Red Chris Incident Overshadows Strong Newmont Result
World’s biggest gold miner reports record quarterly cashflow
Newmont Corporation (NYSE: NEM) has announced its June quarter results, as well as providing an update on an incident at its Red Chris operation in British Columbia, Canada.
On the morning of July 22, two fall of ground incidents occurred in the access way to the non-producing underground work area at Red Chris.
At the time of the initial incident, three contractors were working more than 500m beyond the affected zone and were asked to relocate to a designated refuge station before a subsequent fall of ground blocked the access way and restricted communication.
“Operations at Red Chris have been suspended whilst we respond to the incident, along with the support from emergency responders and teams from nearby mine sites,” Newmont president and CEO Tom Palmer said during a conference call on Thursday afternoon, US time/Friday morning, Australian time.
“Our focus is on restoring communications to the refuge chamber safely, re-establishing access underground and bringing our three teammates up to the surface and to their families and friends.”
Palmer described the situation as “very live and evolving” but thanked the broader industry for their support.
“We are concentrating the full force of our organisation on the safe recovery of our team members at Red Chris and we will conduct a thorough and independent investigation into the factors that led to this event,” he said.
“All findings and lessons learned will be leveraged across Newmont to strengthen our Always Safe program and will be shared across the broader mining industry.”
Record free cashflow
“Although overshadowed by this incident at Red Chris, Newmont delivered another strong operational performance in the second quarter, keeping us firmly on track to achieve our 2025 guidance,” Palmer said.
Newmont reported a strong second quarter result, which included record free cashflow generation of US$1.7 billion.
Net cash from operating activities rose by 2% to US$2.4 billion, net of working capital contributions of US$156 million.
The average realised gold price increased by US$376/oz to US$3320/oz.
Newmont reported net income of US$2.1 billion and adjusted net income of US$1.6 billion equating to US$1.43 per diluted share and a 14% rise in adjusted EBITDA to US$3 billion.
Income and mining cash tax paid increased by 39% over the prior quarter to US$648 million due to higher net income attributable to Newmont shareholders.
Attributable gold production fell by 4% to 1.47 million ounces, while gold all-in sustaining costs were down 4% to US$1593 an ounce on a co-product basis primarily due to an US$81 million lower sustaining capital spend.
On a by-product basis, AISC was US$1375/oz.
Palmer said the company would present co-product and by-product unit costs to allow better benchmarking against its peers.
Newmont maintained 2025 guidance of 5.6Moz of gold, including 4.2Moz from its managed tier one portfolio, at AISC of US$1630/oz.
“We realise none of this matters until we bring our three Red Chris team mates home safe and sound,” Palmer said.
Balance sheet strengthening
Palmer acknowledged the recent resignation of chief financial officer Karyn Ovelman.
“Whilst the timing was unfortunate, we respect her decision,” he said.
Peter Wexler is acting CFO while the company searches for a replacement but Palmer said Newmont “won’t miss a beat” during the process.
Newmont ended the quarter with US$6.2 billion in cash and US$10.2 billion in total liquidity.
Debt was reduced by US$372 million over the past three months, with the reported net debt to adjusted EBITDA ratio dropping to 0.1x.
The company expects to receive more than US$3 billion in post-tax cash proceeds from its divestiture program this year, including roughly US$2.5 billion from divested assets and approximately US$470 million from the sale of equity shares in Greatland Resources (LSE/ASX: GGP) and Discovery Silver (TSX: DSV).
Newmont returned US$1 billion in cash to shareholders in the past three months via dividends and share repurchases.
It declared a dividend of US25c per share for the June quarter.
The board approved an additional US$3 billion share repurchase program.
Internal focus
Given the Newmont’s strong balance sheet, Palmer was asked about acquisitions and increasing copper exposure.
“I'll be as clear as I can: our focus is internal, and the best use of our capital is to buy back Newmont stock, and that's where you'll see us spend our time and attention,” he said.
“We have a magnificent organic project pipeline. Next cab off the rank is likely to be the Red Chris block cave, which is a copper-gold mine, so you will see us focus on a balance of copper in our portfolio as a gold mining company, but that copper exposure will come from our organic growth.”
Palmer described the company’s stakes in Greatland and Orla Mining (TSX: OLA) as non-core but the 32% stake in Lundin Gold (TSX: LUG) as core.
He said the company had started working on a 2026 business plan.
“On the project side of things, it’s really important that we safely deliver first gold and commercial production out of Ahafo North, continue to progress the Tanami expansion and continue to progress the two-panel cave at Cadia, but we are actively working our project pipeline,” Palmer said.
Newmont is working on a feasibility study on a block cave at Red Chris, as well as permitting.
“We’re very much focused on that project and whether that could come up to the mark to be considered for full funds in the 2026 timeframe.”