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Teething trouble at Boddington irrelevant

Newmont Corporation 26 October 2021 Update
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Newmont Corporation

Teething trouble at Boddington irrelevant

Q321 forecast adjustments

Metals & mining

26 October 2021

Price

US$57.91

Market cap

US$46,270m

Net debt (US$m) at end-June 2021

1,574

Shares in issue

799.0m

Free float

99.8%

Code

NEM

Primary exchange

NYSE

Secondary exchange

TSX

Share price performance

%

1m

3m

12m

Abs

7.5

(3.7)

(4.2)

Rel (local)

4.9

(6.9)

(27.3)

52-week high/low

US$74.4

US$53.6

Business description

Founded in 1916, Newmont Corporation is the world’s leading gold company with a world-class portfolio of assets in North and South America, Australia and Africa. It is the only gold producer in the S&P 500 Index, and is widely recognised for its ESG practices and as a leader in value creation, safety and mine execution.

Next events

Q321 results

28 October 2021

Yanacocha Sulphides decision

H221

Q421/FY21 results

February 2022

Analyst

Charles Gibson

+44 (0)20 3077 5724

Newmont Corporation Corporation is a research client of Edison Investment Research Limited.

Since August, there have been a number of developments at Newmont Corporation pertaining to its operational performance for the remainder of FY21. Chief among these was the announcement on 5 October that it had delivered the gold industry’s first Autonomous Haulage System (AHS) fleet to its Boddington mine in Western Australia. Notwithstanding COVID-19, the fully autonomous haulage fleet was delivered on time and on budget and will improve both mine safety and productivity as well as its life. Newmont expects full ramp up and realisation of these benefits in the near future. However, during commissioning, the project faced a number of challenges, including unusually severe weather and heavy rainfall, shovel reliability and operational delays associated with managing bench hygiene, as a result of which it now expects to produce 140koz fewer ounces of gold than originally anticipated in FY21 (cf company-wide attributable production guidance for FY21 of 6.5Moz ±5%).

Year end

Revenue (US$m)

PBT*
(US$m)

EPS*
(US$)

DPS
(US$)

P/E
(x)

Yield
(%)

12/19

9,740

3,693

1.32

**1.44

43.9

2.5

12/20

11,497

3,143

2.66

1.45

21.8

2.5

12/21e

11,975

3,281

2.88

2.20

20.1

3.8

12/22e

12,185

3,537

2.81

2.20

20.6

3.8

Note: *EPS are normalised, excluding amortisation of acquired intangibles and exceptional items. **Includes special dividend of US$0.88/share.

Lingering coronavirus disruptions

At the same time as it was commissioning the AHS at Boddington, in Q3, Newmont’s other mine in Australia, Tanami, was shut for two weeks as a result of anti-coronavirus measures. In addition, Barrick has also announced preliminary production results for its operations for Q321 (including NGM and Pueblo Viejo in which Newmont also has interests). This note adjusts for all of these developments.

Basic adjusted EPS forecast still higher than in April

As a consequence of this combination of factors, we have reduced our basic adjusted EPS forecast for FY21 by 10.3%. Nevertheless, at US$2.879/share, it remains 6.2% higher than our forecast prior to our August upgrade. Moreover, while our forecast is towards the bottom end of the range of analysts’ expectations (see Exhibit 3), we note that Newmont has outperformed our expectations in each of the last three quarters since we initiated coverage of the stock (ie a 100% record).

Valuation: 24% premium to the share price

In the light of these changes, we have reduced our valuation of Newmont by a modest 0.6% to US$71.61/share (cf US$72.05/share previously). This valuation puts Newmont on a premium rating relative to its peers. However, this may be justified by the company’s size, track record and the fact that almost all of its operations are in top-tier jurisdictions. In the meantime, it remains cheap relative to historical valuation measures, which continue to imply a share price of nearly US$100/share.

