DENVER--(BUSINESS WIRE)--Newmont Corporation (NYSE: NEM, TSX: NGT) (Newmont or the Company) today announced third quarter 2023 results and declared a third quarter dividend of $0.40 per share.
Newmont Delivered a Stable Q3 Performance
- Produced 1.3 million attributable gold ounces and 58 thousand co-product gold equivalent ounces (GEOs)* from copper; building momentum for improved production in the fourth quarter
- Reported gold Costs Applicable to Sales (CAS) per ounce** of $1,019 and gold All-In Sustaining Costs (AISC) per ounce** of $1,426; improvement driven by higher sales volumes compared to the prior quarter
- Revised 2023 outlook for the standalone Newmont portfolio to 5.3 million ounces of attributable production, CAS per ounce** of $1,000 and AISC per ounce** of $1,400; incorporates the impacts of the strike at Peñasquito, and lower production volumes from non-managed joint ventures (Nevada Gold Mines and Pueblo Viejo) and Ahafo***
- Generated $1.0 billion of cash from continuing operations and reported $397 million of Free Cash Flow**; driven by favorable working capital changes, while continuing to reinvest in profitable projects
- Reported Net Income of $163 million, with Adjusted Net Income (ANI)** of $0.36 per diluted share and Adjusted EBITDA** of $933 million; driven by higher production volumes, strong gold prices and stable costs
- Ended the quarter with $3.2 billion of consolidated cash and $6.2 billion of liquidity; reported net debt to adjusted EBITDA ratio of 0.7x**
- Resolved the Union labor strike at Peñasquito; focused on the safe ramp-up of operations in the fourth quarter
- Received Full Funds approval for the Pamour project at Porcupine; on track to deliver first ore in 2024
- Declared commercial production at San Marcos; the first of six ore bodies in Cerro Negro District Expansion 1
- Assigned an A- rating with a stable outlook from Fitch; reflects Newmont’s ability to generate strong liquidity
- On track to close the pending acquisition of Newcrest Mining Limited ("Newcrest") on November 6th; secured all government and regulatory approvals and shareholder votes
- Announced the addition of two Directors; welcoming Philip Aiken AM and Sally-Anne Layman from the Newcrest Board, with appointment to the Newmont Board of Directors effective upon close of the pending Newcrest transaction
Third Quarter Dividend Declared Within Established Framework****
- Board of Directors declared a dividend of $0.40 per share of common stock for the third quarter of 2023; payable on December 22, 2023 to holders of record at the close of business on November 30, 2023
- Annualized dividend payout range for 2023 of $1.40 to $1.80 per share****; subject to quarterly approval by Board of Directors
- Based on a sustainable base dividend of $1.00 per share payable at base reserves price and an incremental dividend payout of $0.60 per share; third quarter dividend payout calibrated at the mid-point of the $1,700 per ounce annualized payout range
"Newmont generated $1.0 billion of cash from continuing operations during the third quarter and continued to execute on our long-term strategic plan. As we look ahead to the closing of the Newcrest transaction, we are excited about the long-term value it will bring to both sets of stakeholders and our combined workforce. This transaction strengthens our position as the world's leading gold company and sets the standard in safe, profitable and responsible mining. We look forward to closing the transaction on November 6th and providing our first integration update on the combined business in the first quarter of 2024."
