VALUATION HIGHLIGHTS
- Gold constitutes 86% of the Trefis price estimate for Newmont Corporation's stock.
WHAT HAS CHANGED?
- Latest earnings - Q4 2024
Newmont posted a healthy set of Q4 2024 results, as gold production rose considerably following the acquisition of Newcrest. Adjusted earnings came in at $1.24 per share, while revenue rose 43% year-over-year to $5.7 billion. Newmont sold 1.8 million gold ounces over the quarter.
- Asset sales for optimization
Newmont has been actively selling off non-core assets to optimize its portfolio. The company recently agreed to sell the Éléonore gold mine in Quebec to Dhilmar for $795 million. This move is part of a broader effort to divest smaller mines and development projects, aiming to raise over $2 billion to focus on high-producing Tier 1 assets.
POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE
Below are key drivers of Newmont's value that present opportunities for upside or downside to the Trefis price estimate for the company's stock:
North American Mines
- Newmont's Gold Shipments: Newmont's gold shipments declined from 5.9 million ounces in 2021 to 5.4 million ounces in 2023, in part due to a union strike at the Penasquito mine, and lower production due to ongoing upgrades at the Pueblo Viejo mine. However, it increased to 6.5 million ounces in 2024, led by the company's acquisition of Newcrest and higher production from existing mines. We expect shipments to fall marginally before rising in the long term.
- Newmont's Gold EBITDA Margin: Newmont's margins for gold decline from 47% in 2021 to 36% in 2023 due to higher costs and lower production. However, it went up to 45% in 2024 due to higher average realized gold prices and higher sales volumes. We expect the metric to grow to about 51% in the long run, driven by higher volumes and synergies from the Newcrest deal.
BUSINESS SUMMARY
Newmont Corporation is a gold and copper producer with gold mining operations in the United States, Australia, Peru, Ghana, Canada, New Zealand, and Mexico. The company's proven and probable gold reserves stood at 134.1 million ounces at the end of 2024. The company also has 13.5 million tonnes of copper reserves and nearly 530 million ounces of silver reserves.
SOURCES OF VALUE
Gold mining drives value
Gold mining is the most important division for Newmont Corp in terms of revenues and profits. In 2024, the company's consolidated gold production stood at 6.9 million ounces. Gold generally accounts for roughly 84% of the company's consolidated sales revenue. The company's Gold Mines are its most valuable segment, per our estimates.
KEY TRENDS
Rising demand for gold from emerging economies
Demand for gold is expected to be quite robust from major emerging economies. Rapidly growing middle-class populations and rising incomes in these countries, particularly China and India - the world's largest gold consumers - are expected to result in a sustained jewelry and investment demand for gold.
Higher demand for copper
The long-term demand outlook for copper looks favorable, given the adoption of renewable energy and electric vehicles, both of which are very copper-intensive. For perspective, EVs use over 2x the copper used by traditional internal combustion engine vehicles. Renewable generation such as solar and wind requires over 5x more copper for each installed MW compared to traditional nuclear and fossil fuel-based power generation. Moreover, U.S. plans for a $1.2 trillion revamp of infrastructure should raise the demand outlook and create a favorable market environment for copper.