Q321 forecast adjustments

Since our last note on the company (see Material outperformance begets material upgrade, published on 2 August 2021), there have been a number of developments at Newmont pertaining to its operational and financial performance for the remainder of FY21. Chief among these was Newmont’s announcement on 5 October that it had delivered the gold industry’s first Autonomous Haulage System (AHS) fleet at Boddington (Western Australia’s largest gold mine). Notwithstanding the coronavirus pandemic, the fully autonomous haulage fleet, comprising 36 Caterpillar trucks, was delivered on time and on budget (US$150m) and will improve mine safety and productivity, while simultaneously extending its productive life. During commissioning, however, the project faced several challenges, including unusually severe weather and heavy rainfall, shovel reliability and operational delays associated with managing bench hygiene as mining moved into the deeper sections of the pit, as a result of which the mine delivered lower ex-pit tons to the plant than anticipated and therefore now expects to produce 140koz (or 16.9%) fewer ounces than originally expected in FY21 (note that, for the purposes of our financial modelling, below, we have assumed that this effect falls approximately in the ratio two-thirds/one-third for Q3:Q4).

Other developments include:

the announcement by Barrick of its full Q221 results on 9 August (including cost details for Nevada Gold Mines); and

preliminary gold and copper production and sales results from Barrick's operations for Q321, released on 14 October 2021. Among other things, this revealed 495koz and 485koz gold produced and sold at NGM (61.5% basis), respectively, during the quarter (cf Edison’s prior forecast of 553koz produced and sold) and 127koz and 125koz gold produced and sold at Pueblo Viejo (60% basis) cf Edison’s prior forecast of 118koz gold produced and sold.

Operations at Nevada Gold Mines continued to be adversely affected by the mechanical mill failure at Carlin’s Goldstrike roaster in Q2 (albeit this was repaired in late Q3). In addition, we believe that a number of Newmont’s mines may have continued to be adversely affected by lingering disruptions related to the coronavirus pandemic, including Tanami in Australia, which was shut for two weeks during the quarter.

As noted at the time of Newmont’s Q420/FY20 results, both (higher) production and (lower) costs were expected to be weighted towards the second half (approximately in the ratio 47:53) in FY21 and this effect was anticipated to be most pronounced in the first and last quarters of the year. In part, this profile was expected to reflect rising grade profiles, in particular at Boddington and Ahafo (the latter also being as a result of volume, driven by productivity improvements throughout the year from the change in mining method at Subika underground to sub-level shrinkage). However, Merian, Musselwhite, Porcupine and CC&V were all expected to exhibit rising production profiles as well. At the same time, costs were expected be weighted in the other direction, that is H221 costs were expected to be lower than H121 costs. In part, this reflected lower production in H121. However, it also reflected higher sustaining capital costs in H121 relating to the installation of Boddington’s AHS. In the light of the developments noted above, however, we believe that Boddington will have been required to mill material from lower-grade stockpiles in Q3 and, to some extent, in Q4, with the result that the overall recovery in production and the decline in costs expected in H2 will now be delayed until Q4. An updated summary of our production and cost assumptions for each of Newmont’s geographic sub-divisions in the light of these developments is provided in Exhibit 1, below.

Exhibit 1: Newmont Q321e operational results, current cf prior forecasts

Region

Production

Costs applicable to sales

Q121a

Q221a
(koz)

Q321e
(prior)

Q321e
(current)

Change
(%)

Q121a

Q221a
(US$/oz)

Q321e
(prior)

Q321e
(current)

Change
(%)

North America

413

397

445

445

u/c

736

769

748

748

u/c

South America

174

189

179

179

u/c

791

721

852

852

u/c

Australia

269

299

377

237

-62.9

750

764

604

918

+52.0

Africa

205

202

217

217

u/c

758

763

678

678

u/c

Nevada

303

284

346

310

-10.4

745

753

646

709

+9.8

Sub-total

1,364

1,371

1,563

1,388

-11.2

752

755

699

775

+10.9

Pueblo Viejo (40%)

91

78

79

85

+7.6

Total (attributable) gold

1,455

1,449

1,642

1,473

-10.3

Source: Newmont Corporation, Edison Investment Research. Note: Totals may not add up owing to rounding.

