- we're still midstream in that debate, looking at all of those things. But if we were to lift out the gold price that we use for mine planning and for reserve setting then we would step back and look at our dividend framework and the construct around that floor and the gold price, which will have moved. So I think, Nancy, that's probably the most material thing, Josh, in terms of your question, but you want to build on that? Nancy Buese: Yes, that's exactly right, Tom. So if you remember back to our framework, we had indicated a dollar-based dividend at $1,200 gold price and through the inflationary pressures and what we are seeing, as Tom indicated, around reserve pricing and everything else, the question becomes what is that floor today. And so what you may end up seeing, and we've still got quite a lot of work to do with a slight shift in the framework, but certainly, we have the ability and we'll retain the ability to pay a dividend into the future. Josh Wolfson: And then also on the share buyback, I noticed there hasn't been much activity year-to-date and obviously look at the move today. But even before that, prices were pretty much below where the stock was trading throughout 2021 when there was meaningful activity. What's the current thought process on how cash is allocated towards the buyback? Nancy Buese: Yes. Thanks for the question, and it's one where we continue to evaluate. As we've indicated previously, it's a very opportunistic tool, and so we will use that at certain times. As we've been doing the work over the past quarter to evaluate the impact on inflationary pressures with our capital projects, in particular, we have made the decision to think about where we want to spend our dollars and that's really what's resulted in us holding for the moment. We will continue to evaluate our share price and the use of our cash. But yes, I would consider that to be an opportunistic tool that we will certainly use from time to time. And we do have just a bit under $0.5 billion remaining on the existing program. Operator: Our next question comes from Tanya Jakusconek from Scotiabank. Tanya Jakusconek: Can you hear me? Tom Palmer: Loud and clear. Thank you, Tanya. Tanya Jakusconek: I have a couple. I'm going to start the first one maybe to Rob. I don't want to figure out what's happening at Tanami Phase 2 because I was quite surprised at the increase in capital to that extent of 25%. That's mainly new projects that are coming in. And so 25% was quite a big number for me and also the slippage of over a year was quite a slippage for me. So I'm trying to understand what exactly is happening there to have that amount of capital increase and slippage when we were quite advanced in that project? Tom Palmer: Thanks, Tanya, I'll pick that up and then pass for Rob for more color. The key milestone with the seeking a production shaft of that deep, so 1.5 kilometers a mile deep and 5.5 miles wide as you get to this point where we now have a hole essentially within weeks away from being open at that width and depth to be able to move down and survey the conditions of the wall all the way down to understand, therefore, the work you have to do in lighting that shaft to do whatever bolting and shop creating have to do and then to come down and do the establishment of the formwork and the installation on the concrete lighting. So we -- it was -- we're always building to this point in time where we will be able to survey the shaft and understand the time and materials required to complete the job. To put it in perspective for everybody on the call, if you've ever seen a skyscraper being built and the lift well going up with normally the branding of where it was building the building, you'll see the lift well going up in sort of a few meters once a week or every few days as they're putting the form work together and lifting that structure up to establish that well for the heart of that building. And you'll notice that, that takes many months to do that. We are about to start that process upside down for this shaft and it's a depth that's equivalent to 3 Empire State buildings that we're heading underground to put the formwork in place but each and every day, we're establishing formwork, pouring concrete, heading it set, moving forward, unpacking moving forward and other steps are into that serious task, and we have stepped back. Now that we have the shaft almost finished, we've done an initial survey. We've got to do the final survey, and then we can sit down with our contracting partners with absolute clarity on the condition of that shaft and the time of materials required over the next 18 to 24 months to line that shaft with concrete and the other supporting infrastructure all the way down. We haven't provided an update on Tanami 2 in terms of cost or schedule since the beginning of last year. So what you're seeing us update or give you a trend, whilst we do that remaining work is an indication now of the time and materials to complete that work with a clearer understanding of what the shaft looks like and a clear understanding of what the inflationary conditions are in the Australian market. So it is today's pricing and therefore, cost and schedule based upon a hole we now have largely open the ground that goes 1.5 kilometers down. So that sorts of increases aren't dissimilar to the escalations that we have seen as an industry, particularly in Australia over that 18-month period. But Rob, did you want to provide any color on top of that? Rob Atkinson: Yes. Thanks, Tanya. And I'll just build off a couple of things that Tom said. In general terms, aside from being at the moment in time where we can really get the specific quantities of what's going to take to line that shaft, the way in which I'd look at the increase is at -- about 60% of that is also due to COVID is -- some of the key factors in that is that half of our project team was based in WA, so actually getting them there. We had that 2 weeks where we