Most foreign reports of the second quarter results highlighted how well the world’s biggest gold miner performed, particularly in terms of gold and copper production, cash flows, and earnings.
However, these reports failed to mention that, if not for the all-paper takeover of Newcrest, Newmont's performance would have been flat to weak, consistent with results from the past couple of years.
All analysts agreed on the boost Newmont’s (ASX:NEM) revenues, cash flow, and earnings received from the higher gold price in the quarter—up 4.2% and reaching record levels. Copper also traded at or near all-time highs in May and June.
Newmont reported that its attributable gold production rose to 1.61 million ounces in the June quarter, up from 1.24 million ounces a year earlier. Analysts had expected production of 1.56 million ounces, so this was a positive surprise.
The average realized gold price was $2,347 per ounce in the quarter ended June 30, compared to $1,965 per ounce a year earlier.
It is no wonder the company booked net income of $857 million, up from $266 million in the June quarter of 2023. Higher average prices for gold, copper, and zinc drove this result, as did the contribution from acquiring Newcrest.
However, none of the reports analyzed the influence Newcrest might have had on Newmont. For instance, Newcrest’s June 2023 quarter saw it produce more than 556,000 ounces of gold, which would have significantly benefited Newmont.
Newmont's all-in sustaining cost, a key cost measure for gold miners, rose to $1,562 per ounce of gold from $1,472 per ounce a year earlier.
Newmont expects total attributable gold production of 6.9 million ounces in 2024, compared to analysts' estimates of 6.8 million ounces. This is also a million ounces more than before acquiring Newcrest, which produced 2.1 million ounces of gold in 2022-23, its last full year (to June 30).
Newmont reported 477,000 gold-equivalent ounces from copper, silver, lead, and zinc, including 38,000 tonnes of copper. Given that Newcrest produced 34,978 tonnes of copper in the June 2023 quarter, Newmont’s existing copper operations underperformed.
High prices for gold and copper enabled Newmont to generate $594 million in free cash flow, reduce nominal debt by $250 million, and repurchase $250 million of shares, much of which was due to the higher cash flows from Newcrest in the quarter.
“We continued to advance our divestiture program and, to date, have announced $527 million in proceeds this year,” CEO Tom Palmer said in the release.
“As we head into the second half of the year, we remain confident in our ability to continue executing on shareholder returns, meet our full-year guidance, and deliver on our commitments.”
Newmont reiterated that it expects production to grow in the next two quarters, especially in the three months to December.
