Newmont Mining (NEM) is the world’s largest gold miner by production, with operations in North and South America, Australia and Africa; the company boasts the industry’s largest gold reserves, also producing copper, silver, zinc and lead, notes Mike Cintolo, editor of Cabot Top Ten Trader.
Last year was a challenging one for Newmont, which included a virus-related shutdown and rainfall-related setbacks at two of its Australian mines, a mechanical failure at a Nevada mine, plus rising cost pressures, labor shortages and supply disruptions. But the company worked through these problems (the Australia shutdown ended in July and the Nevada mill was repaired in September).
Moreover, Newmont still managed to log a respectable third quarter, with gold production of 1.4 million ounces (down 6% from a year ago but unchanged from Q2) and 315,000 gold equivalent ounces from its base metals (up 15% from a year ago and 4% higher sequentially).
And though revenue of $2.9 billion was off 9% and per-share earnings of 60 cents missed the consensus by 13 cents, it upped its production guidance for 2022 and completed $99 million of share repurchases from its $1 billion buyback program.
Newmont expects to produce 6.2 million gold ounces in 2022 (a 3% improvement from last year) at an all-in sustaining cost of $1,030 per ounce — well under the current gold price of $1,830, allowing for plenty of profits.
The company is also targeting gold production of as much as 6.8 million ounces annually over the next five years, with costs projected to decline starting in 2023 (as investments in profitable projects pays off). For Q4, Wall Street expects revenue to rise 1%, increasing to 10% in the next quarter. A 3.5% dividend yield is an added attraction.
Technically, NEM kicked off a long-term upward trend in May of 2019, rising from a multi-year low of $30 and reaching $72 by the following year’s August. Shares ground lower for the next six months, bottoming at $54 last February.
From there the stock zoomed nearly straight up in what ended up being a false rally, with NEM peaking at $75 in May and starting on another six-month decline. But shares began bottoming out months ago, and it’s hard to ignore the big-volume buying that started in December. It’s not in a true uptrend yet, but we think NEM’s path of least resistance might be turning up.
