What does 2021 have in store for Newmont Corporation?

Source: Roman Bodnarchuk, Shutterstock

Summary

  • Leading producer of gold, Newmont registered a 22% increase in gold production in September quarter.
  • The company has unveiled a gold production guidance of 6.5 Moz for 2021.
  • Newmont is set to buy back shares worth USD 1 billion over the next 18 months.

Diverse mineral explorer Newmont Corporation (NYSE:NEM, TSX:NGT) ranks as one of the leading gold companies. It is also engaged in the mining of silver, copper, lead and zinc.

Newmont’s operations are spread over four continents. In Africa, the Company operates two gold projects - Ahafo and Akyem in Ghana.

In Australia, where the company entered the mining industry in 2002 through the acquisition of Normandy Mining, Newmont operates one gold mine- Tanami and one gold-copper mine-Boddigton. In North America, the Company operates six mines; while in South America, it owns four mines.

Kalkine Image, Data Source: Company’s Reports

Given the backdrop, let us quickly skim through the Company’s performance in the last reported quarter and guidance for the upcoming period.

Robust Q3 Performance  

The Company produced 1.5Moz of gold during the September 2020 quarter, 22% higher from 1.26Moz in the previous quarter.

Cost Applicable to Sales (CAS) stood at USD 756/oz while All in Sustaining Cost (AISC) was USD 1,020/oz for the quarter. The average realized price of gold was USD 1,913 per ounces during the quarter.

Image Source - ©Kalkine Group 2020

The production of other commodities including copper, zinc, silver, and lead stood at 273,000oz of gold equivalent.

The total revenue of the Company reached USD 3.17 billion for Q3 ended 30 September 2020, up 17 per cent from the prior year quarter. The higher realized price of gold increased the revenue substantially. The net income from continuing operations was USD 611 million or USD 0.76 per diluted share.

Guidance for 2021 

Image Source - ©Kalkine Group 2020

  1. Gold Production Guidance: Newmont has set production guidance at 6.5 Moz for 2021. Production is expected in the range of 6.2 to 6.7 Moz for the year 2023 and 6.5-7 Moz through 2025.
  2. AISC Guidance: For 2021, AISC guidance is USD 970 per ounce of gold. For subsequent years, the AISC guidance is expected in range of USD 850-950 for 2022 and USD 825-USD 925 for the year 2023.
  • Capital Guidance: Newmont has pegged capital guidance at USD 950 million for the current year and in a range of USD 900-1,100 million in the long term through the year 2025.
  • ESG Commitment: The Company has set a target of 30% reduction in carbon emissions by 2030 and aims to become carbon-neutral by the year 2050. Newmont will allocate USD 500 million towards climate change initiatives through the year 2025.

Newmont Share Buyback Scheme

During mid-January 2021, the Company announced board approval for the repurchase of ordinary shares valued at up to USD 1 billion from the open market. The share repurchase program is planned to be completed over a period of 18 months. The Company has highlighted that its capital allocation philosophy is focused on balancing steady business investments, maintaining strength and flexibility in its financial position, and delivering better returns to shareholders.

In 2020, by means of the USD 1.0 billion program, the Company retired nearly 22 million shares at USD 45 per share.   

Newmont President & CEO Tom Palmer has stated that the share repurchase program demonstrates the confidence that the Company has in its world-class assets and portfolio along with the discipline in operating model that translates into better returns for its shareholders.

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