Newmont Announces Third Quarter 2022 Results

Newmont remains on track to achieve full-year guidance with stable third quarter production from diverse, global portfolio; focused on delivering long-term value to shareholders

DENVER–(BUSINESS WIRE)–Newmont Corporation (NYSE: NEM, TSX: NGT) (Newmont or the Company) today announced third quarter 2022 results.

THIRD QUARTER 2022 RESULTS

  • Produced 1.49 million attributable ounces of gold and 299 thousand attributable gold equivalent ounces (GEO) from co-products; due to timing of shipments at Peñasquito, 38 thousand attributable gold ounces and 20 thousand GEOs of third quarter production will be sold in the fourth quarter
  • Reported gold Costs Applicable to Sales (CAS)* of $968 per ounce and All-In Sustaining Costs (AISC)* of $1,271 per ounce
  • On track to achieve full-year guidance of 6.0 million ounces of attributable gold production with Gold CAS of $900 per ounce and Gold AISC of $1,150 per ounce, as well as 1.3 million gold equivalent ounce production from copper, silver, lead and zinc with Co-Product CAS of $750 per GEO and Co-Product AISC of $1,050 per GEO**
  • Generated $466 million of cash from continuing operations and reported $(63) million of Free Cash Flow*, impacted by one-time working capital payments totaling $210 million and the timing of concentrate shipments at Peñasquito with an approximate sales value of $80 million
  • Reported Adjusted Net Income (ANI)* of $0.27 per share and Adjusted EBITDA* of $850, impacted by lower metal prices and timing of sales
  • Declared third quarter dividend of $0.55 per share, calibrated at an $1,800 per ounce gold price***
  • $1 billion share repurchase program to be used opportunistically, with $475 million remaining***
  • Ended the quarter with $3.1 billion of consolidated cash, $653 million of time deposits with a maturity of less than one year, and $6.7 billion of liquidity; reported net debt to adjusted EBITDA ratio of 0.5x*
  • Announced the delay and review of the Yanacocha Sulfides project and appointment of Dean Gehring to Chief Development Officer – Peru to lead operations and strategy in the region
  • Advancing profitable near-term projects, including Tanami Expansion 2, Ahafo North, Pamour and Cerro Negro District Expansion 1
  • Announced and closed the sale of Newmont’s 18.75% stake in the MARA project joint venture to Glencore International AG for $125 million, with a minimum $30 million deferred payment upon successfully reaching commercial production
  • Published inaugural Taxes and Royalties Contribution Report, providing an overview of our tax strategy and economic contributions as part of our commitment to shared value creation

“Newmont delivered solid third quarter production of 1.5 million gold ounces as we build momentum for strong production in the fourth quarter. Newmont remains well-positioned to respond to the challenging market environment that our industry faces today. We continue to leverage our leadership and collective experience, as well as the strength of our global portfolio with the size and scale to build a resilient and sustainable future. Supported by our clear long-term strategy, we continue to focus on safely delivering production through our responsibly managed portfolio of world-class assets, while investing in our future and creating value for all of our stakeholders.”

– Tom Palmer, Newmont President and Chief Executive Officer

*Non-GAAP metrics; see reconciliations at the end of this release.

**See discussion of outlook and cautionary statement at end of release regarding forward-looking statements.

***See cautionary statement at the end of this release, including with respect to future dividends and share buybacks.

THIRD QUARTER 2022 FINANCIAL AND PRODUCTION SUMMARY

Q3’22

Q2’22

Q1’22

Q3’21

Average realized gold price ($ per ounce)

$

1,691

 

$

1,836

$

1,892

$

1,778

 

Attributable gold production (million ounces)

 

1.49

 

 

1.50

 

1.34

 

1.45

 

Gold costs applicable to sales (CAS) ($ per ounce)

$

968

 

$

932

$

890

$

830

 

Gold all-in sustaining costs (AISC) ($ per ounce)

$

1,271

 

$

1,199

$

1,156

$

1,120

 

GAAP net income from continuing operations ($ millions)

