Newmont Mining reported what it described as its “best quarterly financial performance” in history.
The company took full advantage of the surge in gold prices during the quarter.
Newmont announced its record dividend.
Gold mining giant Newmont Corporation (NYSE: NEM) reported on Thursday morning what management described as its “best quarterly financial performance” in history.
Best quarter in a century
Newmont was founded in 1921, and almost a century later the company is running at full speed. The world’s largest gold mine, which also produces copper, silver, zinc and lead, reported third-quarter earnings per share of 86 cents versus expectations of 84 cents on revenues of $3.17 billion versus expectations of $3.3 billion.
Although revenues were below expectations, Newmont reported adjusted EBITDA of $1.7 billion and free cash flow of $1.3 billion. The best quarter in the company’s history falls at a time of record gold prices and contributed to a 60% increase in the company’s dividend in October after a 79% increase in January.
The company ended the quarter with consolidated cash on hand of $4.8 billion, liquidity of $7.8 billion and a net debt to adjusted EBITDA ratio of 0.4 times.
The Company’s dividend payment of $1.60 per share gives Newmont the status of offering the highest payout in the gold sector, the Company stated in its earnings release. The dividend represents a yield of 2.7%, a premium over the S&P 500 index.
This should come as no surprise as gold mining stocks outperform the commodity itself. Here is a July report on how this is possible.
“I am confident that our world-class portfolio is best positioned to generate industry-leading value and returns for our shareholders,” said Tom Palmer, CEO and President of Newmont, in the earnings release.
Large Gold Profits
The average realized gold price in Newmont increased by $437 per ounce to $1,913 on a quarterly average basis compared to the previous year. Gold was not the only commodity to record higher prices as copper rose 62 cents per pound to $2.99, silver rose $4.51 per ounce to $21.69 and zinc rose 20 cents per pound to $1.01.
Lead prices dropped 11 cents per pound to 73 cents, although lead is the least significant contributor to revenues at around $30 million.
Other highlights of the quarter
During Newmont’s quarter, the Company produced 1.5 million attributable ounces of gold and 273,000 attributable ounces of gold equivalent from by-products. This compares to 1,541 ounces of gold produced by the Company in the same quarter of the prior year, with the decrease due to the impact of COVID-19.
The Company also reported Cost of Sales Allocated Costs (CAS) of $756 per ounce, an increase of 3% due to higher overburden ratios at certain mines, lower surface grades and higher gold price-related royalties.
All-in sustaining costs (AISC) of $1,020 per ounce marks a 3% increase over last year, primarily due to higher CAS costs per ounce and COVID-related expenses.