Newmont Earnings: A Poor Result but the Company’s Strategy Remains Sound

Lower production and dividend guidance, along with increased capital expenditure, were the main takeaways from no-moat Newmont’s 2023 result, which was weaker than we expected. After its recent purchase of Newcrest, we think management has taken the opportunity to reset expectations across the business, including updating mine plans at a number of assets. The company is also targeting the sale of six smaller, higher-cost mines. We think the strategy of owning a portfolio of larger, longer-life, lower-cost mines is reasonable. At around USD 1,440 per ounce in 2023, Newmont’s all-in-sustaining costs remain elevated. Along with rising production from remaining assets across our five-year forecast period, the disposals are likely to help return unit costs to within the second quartile of the industry.