had a COVID case at Tanami, where we had to shut down the whole operation, which ended up delaying the project by at least 6 weeks. And then with the absenteeism, labor shortages and logistics as well, that has also caused a significant delay as well as the cost. And I think the final point just to really echo what Tom said is that at the early part of the project, we obviously have engineering that we assume. But it's only now that we've actually done the work you can actually see the geology, the overbreak, the actual specifics. And those engineering amounts or the engineering maturity have changed quite markedly. So whilst to say about 60% of the capital increase is due to COVID, about 25% is really due to the engineering maturity amongst other things. But the last thing I'd certainly see, Tanya, is that, hopefully, you can see in the picture, there is significant work that has been accomplished. It's been done safely during a COVID pandemic. We're very, very proud of what we've achieved. But as Tom said, this is a point in time we're able to assess what have the last 18 months really meant to that project and this is the outcome. Tom Palmer: Thanks, Rob. And Tanya still an absolutely terrific project. This production shaft, the crusher chamber underneath opens up 1 of the great gold resources in the world. So still incredibly excited about this project as we reached this milestone and have a greater clarity on the cost and schedule to bring it home. Tanya Jakusconek: And maybe just on the other projects, and I know -- I think it was Josh asked about the CapEx at Yanacocha Sulfides. I'm just wondering, you mentioned that you've done the costing as of now, but you still are working on some steel and others. So as we get to December, when you have to make an investment decision on that one, we -- I just want to clarify, we are expecting potentially a further update on that one, including maybe Cerro Negro and Pamour? Tom Palmer: Why don't I pick up sulfides again, and Rob, just cover off where we're seeing Cerro Negro and Pamour sitting. We have -- as we've looked at some of the inflationary or escalation pressures on steel, in particular, and in providing that sulfides number, the go-forward number of $2.5 billion from full funds is starting to incorporate some early views and trending views as to what that number looks like. We still have to do the definitive estimate, which will actually give us some quoted numbers. But we are starting to incorporate in that number, some of those things in terms of the update this quarter. And Robert, do you want to cover Cerro Negro and Pamour? Rob Atkinson: Yes, I'll kick off with Pamour, Tanya, is that certainly good work is progressing there at the moment, that as you may remember, a large part of the more project is really about dewatering the current pit. So we're well on track for having all the dewatering installed and mechanically complete by the end of this year. So we actually take it forward to the investment committee in the latter part of this year for the actual layback. And we'll be able to provide the assumptions and the estimate there post that. But the good thing about Pamour is it's certainly progressing well. And certainly, in Cerro Negro, there's a lot of work going on there at the moment. We've got 3 portals, which we're working on and have established. So that's growing great guidance. I mentioned about the first blast as well. So we are working along there quite nicely and certainly, again, from the end of the year, we'll provide updates, but it's really going to be more about progress and perhaps an update in terms of development. We're still looking at $300 million development CapEx for Cerro Negro in total. But again, the key thing I just want to make across is the very good progress that we're making at Cerro Negro, in particular around productivities. Tanya Jakusconek: Okay. And then lastly, just another technical question. How should we think about CC&V going forward from an operational standpoint? I know you gave us guidance of reduction for this year, but I'm just keen on understanding this asset just longer term, how we should be thinking about it? Tom Palmer: Thanks, Tanya. I'm going to pick that up again, Rob will build on it. CC&V,moving to focus on open pit mining and heap-leach only. We will be working to have CC&V running as simply as it possibly can as efficiently as it possibly can because it's got a single-minded focus on mining efficiently and stacking on the heap-leach efficiently. And with that focus, we expect that we'll have a mine that's very long life because of that simplicity and that efficiency. Rob, do you want to add? Rob Atkinson: I think that's the key. For me, Tanya, itâs about how do we strip as much cost out of that operation, in particular, the operating support networks, how do we leverage off that, the proximity to Denver and obviously, the technology that we're working on with Caterpillar. But the key to this is the simple mining, leaching operation and which we are really expecting to give us significantly longer life -- a long-life asset that's an important part of the Newmont portfolio. Tanya Jakusconek: Is this going to be a 100,000 ounce producer? Is that how I should think about it? Tom Palmer: No, more than that, Tanya. I think it'd be pushing to get to 200,000, but between 150,000 and 200,000 run as efficiently as it can leading into, as Rob said, that that proximity to the demo is how we're approaching it as opposed to trying to have something that's maybe creating between 200,000 and 250,000 with all of the complexity of trying to produce concentrate and all the bandwidth that gets taken from running a mill for a relatively small part of the value of the operation. Operator: Our next question comes from Anita Soni from CIBC. Anita Soni: I'm just going to ask 1 more question about the dividend and then move down to Yanacocha Sulfides. But on the dividend, Nancy, you mentioned 40% of the -- you're