Is There A Risk Hiding In Newmont Stock’s Strong Cash Flow?
Newmont (NEM) produced $2.2 billion of free cash flow in the second quarter of 2026. Higher gold prices fed through to margins, yielding the company’s highest free cash flow for any second quarter. Behind that cash sits an expense investors should watch: what Newmont spends to keep its mines running. Management expects this bill to rise in the second half of the year. So what is pushing that bill up?
Newmont Has Pushed Most Mine Spending Into Late 2026
The bill is rising because Newmont planned it that way. Management expects about 58% of its 2026 spending to sustain its mines to fall in the second half of the year. The company attributed this timing to key programs at Boddington and Cadia, ventilation work at Tanami, and seasonal surface construction at Brucejack and Red Chris.
The second-half step-up has a plan behind it. Newmont spent $438 million to sustain its mines in the second quarter. On its July call, the company planned to spend about $150 million more during the recently ended third quarter. Newmont is taking the same approach with new projects. It invested $285 million in them during the second quarter, and it expects 63% of its 2026 development spending to land in the second half as it advances projects at Cadia, Tanami, and Lihir.
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What A Bigger Mine Bill Means For Newmont’s Cash
Even before the rise, these expenses take a real share of Newmont’s cash. Spending to sustain its mines and build new projects came to about $723 million in the second quarter, compared with $2.92 billion of cash from operations. In July, management said the third-quarter rise in sustaining spending would bring moderately higher unit costs for that period.
One project may cost more than first planned. On the July 23, 2026 call, management said it expects capital for Red Chris to come in higher than the original numbers drawn up under Newcrest. Management said any extra Red Chris cost would come on top of the $1.4 billion development guidance, which covers 2026 only. A funding decision is due later this year or in early 2027. When asked on that call if shareholder payouts could exceed free cash flow in the second half, management said Newmont could draw on its net cash to get back within its target.
Investors are not paying up for the profits behind Newmont’s cash. Newmont trades at 14.6 times its earnings over the past twelve months, compared with 22.9 for the S&P 500, so the price likely assumes some of today’s profit will not last. Even so, the shares returned 27.9% from July 21 to October 19, 2026, against 2.7% for the index.
Newmont Holds More Net Cash Than It Targets
Newmont ended the second quarter with $3.4 billion of net cash. This sits modestly above the top of its target range of $1 billion, plus or minus $2 billion. On the same call, management said it is confident of holding to its guidance for both sustaining and development spending.
That makes the bigger bill a risk to weigh, not an alarm: the rise is planned, and the balance sheet covers it, but one project may cost more than first planned. Any increase in Newmont’s spending guidance would make the worry larger. When the company reports on or around October 22, 2026, Newmont’s third-quarter spending to sustain its mines against its $1.95 billion guidance for 2026 is the number to watch.
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