Q3 2024 Earnings Summary
- Successful ramp-up of PC2-3 at Cadia, replacing declining production from PC1 and PC2
- Disciplined capital allocation with focus on high-return projects
- Maintaining stable production and cost discipline into 2025 despite challenges
- Higher-than-expected cost inflation, especially in labor and contracted services, is impacting Newmont's costs, with escalations beyond initial assumptions and expected to continue into 2025, potentially reducing margins and profitability.
- Production challenges at key operations like Lihir and Cadia are leading to lower-than-anticipated gold output in 2025, with Lihir expected to produce approximately 250,000 ounces less than initially guided due to lower throughput and mining adjustments. ,
- Elevated sustaining capital expenditures, particularly for critical tailings work at Cadia, are expected over the next few years, resulting in higher costs and potential pressure on free cash flow, which may affect shareholder returns. , ,
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +85% | The acquisition of Newcrest significantly boosted sales volumes of gold and copper, while higher realized prices for these metals further lifted revenue. Market tailwinds, such as strong gold demand, also contributed. Going forward, management expects integration synergies and elevated gold prices to sustain robust revenue growth. |
Gold Sales | +64% | Higher production at newly acquired sites drove much of the increase, alongside an average realized gold price that rose from prior year levels. Company-specific initiatives to improve throughput and the addition of Newcrest’s operations underpinned this growth. Further upside may come from continued operational efficiencies and favorable market sentiment. |
Copper Sales | +266% | The Newcrest transaction added substantial copper output, while average realized copper prices increased from $3.26 to $4.47 per pound. This reflects both underlying global copper demand and the immediate benefit of acquiring copper-producing sites. Continued infrastructure investment and electrification trends globally could support further sales momentum. |
Silver Sales | +2,840% | The jump primarily reflects a low base in the prior year and new silver volume from the Newcrest portfolio, including sites where silver is a byproduct. Recovering operations and improved production output contributed as well. Future silver sales may remain sensitive to operational throughput and precious metals market dynamics. |
Net Income | +>480% | Substantially higher revenues from gold, copper, and silver, combined with integration synergies and improved cost management, drove profitability. While higher tax expenses and transaction-related costs placed partial pressure, they were more than offset by the jump in top-line earnings. Going forward, management anticipates further efficiency gains that could support net income growth. |
EPS (Diluted) | +280% | Increased net income and relatively stable shares outstanding resulted in significantly higher EPS. Additional benefits came from cost discipline and lower depreciation in some legacy assets. Looking ahead, business integration progress and ongoing commodity price strength are likely to continue supporting higher earnings per share. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Gold production | Q4 2024 | no prior guidance | 1.8 million ounces | no prior guidance |
All-in sustaining costs | Q4 2024 | no prior guidance | $1,475 per ounce | no prior guidance |
Development capital | Q4 2024 | no prior guidance | $320 million | no prior guidance |
Free cash flow | Q4 2024 | no prior guidance | strong | no prior guidance |
Production from Nevada Gold Mines & Pueblo Viejo | Q4 2024 | no prior guidance | significantly increase | no prior guidance |
Labor inflation | FY 2024 | no prior guidance | 4% | no prior guidance |
Gold production | FY 2025 | no prior guidance | 5.6 million ounces | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Consistent focus on production growth from key assets | Mentioned in each prior period (Q2, Q1, Q4) with ongoing stripping at Boddington, higher grade sequencing at Peñasquito, and expansions at Tanami and Cadia. | Boddington, Peñasquito, Lihir, Tanami, Cadia, and Ahafo updates continued, with notable emphasis on mine sequencing changes and planned maintenance work at Lihir and higher-grade access at Peñasquito. | Recurring topic across all periods with incremental details and continued emphasis. |
Non-core asset divestments to raise capital and strengthen the balance sheet | Consistently discussed in Q2, Q1, and Q4 with multiple assets in active sale processes and a target of $2B in proceeds. | Announced sales agreements (Akyem and Telfer/Havieron) to reach at least $2B in gross proceeds, further bolstering the balance sheet. | Consistent focus, significantly progressed by Q3 2024 with definitive agreements signed. |
Synergies and cost reductions from the Newcrest integration | Regularly covered since Q4 2023, with targets of up to $500M in run-rate synergies and incremental updates in Q2 and Q1 about specific gains at Lihir, Red Chris, and Cadia. | Achieved the $500M synergy run rate, driven by G&A reductions, supply-chain efficiencies, and the full potential program at Cadia, Red Chris, and Lihir. | Ongoing synergy realization; fully reached the announced run-rate target by Q3. |
