Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
Newmont’s NEM 2025 first-quarter adjusted EBITDA of USD 2.6 billion is 55% up on the same quarter of 2024. A 41% higher realized gold price more than offsets 10% lower volumes and a 5% increase in unit cash costs.
Why it matters: There are no changes to guidance, with volumes likely to be higher in the second half than the first half. Consistent with its strategy to focus on its larger, longer-life, lower-cost mines, it has now sold six smaller, higher-cost mines.
First quarter attributable volumes from its remaining mines of about 1.34 million ounces are 3% down on a year ago but broadly in line with our expectations. We still expect 2025 attributable volumes of about 5.6 million ounces from its remaining mines, at the midpoint of guidance.We forecast 2025 all-in sustaining costs before by-product credits of about USD 1,700 per ounce. This is near the midpoint of guidance after adjusting for higher royalties and other costs given gold is higher than Newmont’s USD 2,500 assumption.
The bottom line: We retain our USD 55 per share fair value estimate for no-moat Newmont, with shares trading 3% below fair value. Elevated gold prices and proceeds from mine disposals mean its balance sheet is strong. Net debt/adjusted EBITDA is 0.3.
The USD 0.25 per share dividend is the same as a year ago and consistent with its quarterly base dividend policy. Expected total dividends for 2025 of USD 1 per share offer a modest 1.9% forward yield.About USD 1 billion remains on its share repurchase program and we prefer it continue buying back shares as long as it can do so at value-accretive prices. Failing that, increased dividends are our preference given value-accretive acquisitions are unlikely at current gold prices.
Long view: We forecast attributable volumes to rise to around 6.4 million ounces midcycle by 2029. All things equal, this will likely see unit cash costs fall, driving some improvement in its position on the industry cost curve from around the middle currently.
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