Newmont Corporation Q3 2024 Earnings Call Review

In a recent earnings call, Newmont Corporation (NYSE: NEM) reported solid financial results for Q3 2024, highlighting updates on production forecasts, cost management strategies, and project developments. CEO Thomas Palmer reaffirmed the company's commitment to safety and operational efficiency. Despite facing challenges such as rising labor costs and a tragic incident, Newmont remains on track with its production and divestment plans. The company projects a decrease in all-in sustaining costs, concentrating on disciplined capital allocation for long-term shareholder value.

Key Takeaways

• Nearly 1.7 million ounces of gold produced, along with 430,000 gold equivalent ounces from other metals in Q3 2024.
• Generated $1.6 billion in cash flow from operations and $760 million in free cash flow during the quarter.
• Announced divestments aiming for at least $2 billion in proceeds from non-core assets.
• Initiated a $2 billion share repurchase program, returning $786 million to shareholders.
• Adjusted EBITDA at $2 billion, with adjusted net income of $0.81 per diluted share.
• On track to meet Q4 2024 gold production target of approximately 1.8 million ounces.
• Expected decrease in all-in sustaining costs to about $14.75 per ounce in Q4.
• Long-term target of approximately 6 million ounces of gold production annually, with variability expected.

Company Outlook

• Newmont intends to maintain a strong balance sheet focused on optimizing costs and production efficiency.
• Anticipates producing around 1.8 million ounces of gold in Q4 2024.
• Projects a 2025 production target of approximately 5.6 million ounces, slightly down from a previous expectation of 6 million ounces.

Challenges and Highlights

Bearish Highlights

• Experienced five fatalities in a year, prompting a renewed focus on safety.
• Projected gold production from Brucejack in 2025 is 100,000 ounces lower than earlier guidance.
• Increased production costs, with contracted labor making up 50% of the cost structure.

Bullish Highlights

• Ahafo South mine showed nearly a 15% increase in gold production in Q3.
• Significant savings and efficiencies achieved in general and administrative costs and supply chain.
• Progressing projects at Tanami, Ahafo North, and Cadia expected to yield substantial gold and copper in the next decade.

Q&A Overview

During the Q&A, management discussed the medium-term perspective on cost reductions despite recent increases in all-in sustaining costs. They emphasized the importance of maintaining tailings facilities and anticipated elevated sustaining capital spending in the coming years. Labor cost inflation has remained a significant challenge, with an industry-standard labor inflation rate of about 4% for 2024.

In conclusion, Newmont Corporation is navigating global market complexities by focusing on safety, cost management, and disciplined capital allocation despite increased production costs and a slight reduction in long-term production targets.

InvestingPro Insights

InvestingPro data offers additional context, showing potential positive outlooks for Newmont's financials despite challenges highlighted in the earnings call. Net income is expected to grow this year, consistent with the company's cost management focus, while maintaining dividend payments for 54 consecutive years underscores commitment to shareholder value. Additionally, solid market performance over the past three months aligns with strategic initiatives like asset divestitures and a share repurchase program.

Full Transcript

Operator: Good morning, and welcome to Newmont's Third Quarter 2024 Earnings Call.

Thomas Palmer: Thank you, operator. Good morning, everyone. Today, I'm joined by my executive leadership team and we'll be available for questions at the end of the call.

Thomas Palmer: Before discussing performance, we remember Antoine Fortin, who tragically lost his life at an operation. We're committed to improving safety systems and culture.

Natascha Viljoen: Our operational priorities include ensuring safety, enhancing productivity, and guiding non-core asset divestment.

Karyn Ovelmen: In Q3, we reported strong results. Adjusted EBITDA was $2 billion and free cash flow was $760 million.

Thomas Palmer: We expect production to remain strong in the upcoming quarters and continue delivering value to our shareholders.

Operator: Questions from analysts followed, addressing various operational and financial aspects.

Operator: The conference has now concluded. Thank you for attending today's presentation.