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Newmont raises gold-sector dividend bar

Newmont Corporation says it has raised the global gold-sector dividend bar again after more than doubling quarterly profit on higher gold prices.
Newmont raises gold-sector dividend bar Newmont raises gold-sector dividend bar Newmont raises gold-sector dividend bar Newmont raises gold-sector dividend bar Newmont raises gold-sector dividend bar

Newmont has announced a 60% increase of its quarterly dividend to US40c per share

"Our dividend is more than the next eight competitors combined," CEO Tom Palmer said.

Newmont increased its September quarter dividend by 60% to US40c/share after a 79% quarterly raise earlier this year.

Its annual $1.60/share return rate translates into a 2.7% dividend yield of 2.7% that compares with the S&P 500 Index average of 1.67%. Newmont says it has returned more than $2.5 billion to shareholders since 2019 in dividends and buybacks.

"This was the best quarterly financial performance in Newmont's history," Palmer said.

An average 30% increase in gold prices received during the quarter, to $1,913/oz, helped Newmont offset 6% lower total output of 1.54 million ounces.

Key operations in South America and Canada continued to ramp up after COVID-related downtime.

But high bullion prices helped drive record EBITDA of $1.7 billion and free cash flow of $1.3 billion.

Palmer said Newmont generated about $400 million of incremental free cash per annum for every $100 increase in the gold price above a base $1,200/oz assumption. At the current spot price its portfolio would generate more than $19 billion in annual free cash.

Overall, strong performances from Penasquito in Mexico and Musselwhite in Canada helped offset the loss of production after the sale of Red Lake (Canada) and Kalgoorlie (Australia) assets earlier in the year. Group all-in sustaining costs rose marginally to $1,020/oz on lower output and higher stripping rates at Yanacocha in Peru, Merian in Suriname, and Akyem in Ghana, and lower openpit grades at Ahafo in Ghana.

Newmont said its share of production from the Nevada Gold Mines joint venture with Barrick Gold was 377,000oz at AISC of $904/oz in the quarter. Newmont's 40-60 joint venture with Barrick at Pueblo Viejo produced 87,000oz.

Headline profit increased 140% yoy to $697 million, or 86c per share, compared with $292 million or 36c per share a year ago, on quarterly revenue of $3.17 billion, up 17% yoy.

Newmont said it had $4.8 billion cash and $7.8 billion of liquidity at the end of September.

Palmer reiterated the company's full-year guidance at about 6Moz at average AISC of $1,015/oz.

Current-year capital expenditure of $1.4 billion is focused on the Tanami Expansion 2 in Australia, developing for sub-level shrinkage mining at Subika in Ghana, and advancing laybacks at Boddington in Australia, and Ahafo.

Newmont shares (NSYE: NEM) hit a 12-month high in early August of $72.22.

At the current $60.41, the company has a market capitalisation of $48.5 billion.