using a 40% and being conservative currently. I'm calculating it nearly like 80%, 90% of your free cash flow for the past few quarters. So I just want to understand when you're -- are we talking about the same basis of where you guys are using your free cash flow for the dividend? Nancy Buese: Yes. Thanks, Anita. And so how we think about it is we look at our plan period and our forecasting, and we calibrate over the cash, we believe we will generate during our -- for us, it's a 5-year planning period and certainly over the much longer term. And so we -- yes, in terms of our forecasting and our modeling, our view is that we are around still the 40% payout calibration at the $1,800 gold price. Anita Soni: Okay. So you're factoring in perhaps better outlook rather than what's near term and happening currently? Nancy Buese: Well, I think you're seeing that. We're investing in our business and investing in our future, and those are the indicated returns from these capital projects from the cash flow they will generate when complete. Anita Soni: Okay. And then the second question was Yanacocha Sulfides. Just to be clear, how much do you plan on spending this year and that would not be included in the $2.5 billion -- current $2.5 billion estimate, correct? Tom Palmer: We're thinking -- we're looking at about $300 million to $400 million this year, Tanya, on the project, building up to full funds approval. So there's money we're spending on key critical path items that we're procuring. There's money that we're spending on using local contractors to do some of the early earthworks, which is a critically important part of ensuring that there is meaningful work for the communities in and around Cajamarca and Yanacocha. We are building the construction camp, 4,000 beds, and you still saw that in the photo, how advanced that was. My experience in these mega projects is that they often fall behind in the very early days because they don't have the camp accommodation for your workforce. So derisking the project with the construction of that camp this year. And the fourth key area for that spend is the engineering work that we're doing with Bechtel and Hatch that enables us to derisk the project because of the level of engineering that we have that allows us to then be comprehensive with our definitive estimate and our definitive schedule as we move towards full funds. So those are the 4 key areas that, that $300 million to $400 million is being directed to. And just if you picked it up, we actually, as we thought -- as we've looked through our development capital spend, we have adjusted our overall debt cap for this year down to $1.1 billion. Anita Soni: Okay. And then my last question is with the outlook in 2024. So I appreciate giving you guys -- giving us this 2023 similar numbers. So I assume that means the $6 million at about $900 cash costs. If we look into 2024, I mean, I think the original with Yanacocha with that -- the half -- the Tanami expansion, that's where you would have seen perhaps an uptick in production, would you expect at this stage 2024 to be similar to 2023 and 2022? Or are there any other areas where you could probably potentially see improvement into 2024 outside of the 2 projects? Rob Atkinson: Yes. Thanks, Anita. Yes, as inevitably, these projects are impacted and affected by experiences over the last couple of years and that timing is pushing out, we'll start to see those ounces come on in '25 rather than '24. So if you look beyond '23 to '24, you're going to see a relatively flat production profile year-on-year as those ounces then kick in in '25 and into '26 and then you've got Yanacocha Sulfides coming beyond that. So 2024 looking pretty consistent through 6 GOs, it's going to be the 7, 7.5 million ounces gold and around about the 6%. And that's really what we're aiming to do is to be a steady producer of gold at or around the 6 to 6.5 million ounces of gold, 7.5 million to 8 million ounces of gold equivalents, all up and '24 being pretty stable, '25 will start to kick up from Tanami, 2.5 and on. Operator: Our next question comes from Brian MacArthur from Raymond James. Brian MacArthur: Most of them asked, but I just want to follow up a little bit on the provisional pricing. And again, I guess when I comment on this, you realized price to zinc say for $1.08. Given where it closed, it seems awfully low. Did you have a lot of open pounds quarter-over-quarter to just -- you said 46% were settled in June, but even the June price was a lot higher than that. So there seems to be a big back half weighting. So can you just go through how that works again specifically at Penasquito. And the second part of your question then is as towns open now. And where I'm going with this is how much of this is cash versus accounting because all these questions we're writing a bit of cash flow over the last couple of quarters, there seems to be a pretty big base metal influence here that's sort of varying quarter-to-quarter. Tom Palmer: Yes. Thanks, Brian. And I think it's an important area to unpack in terms of how the quarter played out, but I'll pass across to Nancy and Iâve got Senior Officer available, so Iâve got Daniel Horton, who leads our commercial team and does a lot of those sales. But maybe with you Nancy an answer and then Daniel is available, too. Nancy Buese: Great to have you chime in, too. So we did have a big changeNEM Ratings Summary
NEM Quant Ranking
Related Analysis
Newmont Corporation's Upcoming Earnings and Financial Challenges
Newmont Corporation, trading as NYSE:NEM, is a leading gold mining company with operations worldwide. It is known for its extensive portfolio of gold and copper assets. As a major player in the mining industry, Newmont competes with other giants like Barrick Gold and AngloGold Ashanti. The company is set to release its quarterly earnings on February 20, 2025, with analysts estimating an earnings per share (EPS) of $1.11 and projected revenue of $5.3 billion.