$

218

 

$

379

$

432

$

(8

)

Adjusted net income ($ millions)

$

212

 

$

362

$

546

$

483

 

Adjusted EBITDA ($ millions)

$

850

 

$

1,149

$

1,390

$

1,316

 

Cash flow from continuing operations ($ millions)

$

466

 

$

1,033

$

689

$

1,133

 

Capital expenditures ($ millions)

$

529

 

$

519

$

437

$

398

 

Free cash flow ($ millions)

$

(63

)

$

514

$

252

$

735

 

Attributable gold production1 increased 3 percent to 1,487 thousand ounces from the prior year quarter primarily due to higher ore grade milled at Ahafo, Akyem and Boddington. In addition, the current quarter benefited from the 100% ownership of Yanacocha compared to the prior year. These increases were partially offset by lower production volumes from Nevada Gold Mines. Attributable gold sales versus production was impacted by the timing of concentrate shipments at Peñasquito, partially due to inclement weather and earthquakes which impacted shipping logistics. All finished goods inventory at September 30th will be sold in the fourth quarter.

Gold CAS totaled $1.3 billion for the quarter. Gold CAS per ounce2 increased 17 percent to $968 per ounce from the prior year quarter primarily due to lower gold sales volumes and higher direct operating costs as a result of inflationary pressures, driven by higher labor costs and an increase in commodity input costs, including higher fuel and energy costs.

Gold AISC per ounce3 increased 13 percent to $1,271 per ounce from the prior year quarter primarily due to higher CAS per gold ounce.

Attributable gold equivalent ounce (GEO) production from other metals decreased 5 percent to 299 thousand ounces primarily due to lower ore grade milled at Peñasquito. Attributable GEO sales versus production was impacted by the timing of concentrate shipments at Peñasquito, partially due to inclement weather and earthquakes which impacted shipping logistics. All finished goods inventory at September 30th will be sold in the fourth quarter.

CAS from other metals totaled $200 million for the quarter. CAS per GEO2 increased 12 percent to $712 per ounce from the prior year quarter primarily due to lower other metal sales at Peñasquito, as well as higher direct operating costs as a result of inflationary pressures, driven by higher labor costs and an increase in commodity input costs, including higher fuel and energy costs.

AISC per GEO3 increased 13 percent to $999 per ounce primarily due to higher CAS per GEO and higher sustaining capital spend.

Average realized price for gold was $1,691, a decrease of $87 per ounce over the prior year quarter. Average realized gold price includes $1,716 per ounce of gross price received, an unfavorable impact of $17 per ounce mark-to-market on provisionally-priced sales and reductions of $8 per ounce for treatment and refining charges.

Revenue decreased 9 percent from the prior year quarter to $2.6 billion primarily due to lower average realized metal prices, excluding zinc, and lower sales volumes.

Net income from continuing operations attributable to Newmont stockholders was $218 million or $0.28 per diluted share, an increase of $226 million from the prior year quarter primarily due to the loss recognized on the sale of the Conga mill assets in the prior year, lower income tax expense and a gain on the change in fair value of marketable and other equity securities compared to a loss in the prior year. These increases were partially offset by lower realized metal prices, lower sales volumes and higher CAS predominately resulting from the impacts of inflation compared to the prior year quarter.

Adjusted net income4 was $212 million or $0.27 per diluted share, compared to $483 million or $0.60 per diluted share in the prior year quarter.

Adjusted EBITDA5 decreased 35 percent to $0.9 billion for the quarter, compared to $1.3 billion for the prior year quarter.

Capital expenditures6 increased 33 percent from the prior year quarter to $529 million primarily due to higher development capital spend. Development capital expenditures in 2022 primarily relate to Tanami Expansion 2, Yanacocha Sulfides, Ahafo North, Pamour and Cerro Negro District Expansion 1.