In addition, we have adjusted our forecasts for actual rather than forecast metals prices – principally, US$1,790/oz gold cf US$1,798/oz forecast previously for Q321 and US$1,791/oz cf US$1,796/oz for Q421. In the light of these changes, our updated financial forecasts for Newmont for the remainder of FY21, by quarter, are now as follows:

Exhibit 2: Newmont quarterly income statement, Q320–Q421e versus our prior forecast

US$m (unless otherwise indicated)

Q320

Q420

FY20

Q121

Q221

Q321e
(prior)

Q321e
(current)

Q421e
(prior)

Q421e
(current)

FY21e
(current)

FY21e
(prior)

Sales

3,170

3,381

11,497

2,872

3,065

3,252

2,935

3,257

3,102

11,975

12,446

Costs and expenses

– Costs applicable to sales

1,269

1,355

5,014

1,247

1,281

1,323

1,308

1,317

1,321

5,156

5,168

– Depreciation and amortisation

592

615

2,300

553

561

633

596

642

628

2,338

2,388

– Reclamation and remediation

38

250

366

46

57

56

56

56

56

214

214

– Exploration

48

69

187

35

52

65

65

65

65

217

217

– Advanced projects, research and development

39

30

122

31

37

37

37

37

37

141

141

– General and administrative

68

64

269

65

64

65

65

65

65

259

259

– Impairment of long-lived assets

24

20

49

0

0

0

0

0

0

0

0

– Care and maintenance

26

7

178

0

2

0

0

0

0

2

2

– Other expense, net

68

51

206

39

50

0

0

0

0

89

89

Total

2,172

2,461

8,691

2,016

2,104

2,178

2,126

2,181

2,170

8,417

8,479

Other income/(expenses)

– Gain on formation of Nevada Gold Mines

0

0

0

0

0

0

– Gain on asset and investment sales, net

1

84

677

43

0

43

43

– Other income, net

(44)

3

(32)

(82)

50

0

0

0

0

-32

(32)

– Interest expense, net of capitalised interest

(75)

(73)

(308)

(74)

(68)

(77)

(77)

(59)

(69)

-288

(278)

(118)

14

337

(113)

(18)

(77)

(77)

(59)

(69)

-277

(267)

Income/(loss) before income and mining tax

880

934

3,143

743

943

997

732

1,017

863

3,281

3,701

Income and mining tax benefit/(expense)

(305)

(258)

(704)

(235)

(341)

(359)

(264)

(366)

(311)

-1,150

(1,301)

Effective tax rate (%)

34.7

27.6

23.4

31.6

36.2

36.0

36.0

36.0

36.0

35.1

35.2

Profit after tax

575

676

2,439

508

602

638

469

651

552

2,131

2,399

Equity income/(loss) of affiliates

53

70

189

50

49

36

40

35

35

174

170

Net income/(loss) from continuing operations

628

746

2,628

558

651

674

509

686

588

2,305

2,569

Net income/(loss) from discontinued operations

228

18

163

21

10

31

31

Net income/(loss)

856

764

2,791

579

661

674

509

686

588

2,336

2,600

Minority interest

17

(60)

(38)

20

11

29

29

29

29

88

89

Do (%)

2.0

(7.9)

(1.4)

3.5

1.7

4.3

5.6

4.2

4.9

3.8

3.4

Net income/(loss) attributable to stockholders

839

824

2,829

559

650

645

480

658

559

2,248

2,512

Adjustments to net income

(142)

32

(689)

35

20

0

0

0

0

55

55

Adjusted net income

697

856

2,140

594

670

645

480

658

559

2,303

2,567

Net income/(loss) per common share (US$)