Despite these projections, Newmont faces challenges, including a class action lawsuit alleging securities fraud. The lawsuit, filed by Levi & Korsinsky, LLP, and supported by Rosen Law Firm, targets losses incurred by shareholders between February 22, 2024, and October 23, 2024. The complaint points to disappointing EBITDA results, decreased production, and increased operating costs, which were disclosed on October 23, 2024.
The company has a price-to-sales ratio is 3.21, suggesting investors are paying $3.21 for every dollar of sales. The enterprise value to sales ratio is 3.57, showing the company's total valuation relative to its sales. The company maintains a moderate debt-to-equity ratio of 0.31, indicating a balanced approach to leveraging debt. Additionally, Newmont's current ratio of 1.96 suggests a strong ability to cover short-term liabilities with short-term assets, providing some financial stability amidst ongoing challenges.
Newmont Corporation's Upcoming Earnings and Financial Challenges
Newmont Corporation, trading as NYSE:NEM, is a leading gold mining company with operations worldwide. It is known for its extensive portfolio of gold and copper assets. As a major player in the mining industry, Newmont competes with other giants like Barrick Gold and AngloGold Ashanti. The company is set to release its quarterly earnings on February 20, 2025, with analysts estimating an earnings per share (EPS) of $1.11 and projected revenue of $5.3 billion.
Despite these projections, Newmont faces challenges, including a class action lawsuit alleging securities fraud. The lawsuit, filed by Levi & Korsinsky, LLP, and supported by Rosen Law Firm, targets losses incurred by shareholders between February 22, 2024, and October 23, 2024. The complaint points to disappointing EBITDA results, decreased production, and increased operating costs, which were disclosed on October 23, 2024.
The company has a price-to-sales ratio is 3.21, suggesting investors are paying $3.21 for every dollar of sales. The enterprise value to sales ratio is 3.57, showing the company's total valuation relative to its sales. The company maintains a moderate debt-to-equity ratio of 0.31, indicating a balanced approach to leveraging debt. Additionally, Newmont's current ratio of 1.96 suggests a strong ability to cover short-term liabilities with short-term assets, providing some financial stability amidst ongoing challenges.
Newmont Corporation's (NYSE:NEM) Impressive Quarter Earnings
- Earnings Per Share (EPS) of $0.72, surpassing the anticipated $0.617, indicating strong operational efficiency.
- Revenue of $4.4 billion, exceeding forecasts and showcasing significant growth from the previous year.
- Financial ratios such as the debt-to-equity (D/E) ratio of 0.31 and current ratio of 2.15 highlight a solid financial structure and short-term health.
Newmont Corporation (NYSE:NEM), a leading entity in the gold and copper mining industry, recently disclosed its earnings for the quarter, revealing figures that not only highlight its financial health but also its ability to exceed market expectations. On July 24, 2024, NEM reported an earnings per share (EPS) of $0.72, surpassing the anticipated $0.617, and a revenue of $4.4 billion, which exceeded the forecasted $4.13 billion. This performance underscores the company's robust operational efficiency and market position, especially when considering the competitive landscape of the mining sector.
The reported EPS of $0.72, which outdid the Zacks Consensus Estimate of $0.53 per share, represents a significant leap from the $0.33 per share earned a year ago. This 35.85% earnings surprise continues a trend for Newmont, following a previous quarter where earnings of $0.55 per share beat forecasts by 57.14%. Such consistent outperformance in earnings highlights Newmont's strategic planning and execution capabilities, positioning it favorably among investors and stakeholders.
Revenue growth is another area where NEM shines, with the reported $4.4 billion for the quarter ending June 2024 not only surpassing the Zacks Consensus Estimate by 26.24% but also marking a substantial increase from the $2.68 billion recorded in the same period last year. This growth trajectory is indicative of Newmont's expanding operations and its ability to capitalize on market opportunities, further solidifying its standing in the mining sector.
