Last close As at 06/08/2026
—
— 0.00 (0.00%)
Market capitalisation
—
Research: Metals & Mining
Newmont has reinstated production and cost guidance for FY20 57 days after it withdrew it. All told, COVID-19 appears likely to cost the company c 6% of its attributable production (or 0.4Moz) at cash and all-in sustaining (AISC) costs US$25/oz and US$40/oz higher than previously estimated at US$775/oz and US$1,015/oz, respectively. However, it will also defer or defray US$300m in capex. Of 12 mines and two joint ventures, 13 are now expected to be fully operational within a matter of weeks.
Newmont Corporation |
Translating size into profitability
|
Metals & mining |
QuickView
22 May 2020 |
Share price graph
Share details
Business description
Bull
Bear
Analyst
Newmont Corporation is a client of Edison Investment Research Limited |
||||||||||||||||||||||
Newmont has reinstated production and cost guidance for FY20 57 days after it withdrew it. All told, COVID-19 appears likely to cost the company c 6% of its attributable production (or 0.4Moz) at cash and all-in sustaining (AISC) costs US$25/oz and US$40/oz higher than previously estimated at US$775/oz and US$1,015/oz, respectively. However, it will also defer or defray US$300m in capex. Of 12 mines and two joint ventures, 13 are now expected to be fully operational within a matter of weeks.
Return to major new projects
Newmont has 95.73Moz gold reserves plus 103.57Moz resources plus a further 63m gold equivalent ounces (GEOs) in the form of co-products. Its stated strategy is to lead the gold sector in creating value for shareholders by 1) delivering superior operational execution, 2) sustaining a global portfolio of long-life assets and 3) leading the sector in profitability and responsibility. Over the course of the coming decade, its plan is to produce a sustainable >6Moz gold pa plus an additional 1.2–1.4Moz of co-product GEOs at an all-in sustaining cost declining to US$800–900/oz by FY23. Over the same timeframe, (approved) development capital is anticipated to fall from US$500–600m in FY21 to <US$100m in FY24.
The next wave of growth
Newmont has declined to rush the development of a number of mega-projects in its portfolio in recent years, preferring instead to advance a series of medium-sized projects on a faster timeline. However, the development of the Yanacocha sulphides project in Peru marks a decisive departure from that strategy. This shift will a) provide the first big test of Newmont’s management in developing a large-scale project for a number of years and b) allow it to re-build capability in the area. In this respect, Yanacocha represents an excellent first initiative, in that it is a brownfields development within the existing footprint of mining operations, thereby facilitating permitting, infrastructure and the company’s social licence to operate. Once successfully completed, future projects of a similar scale include NuevaUnion (9.9Moz resources+reserves), Norte Abierto (26.8Moz) and Galore Creek (5.3Moz).
Valuation
Despite being the world’s largest gold producer, Newmont is good value relative to five large cap peers on 50% of four measures (P/E, P/CF, EV/EBITDA and yield) over three years and the highest yielding for every year. Pro rata to Q1 results, consensus FY20 revenue and EPS estimates appear demanding, but are achievable given NEM’s gearing to the gold price. DPS estimates are conservative.
|
Consensus estimates
Source: Company sources, Refinitiv. Note: EPS is normalised, excluding exceptional items; *Adjusted EPS (company adjusted basis); **Excluding US$0.88/share special dividend. |
|
||||||||||||
|
||||||||||||
Research: Consumer
La Doria has posted a stellar performance for Q120, with revenues up 16.4%. The COVID-19 pandemic caused consumers to seek ambient food with a long shelf-life, and at-home consumption increased due to widespread closure of the horeca channel (which La Doria does not service). The revenue increase was volume-led, which in turn benefited margins. We expect the benefit to continue in Q2, but to a lesser extent as lockdowns are eased across the world. H2 will also be somewhat dependent on the outcomes of the seasonal campaigns. We raise our estimates to reflect the benefits from the current consumption shift. Our fair value moves to €13.50 as a result (€13.00 previously).