Newmont Mining Tops Market Estimates, However, Lower Production Volume To Weigh On Results Through H2 2018

by Trefis Team
Newmont Goldcorp Corporation
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Newmont Mining (NYSE: NEM) released its second-quarter results and conducted a conference call with analysts on 26th July 2018. The company topped analysts earnings estimates and reported an EPS (Non-GAAP) of $0.26 per diluted share. Despite beating market estimates, the company’s performance compared to the same period last year has remained weak due to its declining production volume. Consequently, the company reported a consolidated revenue of $1.66 billion and an adjusted net income of $144 million, approximately 11% and 42% lower year-on-year (y-o-y). Slightly higher y-o-y gold prices provided some relief to the company’s overall performance.

Newmont reported 1.16 million ounces of gold production in the second quarter, roughly 14% lower on a y-o-y basis. The lower output is in line with the company’s overall lower output guidance for the year, broadly reflecting a more mature portfolio of reserves and the resultant lower grades of ore. Gold output for the full year is expected to range between 4.9 and 5.4 million ounces, roughly 3% (assuming mid-points) lower than the company’s actual output in 2017.

Relatively higher gold prices provided some relief to the company’s top line. Newmont reported an average realized price of $1,292 per ounce of gold, about 3% higher than the realized price a year ago. Global trade war tensions stirred the demand for safe-haven assets; however, a stronger dollar impeded the growth of gold prices. Unanticipated trade war concerns could potentially drive gold prices higher in the second half of the year and hence provide Newmont with probable growth prospects.

The company additionally announced that it would acquire a 50% stake in the Galore Creek project, a gold project in Western Canada. This move largely reflects the company’s ambition to sustain its long-term gold reserves. We have maintained our base case estimates for the company based on its reported results. You can make changes to our key assumptions to arrive at your own fair price estimate for the company by using our interactive dashboard: What To Expect From Newmont Mining In 2018.


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