Newmont is the world’s leading gold company and producer of copper, silver, zinc and lead. The company has mining operations in North America (37% of gold reserves), South America (30%), Australia (21%) and Africa (12%).
Newmont has eight other mines and interests in Pueblo Viejo. Newmont’s base metal reserves increased significantly with the addition of Goldcorp’s assets. Newmont’s operations are organized into five geographic regions. North America (Cripple Creek & Victor, Musselwhite, Porcupine and Eleonore and Penasquito), South America (Yanacocha, Merian, Cerro Negro and Pueblo Viejo), Australia (Boddington and Tanami), Africa (Ahafo and Akyem) and Nevada (NGM).
Newmont has verifiable and probable gold reserves of 94.2 million ounces and a total land position of ~ 22,700 square miles. The company earns around 90% of its sales with gold and 10% with copper, silver, lead and zinc. Most of the revenue comes from the sale of refined gold. Newmont has a 38.5% interest in the Nevada gold mines. The UK and Korea are the largest geographic markets, accounting for 74% and 11% of total sales in 2020, respectively.
Newmont trades on the TSX as NGT and on the NYSE as NEM, since then as a publicly traded company. Choose the currency for your dividends.
DISCLOSURE: Please note that links to merchants mentioned in this post may use an affiliate link. Using an affiliate link means that I can earn a commission at no cost to you every time you buy anything through that affiliate link.
Sales growth and market presence
Newmont Goldcorp was founded in 1921 and has since built an industry leading portfolio of gold investments. It has the largest gold reserve base of 94 Moz and 65 Moz in GEO reserves. Newmont added nearly 50 million ounces of gold reserves through the acquisition of Goldcorp and the formation of the Nevada Gold Mines joint venture in 2019.
The company reported an increase in reported gold reserves of more than 50% in 2019 after successfully completing two historic transactions and continued exploration success.
Nine prime assets in prime jurisdictions with 88% in the Americas and Australia form a deep moat around Newmont’s business. The company expects stable production of more than 6 million ounces per year for the coming decades. Newmont continues to expand its metal reserves through successful additional projects and agreements.
Under its silver streaming agreement, Newmont Goldcorp is required to sell 25% of silver production from the Penasquito mine to Wheaton Precious Metals at a lower market price or a fixed contract price, subject to an annual inflation adjustment of up to 1.65%. In 2020, sales to JPMorgan Chase and Standard Chartered each represented 24% of total gold sales.
Newmont shipped 5.9 Moz with an AISC of $ 1,045 / ounce in 2020. It has delivered an outlook of 6.2 to 7 Moz per year through 2021 to 2025 and 1.2 to 1.6 Moz GEOs per year. The company is well positioned to benefit from Tanami’s expansion and growing position that is expected to increase annual gold production by ~ 150-200 Koz / year and reduce operating costs by ~ 10% over the first five years, as well as Ahafo North and Yanacocha Sulfides The Tanami Project is expected to be completed in the first half of 2024. The company’s revenue has increased more than 10% CAGR over the past five years.
Newmont Gold Corp. has an average annual dividend yield of 3.35% with a high payout ratio. A high payout ratio indicates that the dividend is covered by earnings. The EPS has grown by 33% CAGR over the past five years. The company’s dividend framework provides the stability and predictability of a base annual dividend of $ 1.00 per share, calibrated at a gold price of $ 1,200. Newmont aims to return 40% to 60% of the incremental FCF over $ 1,200 / ounce to shareholders.
Newmont returned $ 2.7 billion to shareholders in 2019 and 2020. The quarterly dividend saw an impressive 300% increase over the previous year, helped by the increase in free cash flow. The company generated $ 3.5 billion in free cash flow in 2020, an increase of over 150% year over year.
The attributable FCF is expected to grow as gold prices rise. Newmont delivered three separate dividend increases and completed the $ 1 billion share buyback program in 2020. In addition, Newmont announced a new $ 1 billion share buyback program.
The Company’s gold reserves have been in operation for more than 10 years, backed by a strong mine base and an average reserve grade of 1.05 grams per tonne. The gold reserves are complemented by a substantial exposure to copper, silver, zinc and lead with 63 million ounces of gold equivalent.
Newmont has a stable production of ~ 8M GEOs per year through 2030+ and a strong project pipeline to support sustainable production in the 2040s. The company continues to invest in organic opportunities and expects to invest $ 400 million annually in exploration and advanced projects.
The company is the largest gold mining company that trades publicly. Newmont Gold Corp. competes with Wheaton Precious Metals, Franco Nevada, Agnico Eagle Mines, and Royal Gold. Franco Nevada is the leading gold-focused licensing and streaming company.
Wheaton Precious Metals is the world’s largest streaming-only company, while Royal Gold is another precious metals streaming and licensing company focused on gold. Agnico Eagle is a leading gold miner with over 60 years of experience.
The company expects increasing gold production, ongoing investments and promising growth prospects in the future. High quality gold reserves with a long operating life, a strong pipeline, growing free cash flow, investor-friendly policies and a large geographic footprint are Newmont’s strong competitive advantages.
Gold is considered the safest form of investment, and investors look to gold to find a safe haven. Although the company is facing a delay in some of its mines for fear of infection, it will benefit in the long run.
My portfolio has had an annual return of over 12% since 2009. it’s from 2009 !!! That’s a constant return, which means that after the rule of 72 I double my portfolio every 6 years.
My approach is simple, but you need key data that I created using the Dividend Snapshot Screeners. No other investment service offers you easily understandable data, but also usable data. No hidden magic.
In fact, I’ve tried all of the securities services for dividend investors like a crash test dummy for securities services. Just ask me and you will see why I couldn’t use anything out there and that’s how the Dividend Snapshot Screeners were born!