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    Newmont Corporation (NEM)

    Q4 2023 Earnings Summary

    Reported on Jan 10, 2025 (Before Market Open)
    Pre-Earnings Price$33.43Last close (Feb 21, 2024)
    Post-Earnings Price$33.00Open (Feb 22, 2024)
    Price Change
    $-0.43(-1.29%)

    What went well

    • Operational issues from 2023 are largely behind Newmont, positioning the company for improved performance in 2024 and beyond. The only remaining issue is the defective girth gear at Ahafo, which is being addressed in the first half of the year.
    • Growth in production is expected from Newmont's Tier 1 portfolio, driven by investments in key projects like block caves at Cadia, Tanami expansion, and Ahafo North, with significant development capital allocated to these projects.
    • Proceeds from divestitures and free cash flow will be used to strengthen the balance sheet and return capital to shareholders, prioritizing the maintenance of a $3 billion cash balance, reducing debt to $8 billion, and then funding a $1 billion share repurchase program.

    Q&A Summary

    1. Asset Divestments
      Q: What's the status of divesting the 6 identified assets?
      A: The divestment process for the six high-quality assets in Canada, Ghana, and Australia is just starting. We aim to focus on our Tier 1 portfolio and will manage the sale of these assets through three separate processes this year. Proceeds will first maintain our $3 billion cash balance, then reduce debt to around $8 billion, and any excess will go toward share repurchases.

    2. 5-Year Guidance Clarity
      Q: What's included in the 5-year guidance and development capital?
      A: Our 5-year outlook includes only our go-forward Tier 1 portfolio, excluding the six assets slated for sale. It incorporates production from four approved projects: two block caves at Cadia, the shaft at Tanami, and Ahafo North. These projects account for much of the average $1.3 billion in annual development capital. Projects like Red Chris and Wafi-Golpu are not included, as we only guide to fully funded projects.

    3. Confidence Post-Newcrest Integration
      Q: Why release the 5-year outlook earlier than planned?
      A: Integration of the Newcrest assets has gone very well. We installed Newmont general managers at each site from day one, which has enhanced our confidence. This progress allowed us to provide not only 2024 numbers but also a 5-year view now.

    4. Operational Issues Resolution
      Q: Are the operational issues from 2023 resolved?
      A: Most operational issues from 2023 are behind us. The defective girth gear at Ahafo will be replaced in the first half of this year. In 2024, both Boddington and Peñasquito are in stripping campaigns, leading to lower grades, but higher grades are expected to return at Boddington in 2026.

    5. Downside Risks to Guidance
      Q: Any key downside risks to achieving guidance?
      A: Nothing out of the ordinary. Plans are built from the bottom up, incorporating past performance and some stretch targets. We've accounted for unknowns post-acquisition to ensure our 2024 plans and budget are robust.

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