Consolidated operating cash flow from continuing operations decreased 59 percent from the prior year quarter to $466 million primarily due to an increase in operating cash expenditures resulting from the impacts of inflation on input costs, a $95 million payment related to the Peñasquito profit-sharing agreement related to 2021 results, an $83 million payment related to the Ghanaian employment model change and a $34 million payment related to our strategic alliance with Caterpillar Inc., as well as lower sales revenue and an increase in payments for reclamation and remediation obligations. Free Cash Flow7 decreased to $(63) million from $735 million in the prior year quarter primarily due to lower operating cash flow and higher development capital expenditures.

Balance sheet and liquidity ended the quarter with $3.1 billion of consolidated cash and $653 million of time deposits with a maturity of less than one year; $6.7 billion of total liquidity and reported net debt to adjusted EBITDA of 0.5x8.

Nevada Gold Mines (NGM) attributable gold production was 267 thousand ounces, with CAS of $1,104 per ounce and AISC of $1,358 per ounce for the third quarter. NGM EBITDA9 was $158 million.

Pueblo Viejo (PV) attributable gold production was 81 thousand ounces for the quarter. Cash distributions received for the Company’s equity method investment in Pueblo Viejo totaled $40 million in the third quarter.

THIRD QUARTER 2022 EARNINGS DRIVERS

Compared to the second quarter of 2022, lower realized metal prices, including unfavorable mark-to-market adjustments on provisionally-priced sales, impacted earnings by approximately $200 million. In addition, lower sales volumes impacted earnings by approximately $130 million. Third quarter sales volumes were 38 thousand attributable gold ounces and 20 thousand GEOs lower than production at Peñasquito due to the timing of concentrate shipments which will be sold in the fourth quarter. These impacts were partially offset by the $70 million incremental expense recognized in the second quarter for the Peñasquito profit-sharing agreement related to 2021 results.

COVID UPDATE

Newmont continues to maintain wide-ranging protective measures for its workforce and neighboring communities, including screening, physical distancing, deep cleaning and avoiding exposure for at-risk individuals. The Company incurred incremental Covid specific costs of $6 million during the quarter for activities such as additional health and safety procedures, increased transportation. The majority of the additional incremental Covid specific costs have not been adjusted from our non-GAAP metrics.

PROJECTS UPDATE10

Newmont’s project pipeline supports stable production with improving margins and mine life. Newmont’s 2022 and longer-term outlook includes current development capital costs and production related to Tanami Expansion 2, Ahafo North, Yanacocha Sulfides, Pamour and Cerro Negro District Expansion 1. Additional projects not listed below represent incremental improvements to the Company’s outlook.

  • Tanami Expansion 2 (Australia) secures Tanami’s future as a long-life, low-cost producer to extend mine life beyond 2040 through the addition of a 1,460 meter hoisting shaft and supporting infrastructure to process 3.3 million tonnes per year and provide a platform for future growth. The expansion is expected to increase average annual gold production by approximately 150,000 to 200,000 ounces per year for the first five years and reduce operating costs by approximately 10 percent. Development costs (excluding capitalized interest) since approval were $451 million, of which $167 million related to the nine months ended September 30, 2022. Total capital costs are expected to be approximately 25% above the prior estimate, incorporating the significant impacts from Covid-related restrictions and protocols and the current market conditions for labor and materials. Commercial production for the project is expected to be in early 2025. Formal updates to capital estimates and estimated project completion will be provided later in the year.
  • Ahafo North (Africa) expands our existing footprint in Ghana with four open pit mines and a stand-alone mill located approximately 30 kilometers from the Company’s Ahafo South operations. The project is expected to add between 275,000 and 325,000 ounces per year for the first five full years of production. Ahafo North is the best unmined gold deposit in West Africa with approximately 3.5 million ounces of Reserves and more than 1 million ounces of Measured, Indicated and Inferred Resources and significant upside potential to extend beyond Ahafo North’s current 13-year mine life. Development costs (excluding capitalized interest) since approval were $171 million, of which $104 million related to the nine months ended September 30, 2022. Total capital costs are expected to be approximately 15% above the prior estimate, incorporating the cost associated with delayed land access. Commercial production for the project is expected to be in mid-2025. Formal updates to capital estimates and estimated project completion will be provided once full land access is granted, anticipated in early 2023.
  • Yanacocha Sulfides11 (South America) will develop the first phase of sulfide deposits and an integrated processing circuit, including an autoclave to produce 45% gold, 45% copper and 10% silver. The project economics, timing and optionality are currently being evaluated by management, and remain subject to an investment decision. The first phase focuses on developing the Yanacocha Verde and Chaquicocha deposits to extend Yanacocha’s operations beyond 2040 with second and third phases having the potential to extend life for multiple decades.
  • Pamour (North America) extends the life of Porcupine and maintains production beginning in 2024. The project will optimize mill capacity, adding volume and supporting high grade ore from Borden and Hoyle Pond, while supporting further exploration in a highly prospective and proven mining district. An investment decision is expected in 2023 with estimated capital costs between $350 and $450 million.
  • Cerro Negro District Expansion 1 (South America) includes the simultaneous development of the Marianas and Eastern districts to extend the mine life of Cerro Negro beyond 2030. The project is expected to improve production to above 350,000 ounces beginning in 2024. Development capital costs for the project are estimated to be approximately $300 million. This project provides a platform for further exploration and future growth through additional expansions

