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Key Highlights:
- Newmont Corporation (NYSE:) reported mixed third-quarter earnings with adjusted EPS of $0.81, below expectations.
- Gold production beat forecasts, but rising costs pushed all-in sustaining costs (AISC) above projections.
- The Board approved a $2 billion expansion of its share buyback program, with $750 million repurchased so far.
Newmont Corporation (NYSE:NEM), the world’s largest gold producer, delivered mixed third-quarter earnings, with its adjusted earnings per share (EPS) missing market expectations. While gold production exceeded forecasts, the company grappled with rising costs, particularly at its Lihir and Penasquito operations, which pushed all-in sustaining costs (AISC) higher than projected.
Earnings and Costs Pressure Performance
Newmont’s third-quarter adjusted EPS came in at $0.81, falling short of both Jefferies’ estimate of $0.85 and the Street consensus of $0.86. Higher production costs, especially at key sites like Lihir and Penasquito, contributed to the earnings miss. Despite the cost pressures, Newmont generated stronger-than-expected revenue of $4.61 billion, surpassing Jefferies’ forecast of $4.34 billion.
One key challenge for the quarter was the company’s all-in sustaining costs (AISC), which rose to $1,611 per ounce, significantly higher than the expected $1,374 per ounce. Newmont acknowledged that these increased costs were due to operational challenges and elevated production costs at certain sites. The company anticipates a reduction in unit costs during the fourth quarter, but full-year AISC is still expected to exceed initial guidance by around 9%.
Strong Gold Production and Free Cash Flow
On the production front, Newmont delivered 1.67 million ounces of attributable gold, beating the forecast of 1.60 million ounces. Additionally, the company reported free cash flow (FCF) of $760 million, well above Jefferies’ estimate of $584 million, underscoring the resilience of Newmont’s operations despite the cost challenges.
Expanded Share Buyback Program
In a move to return capital to shareholders, Newmont’s Board of Directors approved a $2 billion expansion of its share buyback program, adding to the previously announced $1 billion plan. To date, Newmont has repurchased $750 million worth of shares under the buyback program, signaling its commitment to returning value to shareholders even as the company faces near-term operational challenges.
Looking Ahead
While Newmont continues to see strong gold production, the company will focus on addressing its rising costs, particularly at Lihir and Penasquito. The company remains optimistic about reducing unit costs in the fourth quarter, but full-year AISC is projected to remain elevated.
Shares of Newmont dropped 9.6% on Thursday morning, trading around $52.16 in New York, as the market digested the mixed earnings report and cost concerns. Despite these challenges, Newmont’s expanded buyback program and strong gold output highlight its commitment to driving long-term shareholder value amidst a volatile market environment.