Basic

– Continuing operations

0.761

1.005

3.317

0.672

0.799

0.808

0.601

0.823

0.700

2.772

3.101

– Discontinued operations

0.284

0.022

0.203

0.026

0.012

0.000

0.000

0.000

0.000

0.039

0.039

– Total

1.045

1.027

3.520

0.698

0.811

0.808

0.601

0.823

0.700

2.811

3.140

Diluted

– Continuing operations

0.758

1.002

3.309

0.671

0.797

0.802

0.597

0.817

0.695

2.752

3.080

– Discontinued operations

0.283

0.022

0.202

0.026

0.012

0.000

0.000

0.000

0.000

0.038

0.038

– Total

1.041

1.025

3.511

0.697

0.809

0.802

0.597

0.817

0.695

2.791

3.118

Basic adjusted net income per share (US$)

0.868

1.067

2.663

0.742

0.836

0.808

0.601

0.823

0.700

2.879

3.209

Diluted adjusted net income per share (US$)

0.865

1.065

2.656

0.741

0.834

0.802

0.597

0.817

0.695

2.859

3.186

DPS (US$/share)

0.400

0.550

1.450

0.550

0.550

0.550

0.550

0.550

0.550

2.200

2.200

Source: Newmont Corporation, Edison Investment Research

After our revisions for the remainder of the year, our basic adjusted EPS forecast of US$2.879/share for FY21 compares to the market consensus, as follows:

Exhibit 3: FY21 Basic adjusted EPS forecast, Edison versus consensus (US$/share)

Q121

Q221

Q321e

Q421e

Sum Q1–Q421e

FY21e

Edison forecast

0.74

0.84

0.60

0.70

2.88

2.88

Consensus forecast

0.74

0.84

0.77

0.90

3.25

3.28

High

0.74

0.84

1.03

1.35

3.96

3.94

Low

0.74

0.84

0.66

0.68

2.92

2.88

Source: Edison Investment Research, Refinitiv (20 October 2021)

While these changes represent an 10.3% reduction relative to previously, at US$2.879/share, they nevertheless leave our basic adjusted EPS 6.2% higher than it was before our August upgrade, when our forecast was US$2.711/share (see Material outperformance begets material upgrade, published on 2 August 2021). An analysis of the individual component parts of the changes to our basic adjusted EPS forecasts for Q3, Q4 and FY21 is as follows:

Exhibit 4: Components of changes to basic adjusted EPS forecasts, October cf August 2021 (US cents per share)

Item

Q321 forecast

Q421 forecast

FY21 forecast

August 2021 forecast

80.8

82.3

320.9

Barrick Q221 results

+0.9

+1.0

+1.9

Metal prices

-1.4

-2.7

-4.1

Boddington production

-11.7

-7.6

-19.3

Tanami production

-4.8

-0.3

-5.1

NGM Q321 production and sales

-4.2

-2.7

-6.9

Pueblo Viejo Q321 production and sales

+0.5

0.0

+0.5

Total change

-18.7

-12.3

-33.1

October 2021 forecast

60.1

70.0

287.9

Source: Edison Investment Research. Note: Numbers may not add up owing to rounding.

While Boddington represents the largest single component of our forecast changes for the year, it is continuing to ramp up its truck fleet to full productivity and to fine tune its haulage system to operate in a deep open pit mine. In this respect, the reasons for the changes may be characterised as no more than early-stage teething problems, of the type that beset many mining projects – especially in cases where the deployment of new technology is concerned. In the longer term, however, Newmont is convinced that the Boddington AHS project is a positive development in implementing more sustainable and efficient projects, encompassing the following benefits (among others):

The use of autonomous haulage trucks improves mine safety by reducing employee exposure to potential vehicle interactions, helping to reduce fatality and reportable injury risks.

The transition to a fully autonomous haulage fleet has extended the current mine life of Boddington by at least two years.

With Boddington as a precedent, Newmont has the opportunity to expedite roll-out of AHS to other appropriate operations in its portfolio (eg possibly Penasquito).

In addition, the AHS fleet provides new job opportunities for Boddington employees.

As a result of AHS, new roles were created, including mine control supervisor and controllers, pit builders, pit technicians, mining system field systems and technicians, and mining system engineers and planners.

Consequently, Newmont was able to successfully engage with all affected employees to identify their preferred development pathway, including opportunities for re-skilling, retraining or redeploying (note: in this respect, Newmont was successful in providing opportunities for all employees who wished to remain with the company; employees who did not were able to take voluntary redundancy instead).

