Newmont Delivers on First Quarter 2023 Expectations, Remains on Track to Achieve Full Year Guidance; Declares $0.40 First Quarter Dividend
DENVER–(BUSINESS WIRE)–Newmont Corporation (NYSE: NEM, TSX: NGT) (Newmont or the Company) today announced first quarter 2023 results and declared a first quarter dividend of $0.40 per share.
Delivered First Quarter Production as Expected; Improving Production in Second Quarter*
- Produced 1.27 million gold ounces and 288 thousand co-product gold equivalent ounces (GEOs)** from copper, silver, lead and zinc
- Reported gold Costs Applicable to Sales (CAS) of $1,025 per ounce and gold All-In Sustaining Costs (AISC) of $1,376 per ounce***; impacted by lower production volumes and continued global cost pressures; costs expected to decrease throughout the year
- On track to achieve full-year guidance of between 5.7 and 6.3 million ounces of attributable gold production with Gold AISC between $1,150 and $1,250 per ounce
- Generated $481 million of cash from continuing operations and reported $(45) million of Free Cash Flow***; impacted by lower production volumes, timing of working capital changes and higher capital spend
- Reported Net Income of $363 million, with Adjusted Net Income (ANI)*** of $0.40 per share and Adjusted EBITDA*** of $990 million; lower production volumes offset by higher realized gold prices
- Ended the quarter with $2.7 billion of consolidated cash, $797 million of short-term time deposits and $6.5 billion of liquidity; reported net debt to adjusted EBITDA ratio of 0.6x***
- Sold common shares of Triple Flag Precious Metals Corporation for $179 million, further optimizing Newmont’s equity portfolio acquired with the Goldcorp transaction in 2019
- Published 19th Annual Sustainability Report and 2nd Annual Taxes and Royalties Contribution Report, providing a transparent review of Newmont’s ESG performance and an overview of Newmont’s tax strategy and economic contributions
First Quarter Dividend Declared Within Established Framework****
- Board of Directors declared a dividend of $0.40 per share of common stock for the first quarter of 2023, payable on June 15, 2023 to holders of record at the close of business on June 1, 2023
- Annualized dividend payout range for 2023 of $1.40 to $1.80 per share****; subject to quarterly approval by Board of Directors
- Based on a sustainable base dividend of $1.00 per share payable at base reserves price and an incremental dividend payout of $0.60 per share; Q1 2023 dividend payout calibrated at the mid-point of the $1,700 per ounce annualized payout range
“Since transforming Newmont’s business four years ago, we continue to lead the gold sector in sustainability, profitable gold production and shareholder returns due to the strength of our team and the quality of our world-class portfolio. During the first quarter, we delivered on our expected results, generated nearly $1.0 billion in adjusted EBITDA and returned $318 million to shareholders through our industry-leading dividend framework. We remain on track to achieve our full year guidance ranges and build upon our track record of safely delivering long-term value to all of our stakeholders through sustainable and responsible mining.”
– Tom Palmer, Newmont President and Chief Executive Officer
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*See discussion of outlook and cautionary statement at the end of this release regarding forward-looking statements. |
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**Gold equivalent ounces (GEOs) calculated using Gold ($1,400/oz.), Copper ($3.50/lb.), Silver ($20.00/oz.), Lead ($1.00/lb.) and Zinc ($1.20/lb.) pricing for 2023. |
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***Non-GAAP metrics; see reconciliations at the end of this release. |
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****Expectations regarding 2023 dividend levels are forward-looking statements. The dividend framework is non-binding and an annualized dividend has not been declared by the Board. The declaration and payment of future quarterly dividends remains at the discretion of the Board of Directors and will depend on the Company’s financial results, cash flow and cash requirements, future prospects, and other factors deemed relevant by the Board. See cautionary statement at the end of this release. |
First Quarter Results In-Line with Previously Signaled Expectations
|
|
Q1’23 |
Q4’22 |
Q1’22 |
||||||
|
Average realized gold price ($ per ounce) |
$ |
1,906 |
|
$ |
1,758 |
|
$ |
1,892 |
|
|
Attributable gold production (million ounces)1 |
|
1.27 |
|
|
1.63 |
|
|
