Newmont Signals Little Appetite for M&A as Returns Boosted
Strong quarter for Newmont but company warns of Q2 dip
Newmont Corporation (NYSE: NEM) announced another record quarter of free cashflow generation and doubled the size of its share repurchase program.
Gold production in the first quarter dropped 10% to 1.3 million ounces, while copper production was up 3% to 30,000 tonnes and silver production increased 29% to 9Moz.
Gold by-product all-in sustaining costs fell by 21% to US$1029 an ounce due to lower sustaining capital spend, G&A, and other expenses, while the average realised gold price for the quarter increased by US$684 to US$4900/oz.
Net income for the quarter was up US$2 billion to US$3.3 billion, while adjusted net income rose by US$400 million to US$3.2 billion.
The company generated US$3.8 billion of cash from operating activities, net of working capital impacts of US$202 million, and reported record free cashflow of US$3.1 billion, up 12%.
Newmont CEO Natascha Viljoen said the result was particularly notable given the seasonal working capital headwinds typically experienced in the first quarter of each year.
Australia challenges
Gold production in Q1 fell due to a bushfire at Boddington in Western Australia, heavy rainfall and a fatal accident at Tanami in the Northern Territory and heavy snowfall at Brucejack in British Columbia.
Newmont maintained 2026 production guidance of 5.3Moz of gold, 52% weighted to the second half.
Newmont expects to produce 23% of total 2026 attributable production in the second quarter of 2026, slightly below first quarter production.
On April 14, a magnitude 4.5Mla earthquake was recorded in New South Wales near Newmont’s Cadia operation.
There were no injuries but some damage to underground infrastructure and operations were briefly suspended.
Cadia is currently processing surface stockpiles and expects underground rehabilitation to be completed in the next five weeks, enabling a return to 80% operating capacity, with full operational capacity expected by the end of the current quarter.
Despite lower AISC in the first quarter, Newmont maintained full-year guidance of US$1650/oz.
Unit costs are expected to be notably higher than the first quarter due to higher sustaining capital spend, lower silver production, and higher costs at Boddington, Tanami, Lihir and Peñasquito.
The company warned unit costs could be impacted by higher oil prices, while increased royalties in Ghana were expected to result in a US$25/oz impact.
“Over the last few weeks, the world has experienced a notable increase in energy prices and impacts to global supply chain dynamics as a result of the ongoing conflict in the Middle East,” Viljoen said.
“We continue to monitor the geopolitical environment and its potential impact on cost closely but remain encouraged by our demonstrated ability to effectively manage costs and improve productivity, and are therefore maintaining our full-year cost guidance at this time.”
Returns boosted
Since the company’s last conference call in February, it returned US$2.7 billion to shareholders via dividends and share buy-backs.
It declared a first quarter dividend of US26c per share.
The Newmont board has authorised an additional US$6 billion of share repurchases.
Newmont ended the quarter with US$8.8 billion of cash and US$12.8 billion in total liquidity, with a net cash position of US$3.2 billion.
The company has a minimum cash balance target of US$5 billion and a net cash target of US$1 billion.
Sustaining capital guidance for 2026 is US$1.95 billion, while development capital spend is expected to be US$1.4 billion.
In light of Agnico Eagle Mines’ (TSX: AEM) deals announced earlier this week, Viljoen was asked about Newmont’s appetite for M&A.
“Just from a disciplined capital allocation point of view, our focus remains firmly, firstly, on continuing to drive our own operations, to be the best operators of these operations, and to get them to operate in the way that they should,” she said.
“Then we have a number of brownfields opportunities that we believe would be very value-accretive for us, and then, of course, by the time we get to greenfields projects and any what could-be acquisition opportunities, it will have to compete for capital within the broader portfolio.
“So, our focus at this stage reminds firmly internally on our operations.”
Nevada Gold Mines
In February, Newmont revealed it had sent a notice of default to its Nevada Gold Mines partner Barrick Mining Corporation (NYSE: B) under the NGM joint venture agreement.
It came after Barrick announced a proposed initial public offering of its North American assets.
Newmont has a 38.5% interest in Nevada Gold Mines (NGM) in the US and a 40% interest in Pueblo Viejo in the Dominican Republic, both operated by Barrick.
At the time, Newmont expressed concern about the operation and management of NGM due to “a degradation in performance and subsequent asset value over the past six years”.
Viljoen said discussions were ongoing, while Newmont was also collecting information on Barrick’s 100%-owned Fourmile discovery.
“We continue to engage constructively with our Nevada Gold Mines joint venture partner with a clear focus on improving the performance of our shared assets and delivering long-term value for Newmont shareholders,” Viljoen said.
“Our focus remains, firstly, on improving the Nevada Gold Mines joint venture performance, and then we are continuously working with our joint venture partner to gain more information around Fourmile and the work that we need to do there.”
Newmont interim chief financial officer Peter Wexler said the notice of default was open-ended.
“There’s no set timeline for bringing it to resolution, but we hope to do so in the near term and make sure that Nevada Gold Mines is operating at the highest level possible,” he said.