Earnings Highlights: Newmont beats Q2 profit estimates, misses cost guidance

Newmont (ASX: NEM) reported a mixed June quarter result – featuring an operationally solid performance and better-than-expected earnings, offset by higher costs.

Q2 Earnings Highlights

• Gold output: 1.61 million ounces or 1% below consensus

• AISC: US$1,562 an ounce or 6% above consensus (Newmont previously guided to 2024 AISC of US$1,400 an ounce)

• Earnings per share: 72 US cents vs. 61 US cents consensus or an 18% beat

• Free cash flow: US$634 million vs. US$363 million consensus or a 75% beat

• Completed $205 million in share repurchases and repaid US$250 million in debt

Earnings Call Highlights

Solid operational performance and reaffirmed guidance: "We delivered solid operational performance as planned, keeping us firmly on track to achieve our 2024 guidance and positioning us to deliver improving financial results."

Asset sales on track: Asset sales process on track and competitive bids have been received for Telfer and North American assets. "We now expect to reach at least $2 billion from the sale of our seven high-quality, non-core assets alone."

Newcrest synergies ahead of schedule: "In the second quarter, we achieved US$100 million in synergies, bringing our run rate to US$205 million since we closed our acquisition of Newcrest only eight months ago. With this solid momentum, we have now expanded our back office integration team and remain firmly on track to achieve a US$335 million run rate by the end of this year, well ahead of our initial estimates."

Shareholder returns and debt reduction: "Since our last earnings call, we repurchased 5.7 million shares at an average price of US$43 per share for a total cost of US$250 million ... we repurchased US$250 million in nominal debt for US$277 million or $0.90 on the dollar."

Production and cost outlook: "Looking ahead, we anticipate higher free cash flows in the second half of the year, driven by increased production volumes and lower unit cost"

Analyst Q&A Highlights

Timing of asset sales and impact of stronger gold prices on offer prices: The asset sales process is on track. For North America, 67 parties participated in Phase 1, 24 bids received, moving to Phase 2. Telfer also progressing well. Good value and competitive process seen in bids.

Buybacks and impact on cash returns relative to debt reduction: The buyback decision is driven by free cash flow realization and divestiture proceeds. Debt reduction is opportunistic based on market conditions.

Share repurchases: The US$1 billion buyback is an initial commitment. Future buybacks depend on board decisions and divestment proceeds.

Capex risks: No significant increase in CapEx expected. Focus remains on disciplined capital allocation with $1.3 billion allocated annually to sustaining and development capital.

Lihir shutdown and production guidance: Shutdown of largest autoclave (representing 40% throughput) for 120 days, impacting Q3 and early Q4 production. Production guidance accounts for this downtime.

This article was generated with the support of AI and reviewed by an editor.