In the aftermath of its monumental $17.14 billion acquisition of Newcrest, Newmont Corp, the world’s premier gold miner, has unveiled a strategic plan to divest eight non-core assets and streamline its workforce with the aim of reducing debt. This revelation came on Thursday as the company reported beating quarterly profit estimates.
However, the positive financial news didn’t prevent a 7% decline in Newmont’s shares. Analysts attributed this dip to a substantial impairment charge of $1.2 billion linked to the Penasquito mine in Mexico, along with a 2024 gold production forecast that failed to meet certain market expectations.
Newmont is targeting a cash realization exceeding $2 billion through the optimization of its portfolio alongside Newcrest. The company will hone its focus on amplifying its tier-1 assets as part of a broader transformation strategy.
CEO Tom Palmer emphasized the significance of their tier-1 strategy, stating, “A key part of our tier-1 definition is the jurisdictions in which we choose to mine.” Palmer outlined the commitment to delivering $100 million in free cash flow by consolidating Newmont and Newcrest, necessitating a reduction in headcount to achieve operational synergies.
With an eye on reducing near-term debt by $1 billion, the planned divestments are expected to contribute significantly to this goal. Newmont concluded the previous year with a total debt of $8.8 billion.
The company’s shares hit their lowest point since June 2019. The reduction in the yearly dividend, dropping from an average of $1.60 per share to a fixed dividend of $1.00 per share, coupled with a diminished production outlook for 2024, played a role in the declining share value, as pointed out by Anita Soni, Managing Director of Equity Research at CIBC.
Looking forward, Newmont anticipates producing 6.93 million ounces of gold in 2024, a notable increase from the 5.5 million ounces reported last year.
For the three months ending December 31, the company reported an adjusted net income of 50 cents per share, surpassing estimates of 46 cents, according to LSEG data.
In organizational changes, Chief Operating Officer Rob Atkinson is set to step down on May 2, to be succeeded by former Anglo American Platinum top executive Natascha Viljoen, as previously announced. This leadership transition aligns with Newmont’s ongoing commitment to navigating the evolving dynamics of the gold mining industry.