Shareholder returns through dividends and share buybacks | Consistently mentioned in Q2, Q1, and Q4 with share repurchase programs and fixed base dividends, guided by free cash flow and asset sale proceeds. | 9.4M shares repurchased and a declared quarterly dividend of $0.25 per share, returning $786M to shareholders in Q3 2024. | Steady commitment to returning capital through dividends and buybacks, with an expanded buyback program by Q3. |
Elevated sustaining capital and reclamation expenditures impacting free cash flow | Q2 and Q1 references to increased reclamation at Yanacocha and higher sustaining capital at Cadia, contributing to free cash flow headwinds. No specific mention in Q4 2023. | Cited $273M in reclamation year-to-date, plus $107M in Q3 for Yanacocha; higher sustaining capital at select operations slightly offsetting benefits of stronger Q4 volumes. | Continued mention of higher outlays for reclamation, constraining free cash flow. |
Operational risks and project delays (maintenance shutdowns, gear replacements, mine sequencing) | Q2 noted a 120-day shutdown at Lihir and Ahafo’s girth gear replacement. Q1 discussed planned shutdowns at Lihir and unit replacement at Ahafo. Q4 2023 highlighted Tanami 2 expansion delays. | Lihir autoclave shutdown driving a 30% step-up in Q4 production vs. Q3; Ahafo benefited from a completed girth gear replacement, boosting throughput. Mine sequencing at Lihir lowers 2025 production guidance. | Continual operational updates with new schedule impacts for Lihir and Ahafo in Q3. |
Emerging labor cost inflation (12–14%) affecting margins | No mention in Q2, Q1, or Q4 [N/A]. | 12–14% contractor labor inflation highlighted as a major driver of cost pressures into 2025. | New topic in Q3 2024, signaling near-term margin pressure from wage escalations. |
Future projects like Red Chris and Wafi-Golpu | Q4 2023 noted they were in the pipeline but not in the 5-year guidance; no mention in Q2 or Q1. | Mentioned as part of synergy achievements and ongoing JV discussions (Red Chris optimizations, Wafi-Golpu lease negotiations), yet facing capital-allocation competition. | Occasional focus; reemerged in Q3 for integration updates and partnership progress. |
Revised lower production guidance for certain assets (Lihir, Brucejack) | No mention of specific revised lower guidance in Q2, Q1, or Q4, though Lihir maintenance and Brucejack improvements were discussed. | Lower 2025 output (Lihir down 250K oz, Brucejack down 100K oz) due to mine-sequencing changes and more drilling/development needed. | New explicit guidance revision in Q3 2024. |
Productivity improvements at Cerro Negro to restore targeted production levels | Minimal detail in Q2, Q1, and Q4. Brief Q2 references to restart and safe mining; no major mention of productivity targets. | Management is “100% focused on productivity” to return Cerro Negro to expected levels, citing all equipment now available. | Reintroduced emphasis in Q3, aiming to recover from prior shortfalls. |
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Cost Outlook and Inflation
Q: Will unit costs moderate over time given higher AISC?
A: Management acknowledges that all-in sustaining costs are $100 higher this year than expected and that previous forecasts did not include any escalation for inflation. They expect current cost levels to trend into 2025 due to higher direct costs, especially from increased contracted labor costs, which make up 50% of their cost structure. -
2025 Production Guidance
Q: Is 2025 gold production base now 5.6 million ounces?
A: Due to lower expected production at Lihir and Brucejack, management indicates that 2025 gold production from the core portfolio is projected to be around 5.6 million ounces, down from the previously anticipated 6 million ounces. -
Impact of Inflation and Integration Challenges
Q: Is higher cost due to inflation or integration issues?
A: Management explains that higher costs stem from both industry-wide inflation, particularly in contracted labor, and integration challenges at operations like Lihir, Cadia, and Cerro Negro. They also mention increased sustaining capital expenditures and efforts to reduce costs. -
Future Production and Cost Expectations
Q: Should we expect 5.5 million ounces at $1,500 AISC?
A: Management suggests that while costs may remain elevated due to inflation and sustaining capital needs, they anticipate new lower-cost ounces from projects coming online in the next few years. Over the long term, they expect to maintain an average production rate around 6 million ounces of gold. -
Multi-Year Guidance Timing
Q: When will detailed multi-year guidance be provided?
A: Management plans to provide greater granularity on 2025 numbers in February next year, after completing the divestment program and focusing on their core operations and projects in execution. -
Cadia Production Outlook
Q: Will Cadia reach 35 Mtpa production target?
A: Management confirms ongoing work on tailings dam expansions and balancing permitting requirements to achieve optimal capital efficiency at Cadia. They are focused on repairing the southern wall of the northern dam and proceeding with further expansions. -
Cerro Negro Production Target
Q: When will Cerro Negro reach original production target?
A: Management is focusing on productivity improvements to bring Cerro Negro back to expected baseline operations. All mining areas and equipment are available; the emphasis is on enhancing productivity to meet targets.
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