What Is Driving Over 30% Growth In Newmont Goldcorp’s Gold Shipments?

January 8th, 2020 by Trefis Team
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Newmont Goldcorp (NYSE: NEM) gold shipments refers to the volume of physical gold shipped/sold by the company from its gold mining operations in the United States, Australia, Peru, Ghana, Canada, New Zealand, and Mexico. The company’s proven and probable gold reserves stood at 65.4 million ounces at the end of 2018.

You can view the Trefis interactive dashboard – Newmont Goldcorp’s Gold Volume: Why Is Gold Shipment Set To Rise 30%, And What Does This Mean For Newmont Goldcorp? – to understand the trend in gold shipments and the effect of a sharp rise in volume.

What Happened?

  • Gold shipments increased at a very low CAGR of 3% over the last three years, from 5.1 million ounces in 2015 to 5.6 million ounces in 2018.
  • As against a cumulative increase of 0.5 million ounces in gold shipments between 2015 and 2018, shipments are set to rise by 1.7 million ounces in 2019, marking a growth of 31% in just one year, which is 10 times the growth seen in the previous three years.
  • Q2 2019 saw a sharp rise in shipments, taking the full year estimate to 7.2 million ounces, compared to 5.5 million ounces in 2018.
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Why?

  • Historically, annual and quarterly shipments have moved in tandem with gold production trends.
  • Production is set to in increase by 32%, from 5.5 million ounces in 2018 to 7.3 million ounces in 2019. This is against a CAGR of 2.9% in production over three years from 2015 to 2018.
  • Newmont’s acquisition of Goldcorp in April 2019, has led to an increase in the company’s gold mines, reserves, and total production.
  • Thus, sharp growth in Newmont’s gold production and, in turn, shipments, is driven by an inorganic growth strategy and not by a marked improvement in production techniques.

So What?

  • The sharp rise in gold volume produced and sold due to the Goldcorp acquisition is expected to lead to a 36% increase in the company’s gold revenues, which could increase from $6.95 billion in 2018 to $9.46 billion in 2019.
  • This is against a CAGR of 6.2% in gold revenues over the three years from 2015 to 2018.
  • Higher gold revenue is also expected to lead to an increase in the share of gold revenues in the company’s total revenue from 96% in 2018 to 97% in 2019.

To understand how a rise in gold shipments could affect Newmont Goldcorp’s revenues, refer to the following Trefis analysis- Newmont Goldcorp Revenues: How Does Newmont Goldcorp Make Money?

Comparing Newmont Goldcorp and Barrick Gold’s Gold Shipments

  • Newmont Goldcorp and Barrick Gold have seen opposite trends in their gold shipments.
  • While Newmont’s gold shipments increased from 5.1 million ounces in 2015 to 5.5 million ounces in 2018, Barrick’s gold shipments declined from 6.1 million ounces in 2015 to 4.5 million ounces during the same period.
  • With both gold giants seeing major deals in 2019, they are expected to see a sharp rise in gold sales for the year.
  • However, Newmont’s gold volume is expected to see a sharper rise with the company expected to maintain its leadership position in the gold market.

To understand how Newmont Goldcorp’s revenues, margins and key operating metrics compare with Barrick Gold, view our dashboard analysis.

 

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