Beyond gold, this world-class miner produces copper, silver, lead and zinc. A recent acquisition has only strengthened its production by increasing both the volume and the number of top-tier mines at its disposal.
Cost-cutting should help boost earnings, and of course rising gold prices should do even more on the earnings front. The additional cash will be used to buy back $1 billion of its shares over the next two years.
Meanwhile, the stock trades at just 10.2 times the company’s forward earnings forecast.
NEWMONT CORP.,(New York symbol NEM; www.newmont.com) remains a solid hedge against inflation.
The company is the world’s largest gold miner, with major mines in North America, South America, Australia, and Africa. In addition to gold, it also produces copper, silver, lead and zinc.
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The company acquired rival Newcrest Mining Ltd. in November 2023. Newcrest shareholders received 0.40 of a Newmont common share. That gave them roughly 31% of the combined company.
Newcrest operates gold mines in Australia, Canada and Papua New Guinea.
And thanks to that acquisition, Newmont produced a total of 1.74 million ounces of gold in the quarter ended December 31, 2023, up 6.7% from 1.63 million ounces a year earlier.
Newcrest’s significant copper reserves will also help diversify its operations.
Mining Stocks: Debt reduction is on the way while the valuation remains cheap
In the 2024 first quarter, Newmont eliminated overlapping operations to cut its annual operating costs by $105 million. It now expects those annual savings to rise to $500 million by the end of 2025.
Newmont also plans to sell six of its less-important mines. In all, these sales should result in total proceeds of $2 billion. It plans to apply the proceeds to its long-term debt of $8.93 billion, which is equal to 19% of its market cap.
After these sales, the company will focus on its 10 top-tier mines in North America, South America Australia, Papua New Guinea and Ghana (Africa).
Thanks to rising gold prices and production, Newmont’s earnings will probably rise over 50% in 2024 to $2.44 a share, and the stock trades at a moderate 10.2 times that forecast.
To free up more cash, the company is also cutting your quarterly dividend by 37.5%. With the March 2024 payment, investors received $0.25 a share instead of $0.40. The new annual rate of $1.00 still yields a solid 2.1%.
What’s more, Newmont plans to buy back $1 billion of its shares over the next two years.
Recommendation in Canadian Wealth Advisor: Newmont Corp. is a buy.
