Newmont reports best quarter ever, raises dividend by 60%

Driven by higher gold prices, Newmont reported record earnings and cash flow in the third quarter that allowed it to raise its dividend by 60% to 40¢ per share.

The company, which previously raised the dividend by 79% in January, says its annualized dividend of $1.60 per share is the highest in the gold sector.

For the quarter, Newmont produced 1.5 million attributable oz. of gold at all-in-sustaining costs of $1,020 per oz., plus 273,000 gold-equivalent attributable oz. from coproducts.

Revenue increased by 17% over the same period of last year, to $3.2 billion, with adjusted net income rising to $697 million from $292 million. The growth in revenue and earnings came despite a 6% decrease in production and a 3% increase in all-in sustaining costs (AISC).

“Capitalizing on the strength of our portfolio and higher gold prices, we delivered record third-quarter adjusted EBITDA of $1.7 billion and free cash flow of $1.3 billion. This was the best quarterly financial performance in Newmont’s history,” said Tom Palmer, Newmont’s president and CEO.

“We also remain focused above all else on protecting the health, safety and wellbeing of our workforce and neighboring communities as the pandemic continues.”

The company sold its gold at an average price of $1,913 per oz. – $437 per oz. higher than the same quarter last year. But stronger prices weren’t limited to gold: achieved prices for copper and silver were $2.99 per lb. and $21.69 per. oz., up 62¢ per lb. and $4.51 per. oz., respectively.

Also aiding the company’s bottom line was lower capital spending (down by 31%), mostly due to the sale of the Red Lake and Kalgoorlie operations and reduced spending at the company’s now completed Borden mine in Ontario.

The increases in its dividend were based on the company’s policy to share incremental free cash flow with shareholders at higher gold prices. Specifically, the company aims to return between 40% and 60% of incremental attributable free cash flow that is generated above a US$1,200 per oz. gold price.

Newmont has returned more than $2.5 billion to shareholders over 2019 and 2020 through dividends and share buybacks.

The company ended the quarter with $4.8 billion in cash and $7.8 billion of liquidity.

Production guidance for the year remains unchanged at roughly 6 million oz. gold at an AISC of $1,015 per oz. (and 1 million gold-equivalent oz. from coproducts).

(This article first appeared in the Canadian Mining Journal)