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Highlights:
Newmont's recent quarterly results fell short of expectations, leading to a 19% decline in share price and a reversal of earlier gains relative to gold prices.
Despite challenges, Macquarie continues to recognize Newmont as a leading name in gold leverage due to its size, sustainable dividends, and potential for asset sales.
The company's 2025 production forecast has been downgraded, reflecting anticipated challenges in operations and costs.
Newmont Corporation (ASX:NEM) has faced significant setbacks following the release of its quarterly results, which revealed lower production levels and higher operational costs. The company’s shares dropped 19% over two days, substantially impacting both Newmont and the broader gold sector. The disappointing performance has erased much of Newmont's year-to-date outperformance relative to gold prices, shifting market sentiment.
In its Q1 2025 results, Newmont reported a net income per share of US$0.81, falling short of the consensus estimate of US$0.86. The average realized gold price stood at US$2,518 per ounce, while all-in sustaining costs increased to US$1,611 per ounce, significantly higher than market expectations of US$1,445. Key mines such as Lihir, Cerro Negro, and Akyem have contributed to the rise in costs.
Management indicated that production for 2025 is expected to average 6 million ounces, a reduction from earlier forecasts of 6.6 million ounces. Notably, Newmont's outlook for production was marked by a downgrade of approximately 9% from previous estimates, impacting long-term projections. Additionally, sustaining capital expenditures are projected to average US$1.8 billion over the next few years.
Despite these challenges, analysts at Macquarie maintain that Newmont remains the "go-to name for gold leverage." This perspective is supported by the company’s status as the only gold producer in the S&P 500, its commitment to sustainable dividends—including a maintained annual dividend of $1.00 per share—and plans for an increased buyback program totaling US$3 billion. Newmont's divestiture strategy, which recently included a sale of the Akyem Project for significantly more than its net present value, further underscores its potential for generating cash flow in the current gold market environment.