1 Attributable gold production for the third quarter 2022 includes 81 thousand ounces from the Company’s equity method investment in Pueblo Viejo (40%).

2 Non-GAAP measure. See end of this release for reconciliation to Costs applicable to sales.

3 Non-GAAP measure. See end of this release for reconciliation to Costs applicable to sales.

4 Non-GAAP measure. See end of this release for reconciliation to Net income (loss) attributable to Newmont stockholders.

5 Non-GAAP measure. See end of this release for reconciliation to Net income (loss) attributable to Newmont stockholders.

6 Capital expenditures refers to Additions to property plant and mine development from the Condensed Consolidated Statements of Cash Flows.

7 Non-GAAP measure. See end of this release for reconciliation to Net cash provided by operating activities.

8 Non-GAAP measure. See end of this release for reconciliation.

9 Non-GAAP measure. See page 14 for reconciliation.

10 Project estimates remain subject to change based upon uncertainties, including future market conditions, continued impacts from the COVID-19 pandemic, the Russian invasion of Ukraine, inflation, commodities and raw materials prices, supply chain disruptions, labor markets, engineering and mine plan assumptions, future funding decisions, consideration of strategic capital allocation and other factors, which may impact estimated capital expenditures, AISC and timing of projects. See end of this release for cautionary statement regarding forward-looking statements.

11 As a response to the current market conditions, record inflation rates, the rising prices for commodities and raw materials, prolonged supply chain disruptions, competitive labor markets and consideration of capital allocation, in the third quarter of 2022 the Company announced the delay of the full-funds investment decision for the Yanacocha Sulfides project in Peru. While the Company has extended the timeline of the full-funds decision, assessment of the project remains a priority in Peru as the Company continues to advance engineering and long-term procurement activities. The delay of the Yanacocha Sulfides project is intended to focus funds on current operations and other capital commitments while management assesses execution and project timeline, plan and options, up to and including transitioning Yanacocha operations into full closure.

OUTLOOK

On July 25, 2022, Newmont provided revised 2022 outlook due to impacts on gold production estimates in the first half of the year, as well as the continued impact from inflationary pressures on costs. Today, the Company is reaffirming its latest 2022 outlook as detailed below.

Further updates about Newmont’s long-term guidance will be provided in December 2022. Please see the cautionary statement in the end notes for additional information. For further discussion, investors are encouraged to attend Newmont’s Third Quarter 2022 Earnings Conference Call.

