Newmont Corporation (TSX: NGT) reported its third-quarter 2024 financial results at closing bell on Wednesday, showcasing robust revenue growth driven by higher gold prices. However, rising costs, weaker non-gold metal performance, and concerns around shareholder returns have tempered the quarterly performance.
The mining giant posted $4.6 billion in revenue for Q3 2024, marking an 84% increase from $2.5 billion in Q3 2023 and a 5% rise from $4.4 billion in Q2 2024. The company benefited from higher realized gold prices, averaging $2,518 per ounce, a substantial jump from $1,920 per ounce in Q3 2023 and $2,347 per ounce in Q2 2024.
Despite the higher prices, rising operational costs were a significant concern. Costs Applicable to Sales (CAS) for gold increased to $1,207 per ounce, a 5% rise from Q2 2024, driven by higher direct operating expenses, particularly at Lihir, where planned maintenance escalated costs. Similarly, All-In Sustaining Costs (AISC) rose to $1,611 per ounce, up 3% from Q2 2024 and considerably higher than $1,426 per ounce in Q3 2023. These rising costs reflect inflationary pressures that impacted Newmont’s ability to fully benefit from strong gold prices.
Newmont’s net income attributable to shareholders surged to $922 million in Q3 2024, a sharp increase from $158 million in Q3 2023 and up from $853 million in Q2 2024.
The company generated $760 million in free cash flow in Q3 2024, significantly up from $397 million in Q3 2023 and $594 million in Q2 2024. This 91% year-over-year growth was primarily due to higher revenues from strong gold prices. However, rising capital expenditures, which grew to $877 million—a 10% increase from Q2 2024—limited the company’s ability to convert the increased revenue into even stronger free cash flow. The rise in capital spending is largely tied to ongoing investments in projects like Tanami Expansion 2 and Ahafo North.
Newmont’s gold production in Q3 2024 reached 1.7 million attributable ounces, a 30% increase from 1.29 million ounces in Q3 2023 and a 4% rise from 1.61 million ounces in Q2 2024. This growth was primarily driven by the benefits of the Newcrest acquisition and improved performance at key operations, including Cerro Negro, Ahafo, and Yanacocha.
In contrast, production of gold equivalent ounces (GEOs) from other metals, including copper, silver, zinc, and lead, fell by 10% quarter-over-quarter to 430,000 GEOs, down from 453,000 GEOs in Q2 2024. This decline was primarily due to lower production at Peñasquito, where lower ore grades and tailings remediation work slowed output. Despite a 51% year-over-year increase in GEO production from 265,000 GEOs in Q3 2023, the sequential decline raised concerns about Newmont’s diversification into non-gold metals. The reduced output at Peñasquito, one of the company’s largest co-product mines, highlighted operational challenges that could affect both performance and cost management in the future.
Newmont’s cash and cash equivalents rose to $3 billion by the end of Q3 2024, up from $2.6 billion in Q2 2024, reflecting solid cash generation. However, this figure is down slightly from $3.2 billion in Q3 2023. Despite this, the company’s overall liquidity position remains strong, with $7.1 billion in total liquidity.
The company also reduced its debt, lowering it to $8.6 billion, down from $8.9 billion in Q2 2024 and $9.4 billion in Q3 2023.
Newmont continued its strategy of divesting non-core assets, announcing the sale of its Akyem mine in Ghana for up to $1 billion in cash, and the sale of the Telfer mine and a 70% interest in the Havieron project in Australia for $475 million. These divestitures are part of the company’s broader plan to generate $2 billion in proceeds by the end of 2024.
In terms of shareholder returns, Newmont repurchased $198 million worth of shares in Q3 2024, bringing the year-to-date total to $500 million. While the company has repurchased 9.4 million shares at an average price of $53.16, the pace of buybacks may be seen as conservative, given the $2 billion authorization announced earlier in the year. The $0.25 per share dividend remained steady despite a high gold price environment.
Looking ahead, Newmont remains optimistic about closing 2024 strongly, forecasting 1.8 million ounces of gold production in Q4 2024. This expected increase will be driven by higher grades at Peñasquito and Tanami, and improved throughput at Lihir following planned maintenance. However, the company’s guidance for an AISC of $1,475 per ounce in Q4 2024—down from Q3 but still relatively high—suggests that cost pressures will remain a concern for the company as it moves into the final quarter of the year.
Newmont last traded at $79.96 on the TSX.
Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
