Newmont Exceeds Production Guidance, Faces Cost Pressures in 2025 Outlook
Newmont Corporation (NYSE: NEM) delivered a strong Q4 2024, marking a transformational year with portfolio rationalization and operational stabilization. CEO Tom Palmer emphasized that divesting six non-core operations will generate $2.5 billion in cash proceeds by mid-2025. Despite robust production figures and record $1.6 billion in free cash flow for Q4, rising costs and lower 2025 production guidance have drawn investor attention.
Q4 2024 Financial Performance and Production Highlights
- Revenue: $5.32 billion, in line with analysts’ expectations.
- Adjusted EPS: $1.03 per share, meeting projections.
- Gold Production: 6.8 million ounces for 2024, exceeding guidance.
- Copper Production: 150,000 tons produced.
- Free Cash Flow: Record $2.9 billion for 2024, with $1.6 billion in Q4 alone.
- Cash Reserves: Ended 2024 with $3.6 billion in cash and $7.7 billion in total liquidity.
2025 Guidance: Cost Challenges and Capital Allocation
Newmont projects gold production at 5.6 million ounces in 2025 from its core Tier 1 portfolio, with all-in sustaining costs (AISC) expected to rise to $1,620 per ounce. Sustaining capital expenditures will remain elevated at $1.8 billion as the company focuses on stabilization efforts.
- Sequentially higher free cash flow expected throughout 2025, starting from a lower point in Q1 due to higher costs and capital expenditures.
- Long-term production target of 6 million ounces annually over the next decade remains intact.
Key Analyst Q&A Takeaways
Debt Management & Liquidity:
- Goldman Sachs’ Hugo Nicolaci: Inquired about post-divestment debt strategy.
- CFO Karyn Ovelmen: Emphasized maintaining $3 billion in cash and keeping debt below $8 billion.
Cost and Production Concerns:
- Barrenjoey’s Daniel Morgan: Asked about discrepancies between reserve price assumptions and AISC guidance.
- CEO Tom Palmer: Explained that reserve prices reflect long-term planning, while short-term costs are influenced by sustaining capital and inflation.
Operational Challenges & Cost Pressures:
- RBC Capital Markets’ Josh Wolfson: Raised concerns on cost increases and integration issues.
- Palmer acknowledged labor cost inflation and sustaining capital needs but emphasized long-term margin improvements.
Market Sentiment: Analysts Cautious Amid Rising Costs
- Analysts expressed skepticism about cost escalations and operational consistency.
- Management emphasized stabilization and long-term potential, but the Q&A tone revealed a more defensive stance.
- Compared to Q3 2024, the narrative shifted from cost reduction optimism to acknowledging cost pressures.
Potential Risks and Challenges
- Labor cost inflation and rising contractor expenses.
- Sustaining capital investments in tailings remediation at Cadia.
- Lower-than-expected production from Lihir and Brucejack in 2025.
Positioning for Long-Term Growth
Newmont’s strategic divestments, cash flow strength, and commitment to maintaining Tier 1 production position it for long-term success. However, investors will closely watch cost management, production trends, and operational stability as the company navigates 2025’s elevated expense environment.