Newmont 2022 Outlook (+/- 5%) a

2022E

Consolidated Gold Production (Moz)

5.9

Consolidated Co-Product GEO Production (Moz) b

1.3

Consolidated Total GEO Production (Moz) b

7.2

Attributable Gold Production (Moz) c

6.0

Attributable Co-Product GEO Production (Moz) b

1.3

Attributable Total GEO Production (Moz) b,c

7.3

Gold CAS ($/oz)

900

Co-Product GEO CAS ($/oz) b

750

Total GEO CAS ($/oz) b

875

Gold AISC($/oz) d

1,150

Co-Product GEO AISC ($/oz) b,d

1,050

Total GEO AISC ($/oz) b,d

1,130

Consolidated Sustaining Capital Expenditures ($M)

1,000

Consolidated Development Capital Expenditures ($M)

1,100

Total Consolidated Capital ($M)

2,100

Attributable Sustaining Capital Expenditures ($M)

925

Attributable Development Capital Expenditures ($M) e

1,100

Total Attributable Capital ($M)

2,025

General & Administrative ($M)

270

Interest Expense ($M)

200

Depreciation and Amortization ($M)

2,300

Exploration & Advanced Projects ($M)

450

Adjusted Tax Rate f,g

30% – 34%

a 2022 outlook projections are considered forward-looking statements and represent management’s good faith estimates or expectations of future production results as of July 25, 2022. Outlook is based upon certain assumptions, including, but not limited to, metal prices, oil prices, certain exchange rates and other assumptions. For example, updated 2022 Outlook includes actual results through June 30, 2022 and assumes $1,800/oz Au, $4.10/lb Cu, $21.00/oz Ag, $1.60/lb Zn, $0.95/lb Pb, $0.74 USD/AUD exchange rate, $0.80 USD/CAD exchange rate and $110/barrel WTI for the second half of 2022. Production, CAS, AISC and capital estimates exclude projects that have not yet been approved, except for Yanacocha Sulfides, Pamour and Cerro Negro District Expansion 1 which are included in Outlook. The potential impact on inventory valuation as a result of lower prices, input costs, and project decisions are not included as part of this Outlook. Assumptions used for purposes of Outlook may prove to be incorrect and actual results may differ from those anticipated, including variation beyond a +/-5% range. Outlook cannot be guaranteed. As such, investors are cautioned not to place undue reliance upon Outlook and forward-looking statements as there can be no assurance that the plans, assumptions or expectations upon which they are placed will occur. Amounts may not recalculate to totals due to rounding. See cautionary at the end of this release.

b Gold equivalent ounces (GEO) is calculated as pounds or ounces produced multiplied by the ratio of the other metal’s price to the gold price, using Gold ($1,200/oz.), Copper ($3.25/lb.), Silver ($23.00/oz.), Lead ($0.95/lb.), and Zinc ($1.15/lb.) pricing.

c Attributable gold production outlook includes the Company’s equity investment (40%) in Pueblo Viejo with ~285Koz in 2022; does not include the Company’s other equity investments. Attributable gold production outlook represents the Company’s 75% interest in Merian.

d All-in sustaining costs (AISC) as used in the Company’s Outlook is a non-GAAP metric; see below for further information and reconciliation to consolidated 2022 CAS outlook.

e Attributable development capital accounts for the acquisition of the remaining interest in Yanacocha, including Buenaventura’s 43.65% interest and Sumitomo Corporation’s 5% interest, as announced on February 8, 2022 and April 12, 2022, respectively.

f The adjusted tax rate excludes certain items such as tax valuation allowance adjustments.

g Assuming average prices of $1,800 per ounce for gold, $3.25 per pound for copper, $23.00 per ounce for silver, $0.95 per pound for lead, and $1.15 per pound for zinc and achievement of current production and sales volumes and cost estimates, we estimate our consolidated adjusted effective tax rate related to continuing operations for 2022 will be between 30%-34%.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

Operating Results

2022

2021

% Change

 

2022

2021

% Change

Attributable Sales (koz)

 

 

 

 

 

 

 

Attributable gold ounces sold (1)

 

1,369

 

1,357

1

%

 

 

4,115

 

4,101

%

Attributable gold equivalent ounces sold

 

281

 

301

(7

) %

 

 

964

 

930

4

%

 

 

 

 

 

 

 

 

Average Realized Price ($/oz, $/lb)

 

 

 

 

 

 

