Newmont posts US$2.5B loss, seeks extra $500M synergies

Newmont has reported a net loss of US$2.5 billion on revenues of $11.8 billion for 2023, compared with a net loss of $459 million in 2022. The loss was driven by $1.9 billion in impairment charges, $1.5 billion in reclamation charges and $464 million in transaction and integration costs related to the acquisition of Newcrest Mining in November 2023.

Newmont's gold equivalent production increased 7.2% to 6.4Moz in 2023, of which gold was 5.55Moz, at an all-in-sustaining cost (AISC) of $1444/oz, 19.2% higher than in 2022. Newmont produced 891,000oz of gold equivalent from copper, silver, lead and zinc. Newmont calculated its gold equivalent ounces using metals prices of $1400/oz for gold, $3.50/lb copper, $20/oz silver, $1/lb lead and $1.20/lb zinc for 2023.

The company has given guidance of the production of 6.9Moz gold in 2024 at an AISC of $1400/oz, with $1.8 billion of sustaining capital spend and d $1.3 billion in development capital spending as it works towards producing 6.7Moz of gold by 2028 and 8.3Moz of gold equivalent, which it expects will bring its ASIC down to $1200/oz from 2026 and beyond.

"2023 was a transformational year for Newmont. … With the acquisition of Newcrest now complete, our principal focus for 2024 is to integrate and transform our leading portfolio of tier one assets into a unique collection of the world's best gold and copper operations and projects," Newmont chief executive Tom Palmer said.

Balance sheet

Newmont ended 2023 with $3 billion in cash, 4.3% more than at the end of 2022. However, its long-term debt jumped 24.8% to $7 billion, assuming more than $1 billion of debt through acquiring Newcrest. Newmont's current liabilities jumped 105% to just under $6 billion, taking its total liabilities to $26.3 billion. The company paid $365 million in interest in the year.

Chief financial officer Karyn Ovelmen said during Newmont's 2023 results conference call that the company will maintain a $3 billion cash balance and seek to lower gross debt to $8 billion from $8.8 billion at the end of 2023 before allocating funds to the $1 billion share buyback program.

The company declared a 25c/share dividend for the quarter. In 2023, Newmont paid out $1.4 billion to shareholders in dividends, more than double the $700 million paid by Barrick Gold and the $686 million in dividends and share buybacks by Agnico Eagle Mines.

Future

The Newcrest acquisition means Newmont has 10 tier-one operations, including six assets it manages at Tanami, Boddington, Peñasquito, Ahafo, Cadia and Lihir. The acquisition helped boost Newmont gold reserves by 41.4% to 135.9Moz, 30% larger than the nearest peer. The company said it has 14Mt copper reserves, and its portfolio includes six world-class copper-gold projects at Red Chris block cave, Wafi-Golpu block cave, Yanacocha Sulphides, Galore Creek, Nueva Union and Norte Abierto.

The Newcrest acquisition helped create a tier one district in British Columbia where Newmont "will be operating for at least the next century," Palmer said during the conference call.

The company expects to deliver an expected $500 million in synergies related to the Newcrest transaction by the end of 2025 and also plans to raise $2 billion by divesting six non-core assets: Éléonore, Musselwhite, Porcupine, Cripple Creek & Victor Mine (CC&V), Akyem and Telfer, as well as two non-core projects, including Havieron and Coffee.

Éléonore, Musselwhite, Porcupine and Coffee came from Newmont's 2019 acquisition of Goldcorp, Telfer and Havieron are from Newcrest, and Cripple Creek & Victor (CC&V) and Akyem are from Newmont. Four assets are in Canada, one in the US, two in Australia and one in Ghana.

Newmont has four projects in execution in 2024, including Tanami Expansion 2, Ahafo North and Cadia block caves, and expects to invest an average of $1.3 billion per year of development capital through 2028.

Newmont updated the cost and time schedule of the Tanami Expansion 2 project in Australia, where development capital increased from $1.7 billion to $1.8 billion, with commercial production now expected in the second semester of 2027.

Shares in Newmont opened 3% lower at $32.20, valuing the company at $37.1 billion.