Newmont 2Q25 Earnings Comment
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TradingKey - Newmont Corp. released its earnings for the second quarter of the fiscal 2025 on July 24th after the bell.
· 2Q25 Earnings per share: $1.43 vs $1.15 estimate (+99% y/y)
· 2Q25 Revenue: $5.32 vs $4.83bn estimate (+21% y/y)
Both the top and bottom lines were very solid beats, with EPS, in particular, ending up being 25% above what was estimated initially. This can be attributed to several factors, including: 1) Elevated gold price; 2) Higher than expected production in terms of gold ounces (1.5 million vs 1.34 million) and 3) All-in sustaining costs (AISC), or the cost associated with the production of one ounce, being $1,593, down 4% from the previous quarter.
Other positive aspects include the continuous sale of non-core assets and doubling up the share repurchase program from $3 billion to $6 billion. For reference, these extra $3 billion worth of shares to be bought would represent 4.4% of the total market cap of $68 billion.
On the negative side, the production level may drop again in the second half of the year, just after we saw an increase, mostly due to some sites experiencing transition to new mining areas. This can affect both gold and copper production.
Conclusion
We do welcome the cost efficiency improvements of Newmont, and we also believe the production hurdles are rather transitionary in nature. This is all combined with a healthy rate of share buyback and low valuation of just 13x PE.
TradingKey - Newmont Corp. will release its earnings for the second quarter of the fiscal 2025 on July 24th after the bell.
- 2Q25 Earnings per share: $1.15 estimate vs. 2Q24 actual of $0.72 (+60% y/y)
- 2Q25 Revenue: $4.83bn estimate vs. 2Q24 actual of $4.40bn (+10% y/y)
Seems like Newmont will be riding the elevated gold prices for a while, as the spot price throughout the quarter has been around $3,300-$3,400 per ounce.
What is more important for their business is the level of production, which is stalling, and this can be explained due to a complex set of factors. In terms of output, there are several headwinds such as 1) The overall strategy of moving towards high-quality assets (quality over quantity); 2) Operational setbacks in Nevada – the biggest mine complex they participate in; 3) The newly acquired mines (Lihir and Penasquito) yield less gold per ton of ore. 4) The yield of some mature assets like the Merian and Suriname mines is decreasing gradually with age.
Any positive implications for the output will take the stock to new heights.
Additionally, Newmont is making more confident steps in the copper production. Copper is of a strategic importance due to its wide usage in the production of EVs and renewable energy projects. Also, Copper is often a by-product of gold mining, allowing costs synergies with the gold mining. Currently copper represents around 10% of the total company revenue, but the goal is this number to double in the coming 3-5 years.
Conclusion
Overall, Newmont is well positioned, driven by both Gold and Copper. The company remains an industry-leading miner and with its large scale, Newmont can keep the production and operation costs within limits. As for the output headwinds, they appear to be more transitional than structural.