1.34 |
|
|
Gold costs applicable to sales (CAS) ($ per ounce)2 |
$ |
1,025 |
|
$ |
940 |
|
$ |
890 |
|
|
Gold all-in sustaining costs (AISC) ($ per ounce)2 |
$ |
1,376 |
|
$ |
1,215 |
|
$ |
1,156 |
|
|
GAAP net income (loss) from continuing operations ($ millions) |
$ |
339 |
|
$ |
(1,488 |
) |
$ |
432 |
|
|
Adjusted net income ($ millions)3 |
$ |
320 |
|
$ |
348 |
|
$ |
546 |
|
|
Adjusted net income per share ($/diluted share)3 |
$ |
0.40 |
|
$ |
0.44 |
|
$ |
0.69 |
|
|
Adjusted EBITDA ($ millions)3 |
$ |
990 |
|
$ |
1,161 |
|
$ |
1,390 |
|
|
Cash flow from continuing operations ($ millions) |
$ |
481 |
|
$ |
1,010 |
|
$ |
689 |
|
|
Capital expenditures ($ millions)4 |
$ |
526 |
|
$ |
646 |
|
$ |
437 |
|
|
Free cash flow ($ millions)5 |
$ |
(45 |
) |
$ |
364 |
|
$ |
252 |
|
FIRST QUARTER 2023 RESULTS DRIVERS
Production volumes came in line with our previously signaled expectations for the first quarter, with higher than signaled production at Tanami and Ahafo, partially offset by lower than planned production at our non-managed joint ventures. Compared to the fourth quarter, earnings were in-line despite lower sales volumes, which were partially offset by higher realized gold prices, including $17 million of favorable mark-to-market adjustments on provisionally-priced gold ounces. Gold CAS per ounce was higher than the fourth quarter due to lower sales volumes, partially offset by lower gross costs from easing inflation on commodities, materials and supplies. Advanced projects and exploration spend was lower than the fourth quarter, but is expected to be higher in the second quarter and the remainder of the year.
Cash flow from continuing operations was $481 million, which was lower than the fourth quarter due to lower sales volumes, partially offset by higher gold prices. Cash flow from continuing operations was also impacted by approximately $360 million of unfavorable working capital movements, including $187 million of cash tax payments, approximately $170 million of build-up of stockpiles and finished goods inventory partially due to the timing of concentrate sales at Peñasquito, and approximately $160 million in timing of payments on accrued liabilities which typically occurs in the first quarter. In addition, we reinvested $526 million in capital spend as we continue to progress our near-term projects.
FIRST QUARTER 2023 FINANCIAL AND PRODUCTION SUMMARY
Attributable gold production1 decreased 5 percent to 1,273 thousand ounces from the prior year quarter primarily due to lower mill recovery and ore grade milled at Peñasquito as a result of the planned mine sequencing, the impact of the mill shutdown at Tanami due to the rainfall event and lower production at Nevada Gold Mines. These decreases were partially offset by higher ore grade milled at Ahafo and higher mill throughput and ore grade milled at Éléonore. Attributable gold sales versus production was impacted by the timing of concentrate shipments at Peñasquito. This concentrate has been sold and the revenue will be realized in the second quarter.
Gold CAS totaled $1.2 billion for the quarter. Gold CAS per ounce2 increased 15 percent to $1,025 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.
Gold AISC per ounce2 increased 19 percent to $1,376 per ounce from the prior year quarter primarily due to higher CAS per gold ounce and higher sustaining capital spend.
Attributable gold equivalent ounce (GEO) production from other metals decreased 18 percent to 288 thousand ounces primarily due to lower mill recovery at Peñasquito. This decrease was partially offset by higher ore grade milled at Boddington. Attributable GEO sales versus production was impacted by the timing of concentrate shipments at Peñasquito. This concentrate has been sold and the revenue will be realized in the second quarter.
CAS from other metals totaled $243 million for the quarter. CAS per GEO2 increased 28 percent to $918 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.
AISC per GEO2 increased 33 percent to $1,322 per ounce primarily due to higher CAS per GEO and higher sustaining capital spend.
Average realized gold price was $1,906, an increase of $14 per ounce over the prior year quarter. Average realized gold price includes $1,901 per ounce of gross price received, a favorable impact of $14 per ounce mark-to-market on provisionally-priced sales and reductions of $9 per ounce for treatment and refining charges.
Revenue decreased 11 percent from the prior year quarter to $2.7 billion primarily due to lower sales volumes for all metals except copper and lower average realized co-product metal prices.
