Newmont is starting to reap rewards from cutbacks

Newmont Corp. is starting to reap the benefits of cost-cutting measures, with the world’s largest gold miner delivering stronger-than-expected quarterly earnings.

After seeing its gold-mining costs hit an all-time high earlier this year, Newmont defied analyst estimates by bringing down its third-quarter expenses slightly, the Denver-based company said in a statement after the close of trading Thursday.

Outgoing chief executive officer Tom Palmer is getting some return from streamlining efforts after a $15 billion purchase of Newcrest Mining Ltd. expanded the company’s portfolio to about 20 mines. It also expanded into copper mining. Labor cuts — as reported by Bloomberg in August — are a big part of the cost-cutting efforts as Palmer strives to bring Newmont more in line with its lowest-cost peers.

Lower general and administrative expenses “is the direct result of our deliberate efforts to simplify the organization and drive down labor and contractor costs,” Natascha Viljoen, who will take over as CEO in January as Palmer retires, told analysts after the earnings release. “And on the back of progressing labor reductions, our exploration and advanced project guidance is also reflecting the optimization work.”

Newmont’s all-in sustaining costs — a key metric for gold miners — had risen more than 50% in the past five years, driven by higher energy, labor and material prices. Last quarter, the measure came in at $1,566 an ounce. That’s still high relative to its peers, but was 5.6% below the average estimate and down 2.8% from the same period last year.

With gold prices surging, the cost surprise helped deliver adjusted earnings that were 29 cents a share higher than consensus.

Still, Newmont’s shares were down 6.5% at 7:53 am in New York, before the start of regular trading, as gold headed for a third decline this week. The company also indicated a modest drop in gold production next year due to planned mine sequencing at key operations.

Newmont expects to realize the full benefits of its cost savings initiatives next year, an indication of which will come in February when it delivers 2026 guidance.

To be sure, some of those savings could be offset by expenses related to sky-high gold prices, such as royalties and profit sharing arrangements, with the company vowing to maintain a disciplined approach even with debt levels near zero. In addition, the industry continues to face inflationary pressures on labor and consumables.

Newmont will keep reviewing capital allocations as surging prices boost revenue. When asked about the prospect of making acquisitions, Viljoen said the focus would remain on developing existing assets and rewarding investors through share buybacks.

The company’s shares are up about 140% this year, close to the peer-group average.

(By James Attwood)