- Tom Palmer, Newmont President and Chief Executive Officer
* |
| Gold equivalent ounces (GEOs) calculated using Gold ($1,400/oz.), Copper ($3.50/lb.), Silver ($20.00/oz.), Lead ($1.00/lb.) and Zinc ($1.20/lb.) pricing for 2023. |
** |
| Non-GAAP metrics; see reconciliations at the end of this release. |
*** |
| See discussion of outlook and cautionary statement at the end of this release regarding forward-looking statements. Revised outlook excludes Newcrest Mining Limited. |
**** |
| Expectations regarding 2023 dividend levels are forward-looking statements. The dividend framework is non-binding and an annualized dividend has not been declared by the Board. The declaration and payment of future quarterly dividends remains at the discretion of the Board of Directors and will depend on the Company’s financial results, cash flow and cash requirements, future prospects, and other factors deemed relevant by the Board. See cautionary statement at the end of this release. |
Summary of Third Quarter Results
| Q3'23 | Q2'23 | Q1'23 | Q3'22 | ||||||
Average realized gold price ($ per ounce) | $ | 1,920 | $ | 1,965 | $ | 1,906 |
| $ | 1,691 |
|
Attributable gold production (million ounces)1 |
| 1.29 |
| 1.24 |
| 1.27 |
|
| 1.49 |
|
Gold costs applicable to sales (CAS) ($ per ounce)2 | $ | 1,019 | $ | 1,054 | $ | 1,025 |
| $ | 968 |
|
Gold all-in sustaining costs (AISC) ($ per ounce)2 | $ | 1,426 | $ | 1,472 | $ | 1,376 |
| $ | 1,271 |
|
GAAP net income (loss) from continuing operations ($ millions) | $ | 157 | $ | 153 | $ | 339 |
| $ | 218 |
|
Adjusted net income ($ millions)3 | $ | 286 | $ | 266 | $ | 320 |
| $ | 212 |
|
Adjusted net income per share ($/diluted share)3 | $ | 0.36 | $ | 0.33 | $ | 0.40 |
| $ | 0.27 |
|
Adjusted EBITDA ($ millions)3 | $ | 933 | $ | 910 | $ | 990 |
| $ | 850 |
|
Cash flow from continuing operations ($ millions) | $ | 1,001 | $ | 656 | $ | 481 |
| $ | 466 |
|
Capital expenditures ($ millions)4 | $ | 604 | $ | 616 | $ | 526 |
| $ | 529 |
|
Free cash flow ($ millions)5 | $ | 397 | $ | 40 | $ | (45 | ) | $ | (63 | ) |
IMPROVED PRODUCTION AND CASH FLOWS DELIVERED IN THE THIRD QUARTER
In the third quarter, Newmont delivered improved production compared to the second quarter, despite navigating challenges at the sites noted below. Further improvements to production are expected in the fourth quarter.
- Peñasquito - Operations continued to be suspended at the site for the duration of the third quarter to focus on finding an appropriate and sustainable resolution to the dispute with the leadership of the National Union of Mine and Metal Workers of the Mexican Republic (“the Union”). On October 13, 2023, Newmont reached a resolution with the Union and has since begun the safe ramp-up of operations. Newmont expects to reach full operating capacity by the end of the fourth quarter.
- Ahafo - During the third quarter, the replacement conveyor at Ahafo was commissioned as planned. However, mill throughput was impacted when routine condition monitoring by Newmont's Asset Management Team identified hairline fractures to one of the large grinding mill’s girth gears. To reduce any further deterioration to the gear and to avoid a major unplanned failure, Newmont made the decision to operate at less than full capacity. In October, the team optimized the processing circuit, bringing throughput to approximately 80 percent. Full processing rates are expected to be reached in the second quarter of 2024 when the girth gear is replaced.
- Cerro Negro - The site delivered higher ounces in the third quarter due to improved productivity compared to the second quarter. This improvement was tempered by supply chain disruptions as a result of import restrictions which impacted the ability to deliver key supplies to the site. Newmont will continue to work closely with suppliers to mitigate disruption in Argentina.
- Nevada Gold Mines and Pueblo Viejo6 - Lower than planned production was delivered from Newmont's non-managed joint ventures.
Direct operating costs remained largely consistent with the second quarter as inflation pressures continued to stabilize, with improvements to pricing on commodities, as well lower direct costs as a result of the suspension of operations at Peñasquito. AISC was lower due to lower sustaining capital during the third quarter compared to the second quarter. Peñasquito incurred $78 million of operating costs and $53 million of depreciation and amortization while operations were suspended. These costs have not been adjusted from Newmont's Non-GAAP financial metrics for the third quarter.
Cash flow from continuing operations was $1,001 million, which was favorable compared to the second quarter, primarily driven by favorable working capital changes, including the timing of accounts payable, draw-downs of lower cost inventory and lower cash tax payments. During the quarter, Newmont reinvested $604 million in capital spend, including $264 million in development capital spend to continue to progress near-term projects and $340 million in sustaining capital to progress site improvement projects.
THIRD QUARTER 2023 FINANCIAL AND PRODUCTION SUMMARY
Attributable gold production1 decreased 13 percent to 1,291 thousand ounces from the prior year quarter primarily due to lower production at Peñasquito, Akyem and Ahafo. In addition, lower than planned production was delivered from the non-managed joint venture at Pueblo Viejo. This unfavorable impact was partially offset by higher production at Yanacocha. Gold sales were largely in line with production for the quarter.
Gold CAS totaled $1.3 billion for the quarter. Gold CAS per ounce2 increased 5 percent to $1,019 per ounce from the prior year quarter primarily due to lower gold sales volumes as a result of the Peñasquito labor strike for the duration of the third quarter of 2023. This unfavorable impact was partially offset by lower energy, materials and contracted services costs at Peñasquito while operations were suspended.
Gold AISC per ounce2 increased 12 percent to $1,426 per ounce from the prior year quarter primarily due to higher CAS per gold ounce and higher sustaining capital spend.
