Newmont Corporation (NEM) – Shining star

Newmont Corp is the world’s largest gold miner, producing more than 5 million ounces a year from its operations and/or assets in the US, Australia, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Papua New Guinea, Ecuador, Fiji and Ghana. Newmont was founded in 1916 and is headquartered in Denver, Colorado.

Newmont posted a June-quarter result that beat market and Ord Minnett expectations on production, costs, and operating earnings, and unveiled a further share buyback program of US$3 billion ($5 billion) thanks to its strong fiscal performance –free cash flow was a record US$1.7 billion – and robust balance sheet. The world's largest gold producer also reiterated guidance for CY25 production, although the composition of output has changed with management now seeing an equal split between the first and second halves of CY25, versus the previous forecast for a 48%/52% breakdown. In our view, this is a conservative estimate, suggesting Newmont is running ahead of target, as management compensates for the company’s recent history of falling short on guidance.

Ord Minnett see plenty of value in Newmont – some of its assets are running below optimum levels but the investment in improving grades and operational efficiency should allow their potential to be realised, pushing gold production to around 6.0 million ounces in CY27 from our now increased but still conservative forecast of 5.7 million ounces in CY25.  Getting the execution of these investments right should drive strong earnings growth and provide the impetus for an increase in its valuation multiple, which leads us to reiterate our Buy recommendation on Newmont and a target price of $115.00.

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