Net income from continuing operations attributable to Newmont stockholders was $339 million or $0.42 per diluted share, a decrease of $93 million from the prior year quarter primarily due to lower sales volumes, lower average realized co-product metal prices and higher CAS predominately resulting from cost inflation impacts. These decreases were partially offset by a non-cash pension settlement charge recognized in 2022, lower depreciation and amortization, and the net gain of $36 million recognized on the exchange and subsequent sale of Triple Flag Precious Metals Corporation shares compared to the loss on the sale of the La Zanja equity method investment in 2022.
Adjusted net income3 was $320 million or $0.40 per diluted share, compared to $546 million or $0.69 per diluted share in the prior year quarter. Primary adjustments to first quarter net income include changes in the fair value of investments of $41 million and the net gain of $36 million recognized on the exchange and subsequent sale of Triple Flag Precious Metals Corporation shares, as well as valuation allowance and other tax adjustments.
Adjusted EBITDA3 decreased 29 percent to $1.0 billion for the quarter, compared to $1.4 billion for the prior year quarter.
Capital expenditures4 increased 20 percent from the prior year quarter to $526 million primarily due to higher sustaining capital spend. Development capital expenditures in 2023 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 30 percent from the prior year quarter to $481 million primarily due to a decrease in revenue due to lower sales volumes and lower average realized co-product metal prices, an increase in operating cash expenditures resulting from the impacts of inflation on input costs and a build-up of inventory compared to the same period in 2022, primarily at Peñasquito.
Free Cash Flow5 decreased to $(45) million from $252 million in the prior year quarter primarily due to lower operating cash flow and higher capital expenditures.
Balance sheet and liquidity remained strong in the first quarter, ending the quarter with $2.7 billion of consolidated cash and $797 million of time deposits with a maturity of more than three months but less than one year, with approximately $6.5 billion of total liquidity; reported net debt to adjusted EBITDA of 0.6x6.
Nevada Gold Mines (NGM) attributable gold production was 261 thousand ounces, with CAS of $1,109 per ounce2 and AISC of $1,405 per ounce2 for the first quarter. NGM EBITDA6 was $191 million.
Pueblo Viejo (PV) attributable gold production was 60 thousand ounces for the quarter. Cash distributions received for the Company’s equity method investment in Pueblo Viejo totaled $26 million in the first quarter. Capital contributions of $36 million were made during the quarter related to the expansion project at Pueblo Viejo.
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1 Attributable gold production includes 60 thousand ounces for the first quarter of 2023, 65 thousand ounces for the fourth quarter of 2022 and 69 thousand ounces for the first quarter of 2022 from the Company’s equity method investment in Pueblo Viejo (40%). |
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2 Non-GAAP measure. See end of this release for reconciliation to Costs applicable to sales. |
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3 Non-GAAP measure. See end of this release for reconciliation to Net income (loss) attributable to Newmont stockholders. |
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4 Capital expenditures refers to Additions to property plant and mine development from the Consolidated Statements of Cash Flows. |
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5 Non-GAAP measure. See end of this release for reconciliation to Net cash provided by operating activities. |
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6 Non-GAAP measure. See end of this release for reconciliation. |
Progressing Profitable Near-Term Projects from Unmatched Organic Pipeline
Newmont’s project pipeline supports stable production with improving margins and mine life1. Newmont’s 2023 and longer-term outlook includes current development capital costs and production related to Tanami Expansion 2, Ahafo North, Pamour and Cerro Negro District Expansion 1. Development capital outlook for 2023 and 2024 includes spend related to the Yanacocha Sulfides project ahead of the investment decision planned for late 2024; additional development capital spend and all metal production for Yanacocha Sulfides has been excluded from longer-term outlook beginning in 2025.
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 by extending 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, bringing average all-in sustaining costs to $900 to $1,000 per ounce for Tanami (2026-2030). Commercial production for the project is expected in the second half of 2025. Total capital costs are estimated to be between $1.2 and $1.3 billion. Development costs (excluding capitalized interest) since approval were $551 million, of which $52 million related to the three months ended March 31, 2023.
- 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 with all-in sustaining costs of $800 to $900 per ounce for the first five full years of production. Ahafo North is the best unmined gold deposit in West Africa with approximately 3.8 million ounces of Reserves and 1.4 million ounces of Measured, Indicated and Inferred Resources2 and significant upside potential to extend beyond Ahafo North’s current 13-year mine life. Commercial production for the project is expected in the second half of 2025. Total capital costs are estimated to be between $950 and $1,050 million. Development costs (excluding capitalized interest) since approval were $254 million, of which $42 million related to the three months ended March 31, 2023.
