Costs continue to be an issue
Newmont has reported net income of US$924 million for the quarter to September 30 on revenues of $4.6 billion, 7.8% higher than in the June quarter and 488% higher than a year ago.Newmont produced 2.1Moz of gold equivalent in the quarter, comprising 1.
7Moz of gold and 430,000oz of equivalent from copper, silver, zinc, and lead. This was marginally higher than in the June quarter and 55.5% higher than a year ago, since when the company acquired Newcrest Mining.The company said it expects to meet its 2024 guidance and deliver 1.8Moz of gold at an AISC of $1475/oz in the December quarter. 2025 gold production is expected to be consistent with this year's, and costs will align with this year's trends. Newmont said Lihir in Papua New Guinea will produce 250,000oz less than previously guided in 2025, while Brucejack in Brtish Colombia, Canda will be 100,000oz less.With a divestment programme underway, Newmont said its core portfolio will be 11 managed operations and three in execution portfolio going forward. "Whilst we anticipate production growth over time, our focus is firmly on expanding margins, generating a strong return on capital invested, and creating value versus chasing volume," said chief executive Tom Palmer during the results conference call.Newmont reported an all-in-sustaining cost of US$1611/oz, 3.1% higher than the June quarter and 13% higher than a year ago. However, a higher average realised gold price of $2518/oz drove a 28% increase in free cash flow and 9.2% increase in net earnings to $936 million. The assets the company wants to divest have an average AISC of $1809/oz. Their divestiture will trim costs. However, Merian, Brucejack and Red Chris all have AISC higher than $1600/oz this year. "We are not happy where we're at, and we're working to reduce these costs," said EVP and CFO Karyn Ovelmen during the conference call.Newmont ended the quarter with $3 billion in cash, $7 billion in available liquidity and $8.6 billion in debt. It has retired $483 million in 2024 and is targeting reducing debt to $8 billion. It declared a 25c September quarter dividend and increased share buyback programme. The company has spent $750 million buying back its stock since a repurchase programme was announced in February, and with $250 million remaining in the current programme, it said an additional $2 billion will be executed to bring the total to $3 billion.The company said it has achieved a run rate of $500 million in annual synergies following the Newcrest Mining acquisition last year, a year ahead of its commitment. This includes $100 million from general and administrative costs and $200 million from the supply chain.Newmont shares have increased in value by 27.6% this year. They are trading at $52.81, valuing the company at $60.6 billion.
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