01—Abstract
Summary
Summary of the 8-K filed April 25, 2024. Cited figures are marked; the original filing is the authoritative source.
Newmont's first quarter 2024 results (8-K Item 2.02, Exhibit 99.1) show an operationally solid quarter with a sharp financial turn following the Newcrest integration.
Attributable gold production was 1.675 million ounces, roughly flat with Q4 2023 and at the low end of the expected run-rate, with 489 thousand GEOs from other metals. Average realized gold price rose to $2,090a/oz, lifting Adjusted EBITDA 23% sequentially to $1.69 billion and Adjusted Net Income to $630 million ($0.55 per diluted share, versus $0.46 in Q4). Gold CAS was $1,057/oz and AISC was $1,439/oz, both in line with the prior quarter.
Management reiterated full-year 2024 guidance and said production is expected to be second-half weighted. Cash generation was weaker than the earnings suggest. Net cash from operating activities was $776 millionb, but working capital absorbed $666 million, including a $291 million Newcrest stamp duty payment.
Free cash flow was negative at $(74) million, or $217 millionc excluding the stamp duty. Net debt rose to $6.8 billion, though net debt to pro forma Adjusted EBITDA was 1.2x. The company recorded a $485 million non-cash loss on six non-core assets and one project classified as held for sale, including the Akyem and Telfer assets.
Reported net income attributable to stockholders was $170 milliond, or $0.15 per diluted share. The release also flags operational and portfolio developments. Operations at Cerro Negro were suspended after two worker fatalities on April 9, 2024, and Telfer was temporarily suspended to remediate its tailings facility.
Newmont announced the sale of its Lundin Gold financing facilities for $330 million, partially monetizing non-core exposure while keeping its equity stake in Fruta del Norte. The company has about $500 million of Newcrest synergies targeted by year-end 2025, of which $105 million has been realized so far. Management also declared a $0.25 per share Q1 dividend, payable June 27, 2024.
02—Key points
Key Highlights
- Adjusted EBITDA rose 23% sequentially to $1,694 million, and Adjusted Net Income was $630 million ($0.55 per diluted share), driven by a $2,090/oz average realized gold price.
- Free cash flow was $(74) million, or $217 million excluding the $291 million Newcrest-related stamp duty payment; operating cash flow was $776 million after a $666 million working capital outflow.
- A $485 million non-cash loss was recorded on assets held for sale (six non-core assets and one project), which drove the gap between GAAP net income of $170 million and adjusted results.
- Attributable gold production of 1.675 Moz was broadly flat sequentially, with full-year 2024 guidance of 6.93 Moz reaffirmed and production expected to be second-half weighted.
- Operational setbacks include the suspension of Cerro Negro after two fatalities on April 9, 2024, and the temporary suspension of Telfer for tailings remediation.
- Portfolio optimization continued with the $330 million sale of the Lundin Gold stream and offtake facilities, with $180 million due June 28, 2024 and $150 million due by September 30, 2024.
- Net debt rose to $6.79 billion, though the net debt to pro forma Adjusted EBITDA ratio stands at 1.2x, and $105 million of the targeted $500 million in Newcrest synergies has been delivered to date.
03—Questions
Frequently Asked Questions
Did Newmont meet its profitability expectations in Q1 2024?
Adjusted results were strong, with Adjusted EBITDA of $1.69 billion and Adjusted Net Income of $0.55 per diluted share, up from $0.46 in Q4 2023. GAAP net income attributable to stockholders was $170 million ($0.15 per share), reduced by a $485 million non-cash loss on assets held for sale and other adjustments. The higher realized gold price of $2,090/oz was the main driver of improved margins.
Why was free cash flow negative this quarter?
Free cash flow was $(74) million, mainly because of a $666 million working capital outflow and $850 million of capital expenditures. The working capital outflow included a $291 million stamp duty payment related to the Newcrest acquisition, a $193 million inventory and stockpile build, and $84 million of receivables growth. Excluding the stamp duty, free cash flow would have been $217 million.
Is Newmont still on track to meet its 2024 guidance?
Management said the company is firmly on track to deliver 2024 guidance for production, costs, and capital spend. Full-year attributable gold production is guided to 6.93 Moz, with CAS of $1,050/oz and AISC of $1,400/oz at a $1,900/oz gold price assumption. Production is expected to be second-half weighted. Investors should monitor the Cerro Negro suspension and Telfer shutdown, which may affect the ramp-up.
How significant is the Lundin Gold financing sale for investors?
The $330 million buyout of the Fruta del Norte stream and offtake facilities is a cash-generating portfolio step that supports the commitment of at least $2 billion in near-term cash improvements within two years of the Newcrest acquisition. Newmont keeps its 31.9% equity interest in Lundin Gold, so it retains exposure to the asset. The consideration is received in two tranches, $180 million by June 28, 2024 and $150 million by September 30, 2024, and the transaction is subject to closing.
What are the main operational and balance sheet risks highlighted in the release?
Key operational risks include the Cerro Negro suspension after two worker fatalities and a full investigation, along with the temporary suspension at Telfer. The $485 million impairment on held-for-sale assets signals lower expected value from non-core disposals. On the balance sheet, net debt increased to $6.79 billion from $6.43 billion at year-end 2023, and management targets about $1 billion of debt reduction after refinancing roughly $2 billion of Newcrest-acquired debt.
04—Continue