- Yanacocha Sulfides (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 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. In the third quarter of 2022, Newmont announced the decision to delay the project in order to manage project execution risk, move out of a period of significant inflation and to balance development capital cash flows. Management continues to assess the execution and project timeline, up to and including transitioning Yanacocha operations into full closure; the project remains subject to an investment decision. Development capital spend on the project is expected to be approximately $300 to $350 million per year in 2023 and 2024 related to advanced engineering, procurement and completing camp construction.
- Pamour (North America) extends the life of Porcupine and maintains production beyond 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 late 2023 as opportunities have been identified to extend production from current operations, allowing for a deferral of project spending. Formal updates to capital estimates and estimated project completion will be provided closer to the investment decision.
- 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 and provides a platform for further exploration and future growth through additional expansions. Development capital costs for the project are estimated to be between $350 and $450 million.
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1 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. |
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2 Total resources presented for Ahafo North includes Measured and Indicated resources of 910 thousand gold ounces and Inferred resources of 490 thousand gold ounces. See cautionary statement at the end of this release. |
2023 Outlook Remains Second-Half Weighted as Previously Signaled
Newmont’s outlook reflects increasing gold production and ongoing investment into its operating assets and most promising growth prospects. Newmont’s reserves and mine planning gold price assumption has been set at $1,400 per ounce. 2023 outlook assumes a $1,700 per ounce revenue gold price for CAS and AISC, including royalties and production taxes. For 2023, Newmont has assumed normalizing levels of inflation, improving throughout the year, with a year-over-year average escalation rate of approximately 3%.
Outlook includes development capital, costs and production related to Tanami Expansion 2, Ahafo North, Pamour and Cerro Negro District Expansion 1. Development capital outlook for 2023 and 2024 includes spend related to the Yanacocha Sulfides project ahead of the investment decision planned for late 2024; additional development capital spend and all metal production for Yanacocha Sulfides has been excluded from longer-term outlook beginning in 2025.
Please see the cautionary statement and footnotes for additional information. For a more detailed discussion, see the Company’s 2023 and Longer-Term Outlook released on February 23, 2023, available on www.newmont.com.
2023 SEASONALITY*
|
Newmont Managed Operations |
FY 2023 Outlook |
Q2 2023E |
|
Boddington |
740 – 820 |
28% |
|
Ahafo |
675 – 745 |
23% |
|
Tanami |
420 – 460 |
30% |
|
Peñasquito |
330 – 370 |
18% |
|
Cerro Negro |
315 – 345 |
24% |
|
Akyem |
315 – 345 |
29% |
|
Porcupine |
285 – 315 |
21% |
|
Éléonore |
265 – 295 |
24% |
|
Yanacocha |
255 – 285 |
26% |
|
Merian |
235 – 265 |
23% |
|
Musselwhite |
200 – 220 |
23% |
|
CC&V |
160 – 180 |
21% |
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*Estimated 2023 seasonality remains subject to change and represents management’s expectations of future production results as of April 27, 2023. |
In the second quarter of 2023, we expect to produce approximately 24 percent of our full year gold guidance, primarily driven by the following sites:
- Tanami – Higher milling rates expected in the second quarter, with continued recovery from the first quarter rainfall event
- Boddington – Higher grades expected in the second quarter; stripping expected to begin in the second half of the year
- Ahafo – Higher grades expected in the second quarter due to the planned mine sequence and the progression of work at Subika Underground
- Akyem – Higher grades expected in the second quarter due to the planned mine sequence
- Peñasquito – Lower production expected in the second quarter due to the planned mine sequence resulting in lower grades from the Chile Colorado pit
We expect to deliver approximately 55 percent of our full year gold production guidance in the second half of the year.
