Newmont earnings dip as it prepares to absorb Newcrest

Newmont, the world's largest gold producer, has reported net earnings of US$163 million on revenues of $2.5 billion for the September quarter, a 25.9% decline over the prior year period.

The company produced 1.3Moz of gold ounces and 58,000oz of co-product gold equivalent from copper, 13% less than in the June quarter and 28% down on the prior year period, reflecting the impact of a strike at Peñasquito in Zacatecas, Mexico, and lower production from non-managed joint ventures with Barrick Gold at Nevada Gold Mines in Nevada, US and Pueblo Viejo in Dominican Republic, and Ahafo in Ghana.

The all-in sustaining cost (AISC) improved 12% to $1426/oz from the June quarter, although it was 3% higher than the prior year period.

Newmont ended the quarter with $3.2 billion in cash, $5.6 billion in long-term debt and $6.2 billion in liquidity. It declared a 40c per share dividend payable in December.

Newmont revised its 2023 production outlook to 5.3Moz, 100Mlb of copper, 15Moz of silver, 100Mlb of lead and 230Mlb of zinc at an AISC of $1400. Chief executive Tom Palmer said the worse-than-expected performance at the joint venture assets the company does not manage "impacted our ability to meet production and cost target for 2023" during the results conference call.

At Ahafo in Ghana, hairline fractures in one of the large grinding mill's girth gears were detected, prompting a decision to operate at less than full capacity. The company said it expects improved production in the December quarter, with the operation to return to full processing in the June quarter of 2024. Ahafo produced 133,000oz of gold at an AISC of $1208/oz in the quarter.

Newcrest acquisition

The September results are the company's last before its acquisition of Newcrest Mining is due to close on November 6. The company said 96% of Newmont and 93% of Newcrest shareholders voted in favour of the union.

Palmer said Newmont will operate six regional business units, with the initial focus on the Newcrest assets being the integration of three key systems: fatality risk management, respect at wok and full potential programmes.

With Newmont approaching five years without a fatality, Palmer said that "good businesses don't kill people". Regarding sexism, racism, harassment and bullying in the mining industry, Palmer said "These disrespectful behaviours have no place at Newmont".

Newmont has committed to realise $2 billion within 24 months of closing the Newcrest acquisition, which Palmer said will come through project resequencing and rationalisation of some tier two operations within its portfolio of 17 operations. However, he said there is no rush.

"We can comfortably manage those 17 operations within our global operating model. … We have a number of [tier two] assets; several have the potential to grow into tier one, but some are clearly tier two," said Palmer.

Palmer said the company's resource team will go into each Newcrest operation to evaluate its reserves and resources and bring them into Newmont resource models to establish mine and business plans for them in the future.

Operations update

COO Rob Atkinson said that the Boddington mine in Australia produced 181,000oz of and 23Mlb copper in the quarter at an AISC of $1123/oz. The mine commissioned another five autonomous haul trucks to accelerate stripping in 2024 to reach higher grades in 2025.

Tanami in Australia produced 123,000oz of gold at an AISC of $890/oz. The mine achieved record mill throughput in August and record monthly production in September. It completed the concrete lining of the upper production shaft to the halfway point as part of the Tanami Expansion 2 project.