Dividend forecasts unchanged

At the time of its Q320 results in October 2020, Newmont unveiled a new dividend framework whereby it formally rebased its dividend to a ‘base’ payout of US$1.00/share (or US$0.25/share per quarter) at a gold price of US$1,200/oz, but also stated explicitly that it would return 40–60% of incremental attributable free cash flow that it generated above a gold price of US$1,200/oz to shareholders. Under the new framework, Newmont will augment the ‘base’ payout in increments of US$0.60–0.90/share per year (or US$0.15–0.225/share per quarter), evaluated in gold price increments of US$300/oz for gold prices above US$1,200/oz, with the goal of targeting 40–60% of incremental free cash flow above a gold price of US$1,200/oz returned to shareholders. Thus, a (sustainable) gold price at US$1,800/oz should (on this basis) result in a quarterly dividend of US$0.55/share, whereas a gold price below that level could result in one of US$0.40/share. In this context, however, it is worth noting that Newmont affords itself a degree of latitude in the level of the ultimate payout in that, should it decide to pay out nearer 60% of incremental attributable free cash flow to shareholders that it generates above a US$1,200/oz gold price, rather than 40%, then there is scope for the quarterly dividend to remain at the higher level, notwithstanding the gold price dipping below the US$1,800/oz level. In consequence, we have left our dividend forecasts for Q321–Q421 and FY21 unchanged on the basis that we believe the gold price temporarily dipping below US$1,800/oz is unlikely to result in any readjustment in the quarterly distribution.

Valuation

Our approach to the valuation of Newmont has remained unchanged since our initiation note (see The sustainable leader, published on 9 February 2021; see that note for a fuller explanation of the methodologies involved). The following is an update of our valuation in light of the changes to our Q3, Q4 and FY21 forecasts.

Absolute valuation

Newmont is a multi-asset company that has shown a willingness and desire to trade assets in the past to maintain production, reduce costs and maximise shareholder returns. As a result, rather than our customary method of discounting maximum potential dividends over the life of operations back to FY21, in the case of Newmont, we have opted to discount forecast dividends back over six years from the start of FY21 and then to apply an ex-growth terminal multiple to forecast cash flows in that year (ie FY26) at the appropriate discount rate. In the normal course of events, we would exclude exploration expenditure from such a calculation on the basis that it is a discretionary investment. In the case of Newmont, however, we have included it in our estimate of future cash flows on the grounds that it may be a critical component of ongoing business performance in its ability to continually expand and extend the lives of the company’s assets via exploration.

As a result of the changes made to our short-term financial forecasts for FY21, our estimate of Newmont’s pre-financing cash flow in FY26 has declined by a modest 2.5% to US$5.14 per share (cf US$5.27/share previously and US$1.22/share in FY18 – note that it now reaches US$5.27/share one year later in FY27). On this basis, applying an almost unchanged (real) discount rate of 6.4% (calculated from a nominal expected equity return of 9% and long-term inflation expectations of 2.4192% as defined by US 30-year break-evens – source: Bloomberg, 26 October), our terminal valuation of the company at end-FY26 is US$80.01/share (cf US$81.10/share previously). However, note that this valuation is based on the inherently conservative assumption of zero growth in (real) cash flows beyond FY26.

In conjunction with forecast intervening dividends, this terminal value then discounts back to a net present value of US$71.57/share (cf US$73.15/share previously) at the start of FY21.

Exhibit 5: Newmont forecast valuation and cash flow per share, FY21–26e (US$/share)

Source: Edison Investment Research

This (absolute) analysis inherently excludes any value to Newmont from its other development assets, such as Coffee, Galore Creek, Conga, Norte Abierto and Nueva Union, which together represent combined reserves and resources of 53.93Moz attributable to Newmont. As noted previously, it is also conservative in its assumption of zero growth in (real) cash flows after FY26, whereas historically the gold price has appreciated at a rate of c 2% per year in real terms.