FIVE YEAR OUTLOOK
|
Guidance Metrics |
2023E |
2024E |
2025E |
2026E |
2027E |
|
Gold ($1,700/oz price assumption) |
|
|
|
|
|
|
Attributable Gold Production (Moz) |
5.7 – 6.3 |
5.9 – 6.5 |
5.9 – 6.5 |
6.1 – 6.7 |
6.1 – 6.7 |
|
Gold CAS ($/oz)* |
$870 – $970 |
$850 – $950 |
$780 – $880 |
$750 – $850 |
$750 – $850 |
|
Gold AISC ($/oz)* |
$1,150 – $1,250 |
$1,100 – $1,200 |
$1,000 – $1,100 |
$1,000 – $1,100 |
$1,000 – $1,100 |
|
Copper ($3.50/lb price assumption) |
|
|
|
|
|
|
Copper Production (Mlb) |
95 – 105 |
85 – 95 |
45 – 55 |
45 – 55 |
55 – 65 |
|
Copper CAS ($/lb)* |
$1.85 – $2.15 |
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|
|
|
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Copper AISC ($/lb)* |
$2.35 – $2.65 |
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|
|
|
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Silver ($20/oz price assumption) |
|
|
|
|
|
|
Silver Production (Moz) |
31 – 35 |
32 – 36 |
35 – 39 |
28 – 32 |
30 – 34 |
|
Silver CAS ($/oz)* |
$11.10 – $12.10 |
|
|
|
|
|
Silver AISC ($/oz)* |
$15.50 – $16.50 |
|
|
|
|
|
Lead ($0.90/lb price assumption) |
|
|
|
|
|
|
Lead Production (Mlb) |
170 – 190 |
190 – 210 |
210 – 230 |
160 – 180 |
250 – 270 |
|
Lead CAS ($/lb)* |
$0.55 – $0.65 |
|
|
|
|
|
Lead AISC ($/lb)* |
$0.70 – $0.80 |
|
|
|
|
|
Zinc ($1.35/lb price assumption) |
|
|
|
|
|
|
Zinc Production (Mlb) |
420 – 460 |
550 – 590 |
580 – 620 |
460 – 500 |
400 – 440 |
|
Zinc CAS ($/lb)* |
$0.65 – $0.75 |
|
|
|
|
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Zinc AISC ($/lb)* |
$1.05 – $1.15 |
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|
|
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Capital |
|
|
|
|
|
|
Sustaining Capital** |
$1,000 – $1,200 |
$1,000 – $1,200 |
$1,000 – $1,200 |
$1,000 – $1,200 |
$1,000 – $1,200 |
|
Development Capital** |
$1,200 – $1,400 |
$1,200 – $1,400 |
$800 – $1,000 |
$500 – $700 |
$300 – $500 |
|
*Consolidated basis; **Attributable basis |
CONSOLIDATED EXPENSE OUTLOOK
|
Guidance Metric ($M) |
2023E |
|
Exploration & Advanced Projects |
$475 – $525 |
|
General & Administrative |
$260 – $290 |
|
Interest Expense |
$200 – $220 |
|
Depreciation & Amortization |
$2,200 – $2,400 |
|
Adjusted Tax Rate a,b |
32% – 36% |
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a The adjusted tax rate excludes certain items such as tax valuation allowance adjustments. |
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b Assuming average prices of $1,700 per ounce for gold, $3.50 per pound for copper, $20.00 per ounce for silver, $0.90 per pound for lead, and $1.35 per pound for zinc and achievement of current production, sales and cost estimates, we estimate our consolidated adjusted effective tax rate related to continuing operations for 2023 will be between 32%-36%. |
ASSUMPTIONS AND SENSITIVITIES
|
|
Assumption |
Change (-/+) |
FCF Impact ($M) |
AISC Impact ($/oz) |
|
Gold ($/oz) |
$1,700 |
$100 |
$400 |
$5 |
|
Australian Dollar |
$0.70 |
$0.05 |
$60 |
$15 |
|
Canadian Dollar |
$0.77 |
$0.05 |
$35 |
$10 |
|
Oil ($/bbl) |
$90 |
$10 |
$20 |
$5 |
|
Copper ($/lb) |
$3.50 |
$0.25 |
$15 |
$— |
|
Silver ($/oz) |
$20.00 |
$1.00 |
$15 |
$2 |
|
Lead ($/lb) |
$0.90 |
$0.10 |
$10 |
$— |
|
Zinc ($/lb) |
$1.35 |
$0.10 |
$30 |
$— |
Assuming a 35% incremental tax rate, a $100 per ounce increase in gold price would deliver an expected $400 million improvement in attributable free cash flow. Included within the attributable free cash flow sensitivity is a royalty and production tax impact of $5 per ounce for every $100 per ounce change in gold price.
2023 OPERATING COSTS BY CATEGORY
|
|
Percent of Total* |
Change in Cost |
FCF Impact ($M) |
AISC Impact ($/oz) |
|
Labor Costs |
50% |
5% |
$90 |
$25 |
|
Materials & Consumables |
30% |
5% |
$50 |
$15 |
|
Fuel & Energy |
15% |
5% |
$30 |
$10 |
Contacts
Media Contact
Omar Jabara
720.212.9651
[email protected]
Investor Contact
Daniel Horton
303.837.5468
[email protected]