 

Average realized gold price

$

1,691

$

1,778

(5

) %

 

$

1,806

$

1,783

1

%

Average realized copper price

$

2.80

$

3.99

(30

) %

 

$

3.54

$

4.19

(16

) %

Average realized silver price

$

15.42

$

18.34

(16

) %

 

$

17.81

$

20.32

(12

) %

Average realized lead price

$

0.86

$

0.99

(13

) %

 

$

0.92

$

0.96

(4

) %

Average realized zinc price

$

1.25

$

1.24

1

%

 

$

1.41

$

1.21

17

%

 

 

 

 

 

 

 

 

Attributable Production (koz)

 

 

 

 

 

 

 

North America

 

404

 

384

5

%

 

 

1,029

 

1,194

(14

) %

South America

 

185

 

188

(2

) %

 

 

593

 

551

8

%

Australia

 

296

 

274

8

%

 

 

944

 

842

12

%

Africa

 

254

 

210

21

%

 

 

695

 

617

13

%

Nevada

 

267

 

308

(13

) %

 

 

845

 

895

(6

) %

Total Gold (excluding equity method investments)

 

1,406

 

1,364

3

%

 

 

4,106

 

4,099

%

Pueblo Viejo (40%) (2)

 

81

 

85

(5

) %

 

 

220

 

254

(13

) %

Total Gold

 

1,487

 

1,449

3

%

 

 

4,326

 

4,353

(1

) %

 

 

 

 

 

 

 

 

North America

 

254

 

275

(8

) %

 

 

819

 

820

%

Australia

 

45

 

40

13

%

 

 

160

 

115

39

%

Total Gold Equivalent Ounces

 

299

 

315

(5

) %

 

 

979

 

935

5

%

 

 

 

 

 

 

 

 

CAS Consolidated ($/oz, $/GEO)

 

 

 

 

 

 

 

North America

$

980

$

800

23

%

 

$

1,032

$

767

35

%

South America

$

1,145

$

958

20

%

 

$

1,010

$

822

23

%

Australia

$

754

$

788

(4

) %

 

$

740

$

767

(4

) %

Africa

$

918

$

886

4

%

 

$

877

$

804

9

%

Nevada

$

1,104

$

768

44

%

 

$

1,010

$

755

34

%

Total Gold

$

968

$

830

17

%

 

$

931

$

779

20

%

Total Gold (by-product)

$

907

$

698

30

%

 

$

847

$

629

35

%

 

 

 

 

 

 

 

 

North America

$

699

$

595

17

%

 

$

815

$

564

45

%

Australia

$

776

$

914

(15

) %

 

$

768

$

913

(16

) %

Total Gold Equivalent Ounces

$

712

$

638

12

%

 

$

807

$

606

33

%

 

 

 

 

 

 

 

 

AISC Consolidated ($/oz, $/GEO)

 

 

 

 

 

 

 

North America

$

1,285

$

1,026

25

%

 

$

1,318

$

988

33

%

South America

$

1,423

$

1,276

12

%

 

$

1,241

$

1,119

11

%

Australia

$

984

$

1,025

(4

) %

 

$

938

$

1,040

(10

) %

Africa

$

1,085

$

1,114

(3

) %

 

$

1,067

$

1,023

4

%

Nevada

$

1,358

$

945

44

%

 

$

1,232

$

931

32

%

Total Gold

$

1,271

$

1,120

13

%

 

$

1,209

$

1,064

14

%

Total Gold (by-product)

$

1,268

$

1,041

22

%

 

$

1,192

$

970

23

%

 

 

 

 

 

 

 

 

North America

$

982

$

822

19

%

 

$

1,094

$

781

40

%

Australia

$

888

$

1,025

(13

) %

 

$

893

$

1,155

(23

) %

Total Gold Equivalent Ounces

$

999

$

887

13

%

 

$

1,098

$

863

27

%

Contacts

Media Contact
Courtney Boone

303.837.5159

[email protected]

Investor Contact
Daniel Horton

303.837.5468

[email protected]

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