Relative Newmont valuation

Newmont’s valuation on a series of commonly used measures, relative to its peer group of the 10 largest publicly quoted senior gold producers, is as follows.

Exhibit 6: Newmont valuation relative to peers

P/E

P/cash flow (x)

EV/EBITDA (x)

Yield (%)

Company

Ticker

Year 1

Year 2

Year 3

Year 1

Year 2

Year 3

Year 1

Year 2

Year 3

Year 1

Year 2

Year 3

Newmont (Edison)

NEM

20.1

20.6

22.4

10.1

9.6

9.7

7.9

7.7

8.5

3.8

3.8

3.8

Newmont (consensus)

NEM

17.7

16.6

18.4

9.6

8.9

9.4

7.4

7.1

7.6

3.7

3.8

3.7

Barrick

ABX

16.7

15.7

15.8

7.4

6.9

6.8

6.7

6.3

6.3

3.6

1.7

2.1

AngloGold

ANGJ

10.3

7.9

7.7

7.0

6.6

5.4

5.1

4.2

4.1

1.4

1.6

2.1

Polyus

PLZL MM

10.9

9.6

9.5

8.5

7.8

7.6

8.3

8.1

7.0

3.4

4.6

4.8

Gold Fields

GFI

9.8

9.4

8.0

6.8

6.4

5.9

4.4

4.4

4.0

3.0

3.1

3.5

Kinross

K

15.9

8.2

7.5

6.5

4.0

3.8

5.7

3.7

3.2

1.9

1.9

1.8

Agnico-Eagle

AEM

21.1

18.5

18.8

8.7

8.4

8.4

8.1

6.8

6.6

2.5

2.5

2.5

Newcrest

NCM AU

17.7

17.1

20.8

9.5

8.9

10.0

7.3

7.0

8.0

1.4

1.5

1.3

Harmony

HARJ

8.8

7.5

15.5

5.3

4.7

18.6

3.8

3.3

5.2

2.1

3.4

0.6

Endeavour (consensus)

EDV

11.4

10.4

10.9

5.6

5.2

5.3

4.9

4.7

5.2

2.1

2.4

2.2

Average (excl NEM)

13.6

11.6

12.7

7.3

6.5

8.0

6.0

5.4

5.5

2.4

2.5

2.3

Source: Edison Investment Research, Refinitiv. Note: Consensus and peers priced on 26 October 2021.

From this table, it can be seen that, while Newmont continues to command a premium rating relative to its peer group on most valuation measures, it remains materially cheap with respect to its dividend yield. Based on consensus forecasts, we estimate that Newmont’s share price would have to rise by an average of 91.3% for its dividend yield to match those of its peer group. Based on our forecasts, we estimate that its share price would have to rise 92.8%.

As before, one further observation concerning the comparability of the above measures is merited. Given its policy of proportionately consolidating its interest in Nevada Gold Mines and that it owns 100% interests in the majority of its remaining mining operations (with the exceptions of Yanacocha and Merian), estimates of cash flow in particular are also close to estimates of cash flow attributable to shareholders (Newmont estimates that 97% of free cash flow was attributable to the company in Q221). This is in contrast to a number of its peers, where earnings and cash flow from assets not 100%-owned tend to be fully consolidated and therefore may not so easily approximate cash flow attributable to shareholders, making direct comparison using these measures either difficult or, potentially, misleading.

Blended average valuation

A summary of our updated valuation of Newmont over 29 measures of value across three different methodologies (namely absolute, historical and peer group) over the next five years is shown in Exhibit 7, below.

