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Despite gold hitting all-time highs almost daily, Newmont Corp. shares were down about 6% this year to Thursday’s market close, while rival Barrick Gold Corp.’s stock had fallen about 2%. Shares of both companies gained Friday as gold set a fresh record high, with Newmont rising the most since February.“I’ve never seen it dislocate quite like this,” said Peter Grosskopf, chairman of SCP Resources Finance LP and former chief executive officer of Sprott Inc.
Newmont and Barrick went on deal-making sprees in recent years, snapping up smaller companies and eclipsing rivals in terms of scale. The logic behind this was clear: With investors increasingly wary about the sector, the companies wanted to give the gold-miner curious a place to invest.Since then, though, miners have seen margins shrink as inflationary pressures persist, with most companies spending more on labor, equipment and processing than expected.
At Newmont, total operating expenses were 43% higher than analysts expected in 2023, according to data compiled byThe Denver-based company also faces skepticism from shareholders about its $15 billion acquisition of Newcrest Mining Ltd., which is poised to deliver less gold production than anticipated this year and involves selling several mines that Newmont acquired during its 2019 takeover of Goldcorp Inc.
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