Attributable gold equivalent ounce (GEO) production from other metals decreased 81 percent to 58 thousand ounces primarily due to the suspension of operations at Peñasquito, which were partially offset by higher copper production at Boddington. GEO sales were largely in line with production for the quarter.
CAS from other metals totaled $98 million for the quarter. CAS per GEO2 increased 130 percent to $1,636 per ounce from the prior year quarter primarily due to lower other metal sales as a result of the Peñasquito labor strike for the duration of the third quarter of 2023. This unfavorable impact was partially offset by lower energy, materials and contracted services costs at Peñasquito while operations were suspended.
AISC per GEO2 increased 142 percent to $2,422 per ounce primarily due to higher CAS per GEO as a result of the Peñasquito labor strike.
Average realized gold price was $1,920, an increase of $229 per ounce over the prior year quarter. Average realized gold price includes $1,929 per ounce of gross price received, an unfavorable impact of $4 per ounce mark-to-market on provisionally-priced sales and reductions of $5 per ounce for treatment and refining charges.
Revenue decreased 5 percent from the prior year quarter to $2.5 billion primarily due to lower sales volumes, partially offset by higher average realized gold and copper prices.
Net income from continuing operations attributable to Newmont stockholders was $157 million or $0.20 per diluted share, a decrease of $61 million from the prior year quarter primarily due to lower sales volumes as a result of the Peñasquito labor strike, as well as higher reclamation and remediation charges. These decreases were partially offset by higher average realized prices for gold and copper and lower CAS.
Adjusted net income3was $286 million or $0.36 per diluted share, compared to $212 million or $0.27 per diluted share in the prior year quarter. Primary adjustments to third quarter net income include reclamation and remediation charges of $104 million, changes in the fair value of investments of $41 million, Newcrest transaction-related costs of $16 million and restructuring and severance costs of $7 million.
Adjusted EBITDA3 increased 10 percent to $933 million for the quarter, compared to $850 million for the prior year quarter.
Capital expenditures4 increased 14 percent from the prior year quarter to $604 million primarily due to higher sustaining capital spend. Development capital expenditures in 2023 primarily relate to Tanami Expansion 2, Ahafo North, Yanacocha Sulfides, Pamour and Cerro Negro District Expansion 1.
Consolidated operating cash flow from continuing operations increased 115 percent from the prior year quarter to $1,001 million primarily due to payments made in the third quarter of 2022 related to 2021 site performance for the Peñasquito Profit-Sharing Agreement, as well as the timing of accounts payable and prepaid taxes at Peñasquito, partially offset by a decrease in revenue due to lower sales volumes primarily as a result of the strike at Peñasquito.
Free Cash Flow5increased to $397 million from $(63) million in the prior year quarter primarily due to higher operating cash flow, partially offset by higher capital expenditures.
Balance sheet and liquidity remained strong in the third quarter, ending the quarter with $3.2 billion of consolidated cash, with approximately $6.2 billion of total liquidity; reported net debt to adjusted EBITDA of 0.7x7.
Nevada Gold Mines (NGM)6attributable gold production was 300 thousand ounces, with CAS of $992 per ounce2 and AISC of $1,307 per ounce2 for the third quarter. NGM EBITDA7 was $263 million.
Pueblo Viejo (PV)6attributable gold production was 52 thousand ounces for the quarter. Cash distributions received for the Company's equity method investment in Pueblo Viejo totaled $32 million in the third quarter. Capital contributions of $23 million were made during the quarter related to the expansion project at Pueblo Viejo.
1 |
| Attributable gold production includes 52 thousand ounces for the third quarter of 2023, 51 thousand ounces for the second quarter of 2023, and 60 thousand ounces for the first quarter of 2023 and 81 thousand ounces for the third quarter of 2022 from the Company’s equity method investment in Pueblo Viejo (40%). |
2 |
| Non-GAAP measure. See end of this release for reconciliation to Costs applicable to sales. |
3 |
| Non-GAAP measure. See end of this release for reconciliation to Net income (loss) attributable to Newmont stockholders. |
4 |
| Capital expenditures refers to Additions to property plant and mine development from the Consolidated Statements of Cash Flows. |
5 |
| Non-GAAP measure. See end of this release for reconciliation to Net cash provided by operating activities. |
6 |
| Newmont has a 38.5% interest in Nevada Gold Mines in the U.S., which is accounted for using the proportionate consolidation method. In addition, Newmont has a 40% interest in Pueblo Viejo, which is accounted for as an equity method investment. |
7 |
| Non-GAAP measure. See end of this release for reconciliation. |
Progressing Profitable Near-Term Projects from Unmatched Organic Pipeline
Newmont’s project pipeline supports stable production with improving margins and mine lives1. Newmont's 2023 and longer-term outlook includes current development capital costs and production related to Tanami Expansion 2, Ahafo North, Pamour and Cerro Negro District Expansion 1. Development capital spend and all metal production for Yanacocha Sulfides has been excluded from longer-term outlook until an investment decision has been reached.
