Newmont Mining Q1 2018 Earnings Review: Higher Gold Prices Lead To Earnings Beat, Guidance Kept Unchanged

by Trefis Team
Newmont Corporation
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Newmont Mining (NYSE: NEM) released its first-quarter 2018 results on April 26 and conducted a conference call with analysts the same day. The company reported a better than expected earnings, but missed revenue estimates by $20 million. EPS (Non-GAAP) was reported at $0.35 per diluted share, almost 35% higher year-on-year (y-o-y) and revenue was reported at $1.8 billion, ~8% higher y-o-y. Higher revenue was reported despite a decline in total gold output as the company benefited from higher gold prices in Q1.

Newmont reported total gold output at 1.21 million ounces, a 2% decline y-o-y as a result of lower grade, lower leach activity at Yanacocha and scheduled maintenance at Boddington, partly offset by the improved output at Merian, Tanami, Carlin, and Ahafo. Despite the lower output, sales volume was equivalent to its Q1 2017 level and the company was able to report higher revenue as a consequence of higher gold prices prevalent in this Q1. Demand for the safe-haven commodity increased as a result of the ongoing tension between the U.S. and China and the geopolitical uncertainty in the Middle East, which boosted its price. Additionally, a weaker dollar provided further buying opportunity for the yellow metal. Newmont’s output, however, surpassed the production volume of its largest competitor, Barrick which recently reported a total gold output of 1.05 million ounces in Q1.

The company also reported a 28% increase in its capital expenditure from its prior-year quarter, which confirms the company’s focus on developing its growth projects, including Quecher Main, Subika Underground, and Ahafo Mill expansion.

Newmont kept its 2018 guidance intact and declared a dividend of $0.14 per share, nearly 3x higher than its prior-year quarter. Notably higher dividend value reaffirm’s the company’s stance on its continued focus on increasing its cash return to shareholders. We have kept our estimates on our interactive dashboard analysis unchanged based on the company’s Q1 performance. You can make changes to our assumptions to arrive at your own fair price estimate for the company.


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