Newmont is selling assets, cutting costs and buying back shares

A major strategic acquisition has led to Newmont’s 6.7% increase in gold production in the most recent quarter.

Now the company plans to sell six of its less-important mines and focus on its 10 top-tier mines in North America, South America, Australia, Papua New Guinea, and Ghana.

The shares yield 2.5% while the stock trades at 18.9 times the company’s 2024 earnings forecast.

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NEWMONT CORP. (New York symbol NEM; www.newmont.com) remains a solid hedge against inflation. The company completed its acquisition of Newcrest Mining in November 2023. Newcrest operates gold mines in Australia, Canada and Papua New Guinea.

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.

As a result, revenue in the quarter rose 23.7%, to $3.96 billion from $3.20 billion. Per-share earnings before one-time items rose 13.6%, to $0.50 from $0.44.

To improve its long-term prospects, Newmont now plans to sell six of its less-important mines. In all, these sales should raise $2 billion. After these sales, the company will focus on its 10 top-tier mines in North America, South America Australia, Papua New Guinea and Ghana.

Mining Stocks: Newmont’s cost cutting should improve long-term prospects

The company also expects the merger with Newcrest will let it cut $500 million from annual costs by the end of 2025. A separate plan to improve productivity will cut its annual costs a further $500 million by the end of 2025.

Newmont will use those savings to pay down its long-term debt of $6.95 billion (as of December 31, 2023). That’s equal to 15% of its $45.7 billion market cap.

To free up more cash, the company is also cutting your quarterly dividend by 37.5%. With the March 2024 payment, investors will receive $0.25 a share instead of $0.40. The new annual rate of $1.00 still yields a solid 2.5%. 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.

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Scott Clayton

Scott is an associate editor at TSI Network. He is the lead reporter and analyst for Dividend Advisor, Power Growth Investor and Canadian Wealth Advisor and a member of the Investment Planning Committee. Scott began his investment and financial career working with Pat McKeough at The Investment Reporter in the 1980s. Subsequently, he worked at the Financial Post Corporation Service for 10 years. He joined TSI Network in 1998. He is a Bachelor of Economics graduate of York University, and he also has an M.B.A. from the Schulich School of Business.

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