Additional projects not listed below represent incremental improvements to the Company's outlook.
- Tanami Expansion 2 (Australia) secures Tanami’s future as a long-life, low-cost producer by extending mine life beyond 2040 through the addition of a 1,460 meter hoisting shaft and supporting infrastructure to process 3.3 million tonnes per year and provide a platform for future growth. The expansion is expected to increase average annual gold production by approximately 150,000 to 200,000 ounces per year for the first five years and reduce operating costs by approximately 10 percent, bringing average all-in sustaining costs to $900 to $1,000 per ounce for Tanami (2026-2030). Commercial production for the project is expected in the second half of 2025. Total capital costs are estimated to be between $1.2 and $1.3 billion. Development costs (excluding capitalized interest) since approval were $677 million, of which $178 million related to the nine months ended September 30, 2023.
- Ahafo North (Africa) expands our existing footprint in Ghana with four open pit mines and a stand-alone mill located approximately 30 kilometers from the Company’s Ahafo South operations. The project is expected to add between 275,000 and 325,000 ounces per year with all-in sustaining costs of $800 to $900 per ounce for the first five full years of production. Ahafo North is the best unmined gold deposit in West Africa with approximately 3.8 million ounces of Reserves and 1.4 million ounces of Measured, Indicated and Inferred Resources2 and significant upside potential to extend beyond Ahafo North’s current 13-year mine life. Commercial production for the project is expected in the second half of 2025. Total capital costs are estimated to be between $950 and $1,050 million. Development costs (excluding capitalized interest) since approval were $333 million, of which $121 million related to the nine months ended September 30, 2023.
- Pamour (North America) extends the life of Porcupine and maintains production beyond 2024. The project will optimize mill capacity, adding volume and supporting high grade ore from Borden and Hoyle Pond, while supporting further exploration in a highly prospective and proven mining district. An investment decision was reached in October of 2023, with first ore expected in 2024. Commercial production for the project is expected in the fourth quarter of 2025. Development capital costs are estimated to be between $350 and $450 million.
- Cerro Negro District Expansion 1 (South America) includes the simultaneous development of the Marianas and Eastern districts to extend the mine life of Cerro Negro beyond 2030. The project is expected to improve production and provides a platform for further exploration and future growth through additional expansions. Development capital costs for the project are estimated to be between $350 and $450 million. In the third quarter of 2023 Newmont declared commercial production for San Marcos, the first of six ore bodies associated with the expansion project.
- Yanacocha Sulfides (South America) has been deferred for at least two years from the previously planned investment decision date in 2024, representing the first step to Newmont delivering on its portfolio optimization strategy. Yanacocha Sulfides will develop the first phase of sulfide deposits and an integrated processing circuit, including an autoclave to produce 45% gold, 45% copper and 10% silver. The first phase focuses on developing the Yanacocha Verde and Chaquicocha deposits to extend Yanacocha’s operations beyond 2040 with second and third phases having the potential to extend life for multiple decades.
1 |
| Project estimates remain subject to change based upon uncertainties, including future market conditions, macroeconomic and geopolitical conditions, changes in interest rates, inflation, commodities and raw materials prices, supply chain disruptions, labor markets, engineering and mine plan assumptions, future funding decisions, consideration of strategic capital allocation and other factors, which may impact estimated capital expenditures, AISC and timing of projects. See end of this release for cautionary statement regarding forward-looking statements. |
2 |
| Total resources presented for Ahafo North includes Measured and Indicated resources of 910 thousand gold ounces and Inferred resources of 490 thousand gold ounces. See cautionary statement at the end of this release. |
Revised 2023 Outlook Incorporating the Resolution of the Peñasquito Strike
Newmont is providing a revised 2023 outlook for the standalone Newmont portfolio of 5.3 million ounces of attributable production to incorporate the impacts of the Peñasquito strike, lower production from the non-managed Nevada Gold Mines and Pueblo Viejo joint ventures, and lower production at Ahafo due to lower throughput following the decision to operate at less than full capacity to protect one of the grinding mill's girth gears until it is replaced. As a result of these volume impacts, 2023 CAS is expected to be approximately $1,000 per ounce, with AISC of $1,400 per ounce. In addition, as a result of the Peñasquito strike, the outlook for silver, lead and zinc has been revised for the remainder of the year.