Exhibit 7: Newmont valuation summary (US$/share in years shown)

Basis of valuation

FY21e

FY22e

FY23e

FY24e

FY25e

Absolute

6.4% real cost of equity and ex-growth terminal multiple

71.57

73.96

76.52

79.23

82.72

Historical

Share price implied by Edison EPS forecast (US$/share)

70.17

68.51

62.90

53.49

Historical

Share price implied by Edison DPS forecast (US$/share)

123.32

123.32

123.32

89.69

Historical

Share price implied by consensus EPS forecast (US$/share)

79.94

84.81

76.77

84.57

Historical

Share price implied by consensus DPS forecast (US$/share)

120.52

122.76

120.52

126.68

Peer group

Share price implied from Edison EBITDA forecast (US$/share)

44.71

41.95

Peer group

Share price implied from consensus EBITDA forecast (US$/share)

48.78

46.11

Peer group

Share price implied from Edison cash flow per share (US$/share)

41.44

39.53

Peer group

Share price implied from consensus cash flow per share (US$/share)

44.00

42.59

Average (US$/share)

71.61

71.51

92.01

86.73

82.72

Source: Edison Investment Research (underlying consensus data: Refinitiv, 26 October 2021).

Exhibit 8: Financial summary

Accounts: US GAAP, year-end: December, US$m

 

 

2018

2019

2020

2021e

2022e

2023e

2024e

2025e

INCOME STATEMENT

 

 

 

 

 

 

 

 

 

 

Total revenues

 

 

7,253

9,740

11,497

11,975

12,185

11,623

12,219

11,862

Cost of sales

 

 

(4,093)

(5,195)

(5,014)

(5,156)

(5,143)

(5,155)

(5,768)

(5,768)

Gross profit

 

 

3,160

4,545

6,483

6,818

7,042

6,467

6,450

6,094

SG&A (expenses)

 

 

(244)

(313)

(269)

(259)

(260)

(260)

(260)

(260)

R&D costs

 

 

(350)

(415)

(309)

(358)

(406)

(406)

0

0

Other income/(expense)

 

 

(406)

(253)

(831)

(337)

(169)

(169)

(84)

(83)

Exceptionals and adjustments

(424)

2,220

214

(106)

0

0

0

0

Depreciation and amortisation

 

 

(1,215)

(1,960)

(2,300)

(2,338)

(2,515)

(2,613)

(3,384)

(3,583)

Reported EBIT

 

 

945

3,994

3,451

3,569

3,692

3,019

2,722

2,167

Finance income/(expense)

 

 

(207)

(301)

(308)

(288)

(155)

82

4

16

Reported PBT

 

 

738

3,693

3,143

3,281

3,537

3,100

2,727

2,183

Income tax expense (includes exceptionals)

 

 

(419)

(737)

(515)

(976)

(1,168)

(970)

(884)

(793)

Reported net income

 

 

380

2,884

2,791

2,336

2,369

2,130

1,842

1,390

Basic average number of shares, m

 

 

533

735

804

800

799

799

799

799

Basic EPS (US$)

 

 

0.64

3.82

3.52

2.81

2.81

2.58

2.19

1.60

Adjusted EBITDA

 

 

2,584

3,734

5,537

6,013

6,206

5,632

6,106

5,750

Adjusted EBIT

 

 

1,369

1,774

3,237

3,675

3,692

3,019

2,722

2,167

Adjusted PBT

 

 

1,162

1,473

2,929

3,387

3,537

3,100

2,727

2,183

Adjusted EPS (US$)

 

 

1.35

1.32

2.66

2.88

2.81

2.58

2.19

1.60

Adjusted diluted EPS (US$)

 

 

1.34

1.32

2.66

2.86

2.79

2.56

2.18

1.58

BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

12,258

25,276

24,281

24,010

23,896

23,583

21,699

19,315

Goodwill

 

 

58

2,674

2,771

2,771

2,771

2,771

2,771

2,771

Other non-current assets

 

 

3,122

5,752

5,812

5,855

5,855

5,855

5,855

5,855

Total non-current assets

 

 

15,438

33,702

32,864

32,636

32,522

32,209

30,325

27,941

Cash and equivalents

 

 

3,397

2,243

5,540

5,579

5,744

6,082

8,499

11,306

Inventories

 

 

630

1,014

963

1,119

1,139

1,086

1,142

1,109

Trade and other receivables

 

 

254

373

449

361

367

350

368

357

Other current assets

 

 

996

2,642

1,553

1,584

1,584

1,584

1,584

1,584

Total current assets

 

 

