Newmont just reported its best quarter ever

Newmont just reported its best quarter ever
Written by:
Jayson Derrick
29th October, 23:25
  • Newmont Mining reported what it described as its "best quarterly financial performance" in history.
  • The company took full advantage of soaring gold prices in the quarter.
  • Newmont touted its dividend record.

Gold mining giant Newmont Corporation (NYSE: NEM) reported Thursday morning what management described as its “best quarterly financial performance” in history.

Best quarter in a century

Newmont was founded in 1921 and nearly a full century later the company is operating at its peak performance. The world’s largest gold miner that also produces copper, silver, zinc, and lead reported third quarter EPS of 86 cents versus expectations of 84 cents on revenue of $3.17 billion versus expectations of $3.3 billion.

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Even though revenue fell short of expectations, Newmont recorded adjusted EBITDA of $1.7 billion and free cash flow of $1.3 billion. The best quarter in history comes at a time of record gold prices and helped the company increase its dividend by 60% in October on top of a 79% increase in January.

The company ended the quarter with $4.8 billion of consolidated cash, $7.8 billion of liquidity, and net debt to adjusted EBITDA ratio of 0.4 times.

The company’s $1.60 per share dividend payout gives Newmont the status as offering the highest payout in the gold sector, the company said in its earnings release. The dividend translates to a yield of 2.7% and this is a premium to the S&P 500 index.

This shouldn’t come as a surprise as gold mining stocks are outperforming the commodity itself. Here is a report from July on how that is possible.

“I am confident that our world-class portfolio is best positioned to generate industry-leading value and returns for our shareholders,” Newmont CEO and President Tom Palmer said in the earnings release.

Major gold gains

Newmont’s average realized price for gold in the quarter soared by $437 per ounce year-over-year to $1,913. Gold wasn’t the only commodity to see higher prices as copper rose 62 cents per pound to $2.99, silver rose $4.51 an ounce to $21.69, and zinc rose 20 cents per pound to $1.01. 

Lead prices were down 11 cents per pound to 73 cents although lead represents the least amount of sales at around $30 million.

Other quarter highlights

During Newmont’s quarter, the company produced 1.5 million attributable ounces of gold and produced 273,000 attributable gold equivalent ounces from co-products. By comparison, the company produced 1.541 ounces of gold in the same quarter last year and the decrease is attributed to COVID-19 impacts..

The company also reported costs applicable to sales (CAS) of $756 per ounce, marking a 3% increase due to higher stripping ratios at certain mines, lower surface grades, and higher gold price-related royalties. 

All-in sustaining costs (AISC) of $1,020 per ounce marks a 3% increase from last year, mostly due to higher CAS per ounce and COVID-related expenses.

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