Sustaining capital is expected to be $1.4 billion for 2023, incorporating increased spend from the upgrading of camp conditions at Musselwhite, the addition of five new autonomous haulage trucks at Boddington to advance stripping in the North and South Pits and the replacement conveyor at Ahafo. Development capital is expected to be $1.1 billion for 2023, incorporating reduced spend at Yanacocha Sulfides and the timing of spend at Tanami Expansion 2 as a result of the rainfall event in the first quarter.
Copper guidance for Boddington remains unchanged for the year. In addition, consolidated expense guidance remains unchanged, with the exception of Depreciation and Amortization as a result of the lower production volumes for the year.
Please see the cautionary statement at the end of this release for additional information. For further discussion, investors are encouraged to attend Newmont’s Third Quarter 2023 Earnings Conference Call.
Standalone Newmont 2023 Outlook a | 2023E |
Gold ($1,900/oz price assumption) | |
Attributable Gold Production (Moz) b | 5.3 |
Gold CAS ($/oz) | $1,000 |
Gold AISC ($/oz) c | $1,400 |
Copper ($3.50/lb price assumption) | |
Copper Production (Mlb) | 100 |
Copper CAS ($/lb) | $2.00 |
Copper AISC ($/lb) c | $2.50 |
Silver ($23.00/oz price assumption) | |
Silver Production (Moz) | 15 |
Silver CAS ($/oz) | $16.00 |
Silver AISC ($/oz) c | $21.60 |
Lead ($0.95/lb price assumption) | |
Lead Production (Mlb) | 100 |
Lead CAS ($/lb) | $0.80 |
Lead AISC ($/lb) c | $1.00 |
Zinc ($1.15/lb price assumption) | |
Zinc Production (Mlb) | 230 |
Zinc CAS ($/lb) | $1.10 |
Zinc AISC ($/lb) c | $1.60 |
Attributable Capital | |
Sustaining Capital($M) | $1,400 |
Development Capital($M) | $1,100 |
Consolidated Expenses | |
Exploration & Advanced Projects ($M) | $500 |
General & Administrative ($M) | $275 |
Interest Expense ($M) | $210 |
Depreciation & Amortization ($M) | $2,000 |
Adjusted Tax Rate d,e | 32% - 36% |
| a |
| 2023 outlook projections are considered forward-looking statements and represent management’s good faith estimates or expectations of future production results as of October 26, 2023, excluding Newcrest Mining Limited. Outlook is based upon certain assumptions, including, but not limited to, metal prices, oil prices, certain exchange rates and other assumptions. For example, revised 2023 Outlook assumes $1,900/oz Au, $3.50/lb Cu, $23.00/oz Ag, $1.15/lb Zn, $0.95/lb Pb, $0.70 AUD/USD exchange rate, $0.75 CAD/USD exchange rate and $80/barrel WTI. Production, CAS, AISC and capital estimates exclude projects that have not yet been approved, except for Cerro Negro District Expansion 1 which is included in Outlook. The potential impact on inventory valuation as a result of lower prices, input costs, and project decisions are not included as part of this Outlook. Assumptions used for purposes of Outlook may prove to be incorrect and actual results may differ from those anticipated, including variation beyond a +/-5% range. Outlook cannot be guaranteed. As such, investors are cautioned not to place undue reliance upon Outlook and forward-looking statements as there can be no assurance that the plans, assumptions or expectations upon which they are placed will occur. Amounts may not recalculate to totals due to rounding. See cautionary statement at the end of this release. |
b |
| Attributable production includes Newmont’s 40% interest in Pueblo Viejo, which is accounted for as an equity method investment. |
c |
| All-in sustaining costs (AISC) as used in the Company’s Outlook is a non-GAAP metric; see below for further information and reconciliation to consolidated 2023 CAS outlook. |
d |
| The adjusted tax rate excludes certain items such as tax valuation allowance adjustments. |
e |
| Assuming average prices of $1,900 per ounce for gold, $3.50 per pound for copper, $23.00 per ounce for silver, $0.95 per pound for lead, and $1.15 per pound for zinc and achievement of current production, sales and cost estimates, we estimate our consolidated adjusted effective tax rate related to continuing operations for 2023 will be between 32%-36%. |
Contacts
Media Contact
Jennifer Pakradooni
720.236.8170
[email protected]
Investor Contact - North America
Daniel Horton
303.837.5468
[email protected]
Investor Contact - Asia Pacific
Christopher Maitland
+61 499.082.360
[email protected]
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