5,277

6,272

8,505

8,643

8,834

9,103

11,594

14,356

Non-current loans and borrowings

 

 

3,608

6,734

6,045

5,495

5,003

4,589

4,589

4,589

Other non-current liabilities

 

 

3,808

8,438

8,076

8,137

8,114

8,091

7,984

7,876

Total non-current liabilities

 

 

7,416

15,172

14,121

13,632

13,117

12,680

12,573

12,465

Trade and other payables

 

 

303

539

493

465

464

465

520

520

Current loans and borrowings

 

 

653

100

657

657

657

657

657

657

Other current liabilities

 

 

831

1,746

2,219

2,219

2,219

2,219

2,219

2,219

Total current liabilities

 

 

1,787

2,385

3,369

3,341

3,340

3,341

3,396

3,396

Equity attributable to company

 

 

10,502

21,420

23,008

23,347

23,836

24,140

24,615

24,612

Non-controlling interest

 

 

1,010

997

871

959

1,063

1,150

1,335

1,825

CASH FLOW STATEMENT

 

 

 

 

 

 

 

 

 

 

Profit for the year

 

 

380

2,884

2,791

2,336

2,369

2,130

1,842

1,390

Taxation expenses

 

 

386

832

704

1,150

1,296

1,118

1,032

886

Net finance expenses

 

 

207

301

308

288

155

(82)

(4)

(16)

Depreciation and amortisation

 

 

1,215

1,960

2,300

2,338

2,515

2,613

3,384

3,583

Share based payments

 

 

76

97

72

0

0

0

0

0

Other adjustments

 

 

749

(2,131)

(654)

140

169

169

84

83

Movements in working capital

 

 

(743)

(309)

295

(249)

(220)

(122)

(210)

(147)

Interest paid / received

 

 

(207)

(301)

(308)

(288)

(155)

82

4

16

Income taxes paid

 

 

(236)

(498)

(926)

(1,150)

(1,296)

(1,118)

(1,032)

(886)

Cash from operations (CFO)

 

 

1,827

2,866

4,882

4,566

4,833

4,791

5,100

4,910

Capex

 

 

(1,032)

(1,463)

(1,302)

(1,740)

(2,400)

(2,300)

(1,500)

(1,200)

Acquisitions & disposals net

 

 

(98)

224

1,463

(328)

0

0

0

0

Other investing activities

 

 

(47)

41

65

0

0

0

0

0

Cash used in investing activities (CFIA)

 

 

(1,177)

(1,226)

91

(2,068)

(2,400)

(2,300)

(1,500)

(1,200)

Net proceeds from issue of shares

 

 

(98)

(479)

(521)

(149)

0

0

0

0

Movements in debt

 

 

0

(1,186)

(175)

(550)

(492)

(414)

0

0

Dividends paid

 

 

(301)

(889)

(834)

(1,829)

(1,854)

(1,815)

(1,343)

(1,394)

Other financing activities

 

 

(56)

(223)

(150)

69

77

77

160

490

Cash from financing activities (CFF)

 

 

(455)

(2,777)

(1,680)

(2,459)

(2,268)

(2,152)

(1,183)

(904)

Currency translation differences and other

 

 

(4)

(3)

6

0

0

0

0

0

Increase/(decrease) in cash and equivalents

 

 

191

(1,140)

3,299

39

165

338

2,417

2,806

Cash and equivalents at end of period

 

 

3,489

2,349

5,648

5,687

5,852

6,190

8,607

11,414

Net (debt)/cash

 

 

(864)

(4,591)

(1,162)

(573)

84

836

3,253

6,060

Movement in net (debt)/cash over period

 

 

(864)

(3,727)

3,429

589

657

752

2,417

2,806

Source: Company sources, Edison Investment Research.

General disclaimer and copyright

This report has been commissioned by Newmont Corporation and prepared and issued by Edison, in consideration of a fee payable by Newmont Corporation. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

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Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

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Frankfurt +49 (0)69 78 8076 960

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United States of America

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Newmont Corporation and prepared and issued by Edison, in consideration of a fee payable by Newmont Corporation. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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