Financial ratios provide deeper insights into Newmont's valuation and financial health. Despite a negative price-to-earnings (P/E) ratio of approximately -20.62, suggesting market skepticism, the company's price-to-sales (P/S) ratio of about 4.20 and an enterprise value to sales (EV/Sales) ratio of roughly 4.74 reflect a valuation that investors are willing to pay for its sales. Moreover, the enterprise value to operating cash flow (EV/OCF) ratio of around 20.32 offers a perspective on the company's valuation concerning its operating cash flow, indicating a positive outlook from the cash flow perspective.
The debt-to-equity (D/E) ratio of 0.31 portrays a moderate level of debt, suggesting a balanced financial structure, while the current ratio of about 2.15 indicates strong short-term financial health. These metrics, combined with Newmont's impressive earnings and revenue performance, paint a picture of a company that is not only navigating the complexities of the mining industry successfully but is also laying down a solid foundation for sustained growth and profitability.
Newmont Corporation's (NYSE:NEM) Impressive Quarter Earnings
- Earnings Per Share (EPS) of $0.72, surpassing the anticipated $0.617, indicating strong operational efficiency.
- Revenue of $4.4 billion, exceeding forecasts and showcasing significant growth from the previous year.
- Financial ratios such as the debt-to-equity (D/E) ratio of 0.31 and current ratio of 2.15 highlight a solid financial structure and short-term health.
Newmont Corporation (NYSE:NEM), a leading entity in the gold and copper mining industry, recently disclosed its earnings for the quarter, revealing figures that not only highlight its financial health but also its ability to exceed market expectations. On July 24, 2024, NEM reported an earnings per share (EPS) of $0.72, surpassing the anticipated $0.617, and a revenue of $4.4 billion, which exceeded the forecasted $4.13 billion. This performance underscores the company's robust operational efficiency and market position, especially when considering the competitive landscape of the mining sector.
The reported EPS of $0.72, which outdid the Zacks Consensus Estimate of $0.53 per share, represents a significant leap from the $0.33 per share earned a year ago. This 35.85% earnings surprise continues a trend for Newmont, following a previous quarter where earnings of $0.55 per share beat forecasts by 57.14%. Such consistent outperformance in earnings highlights Newmont's strategic planning and execution capabilities, positioning it favorably among investors and stakeholders.
Revenue growth is another area where NEM shines, with the reported $4.4 billion for the quarter ending June 2024 not only surpassing the Zacks Consensus Estimate by 26.24% but also marking a substantial increase from the $2.68 billion recorded in the same period last year. This growth trajectory is indicative of Newmont's expanding operations and its ability to capitalize on market opportunities, further solidifying its standing in the mining sector.
Financial ratios provide deeper insights into Newmont's valuation and financial health. Despite a negative price-to-earnings (P/E) ratio of approximately -20.62, suggesting market skepticism, the company's price-to-sales (P/S) ratio of about 4.20 and an enterprise value to sales (EV/Sales) ratio of roughly 4.74 reflect a valuation that investors are willing to pay for its sales. Moreover, the enterprise value to operating cash flow (EV/OCF) ratio of around 20.32 offers a perspective on the company's valuation concerning its operating cash flow, indicating a positive outlook from the cash flow perspective.
The debt-to-equity (D/E) ratio of 0.31 portrays a moderate level of debt, suggesting a balanced financial structure, while the current ratio of about 2.15 indicates strong short-term financial health. These metrics, combined with Newmont's impressive earnings and revenue performance, paint a picture of a company that is not only navigating the complexities of the mining industry successfully but is also laying down a solid foundation for sustained growth and profitability.
Newmont Corporation Shares Plunge 13% Following Q2 Miss
Newmont Corporation (NYSE:NEM) shares plummeted around 13% on Monday following the company’s reported Q2 results, with EPS of $0.46 coming in worse than the Street estimate of $0.68, impacted by higher operating costs, provisional pricing headwinds, and Penasquito profit sharing expenses. Revenue was $3.06 billion, compared to the Street estimate of $3.15 billion.
The company's free cash flow outlook has materially weakened over 2022-2024 as compared to prior expectations, and financial flexibility is now viewed as below average.
The analysts at RBC Capital believe it is reasonable to expect the company’s dividend policy to change later in 2022 to allow for greater latitude at current/lower gold prices. The analysts lowered their price target to $60 from $77, while reiterating their Sector Perform rating.
