Newmont Mining Corporation of Canada Ltd (TSX:NGT) delivered fourth-quarter 2022 results and updated guidance that were 'in line to slightly positive' versus the expectations of analysts at Canaccord Genuity (TSX:CF, LSE:CF).
Still, they were enough to earn the gold producer an upgraded ‘Buy’ rating, from ‘Hold’, with an increased price target of $55.
The analysts noted that 2022 overall was a challenging year for Newmont with production coming in at the low end of guidance and costs above the high end. It also reset its dividend framework, as expected, to $1.60 per share, down from $2.20, representing about 45% of its 2023 sustaining free cash flow (FCF) and a 3.6% yield.
“We view Newmont as offering investors a steady gold production profile centered on geopolitically stable jurisdictions, with a deep project pipeline, strong balance sheet and FCF generation, and a proven operating team,” the analysts wrote in a client note. “We also see the potential acquisition of Newcrest Mining as making strategic sense.”
Newmont posted adjusted earnings per share (EPS) of $0.44 and underlying earnings (EBITDA) of $1.22 billion, a slight beat over the analysts’ prior estimates on better production of 1.63 million ounces (Moz) versus their prior estimate of 1.58 Moz.
Cash costs and all-in-sustaining costs (AISC) of $940/oz and $1,215/oz, respectively, were largely in line with Canaccord’s prior estimates.
The analysts said Newmont’s 2023 guidance was largely in line with its prior estimates, with gold production of 6 Moz at the mid-point, gold cash costs of $870-970/oz, AISC of $1,150-$1,250/oz and capital expenditure of $2.2-$2.6 billion.
They said the company’s longer-term production guidance implies modest growth, with gold production expected to trend higher from 6 Moz in 2023 to 6.4 Moz by 2026. Costs are expected to trend downwards from $920/oz in 2023 (mid-point) to about $800/oz by 2026 on expectations of normalizing inflation and higher production levels.
Newmont's shares traded 1.7% down at $44.36 by 1pm ET.
Contact the author at stephen.gunnion@proactiveinvestors.com