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Newmont in new US$1B share buyback

Newmont has announced a new US$1 billion share buyback programme that looks to add more flexibility to its industry-leading capital return strategy.
Newmont in new US$1B share buyback Newmont in new US$1B share buyback Newmont in new US$1B share buyback Newmont in new US$1B share buyback Newmont in new US$1B share buyback

Newmont has announced another circa US$1 billion share buyback programme for 2021

The open-market share repurchase programme over the next 18 months builds on 2020 share buying that saw about $1 billion of shares repurchased.

Newmont aims to return 40-60% of free cash flows above those generated from a base $1,200/oz gold price. It assesses the dividend policy twice a year based on a review of the gold price.

Newmont said its capital allocation strategy aimed to find a balance between steady reinvestment in the business, maintaining financial strength and flexibility, and providing sector-leading returns to shareholders.

"The share repurchase programme is among a number of tools we have the flexibility to deploy to provide the most superior set of returns to shareholders over time," said president Tom Palmer.

BMO Capital Markets' analyst Jackie Przybylowski said the buyback programme was a "meaningful" addition to the capital returns strategy yet it was affordable.

"At a flat 40c per share quarterly dividend, we expect that Newmont will distribute $1.3 billion in dividends in 2021. The addition of a $1 billion buyback (if it's completed in the calendar year) would nearly double the total capital distributed to investors. We forecast Newmont will exit 2021 at $2.5 billion net cash without the buyback, or $1.5 billion even if the full buyback is completed," she said.

Newmont will release its reserve and resource update on February 10 and report 2020 and fourth-quarter results on February 18.

Newmont recently outshone its gold rivals in the MJ Top 100 listing, retaining its title as the most valuable gold producer in 2020.

BMO has a 12-month share price target of $87 on the company.

Shares (NYSE:NEM) last traded up 2% in New York at $63.33, which capitalises it at $50.8 billion.