Published On: February 23rd, 2024
Newmont Mining ASX or Newmont Corp., the global leader in gold production, aims to divest six mines and two projects to generate approximately USD 2 billion in cash.
This follows strong suit with the biggest Newmont Mining news of late, their USD 15 billion acquisition of Newcrest Mining Ltd. in November 2023, cementing their position as the world’s largest gold producer.
A strategic shift in operations and ownership shows Newmont’s stable progress towards a long-term target of operating globally the best gold and copper mining assets.
Figure 1-Newmont To Strike Gold Again?
Newmont Mining ASX: Divesting for Future Diversity
Newmont’s acquisition of Newcrest Mining Ltd. points towards a dynamic effort at consolidating its gold and copper mining behemoth position.
The divestitures are based on threshold values set as core company criteria for only maintaining and operating Tier 1 assets.
Tier assets are classified and calculated as gold mining assets meeting the standards –
- Generating at least 500,000 gold-equivalent ounces
- Located in top jurisdictions with stable geo-eco-political environments for sustainable growth
- Tentatively showing an operational lifespan of at least ten years
Experts and analysts continue to back this bold move and shift in functional dynamics despite the divestitures dissociating Newmont from a global footprint. However, that is a temporary and limited outlook.
Newmont intends to expand operations, assisted by commercials generated from the divestitures, towards more geo-politically stable jurisdictions in the form of brownfield and greenfield expansions, not to mention their Newcrest acquisition single-handedly adding substantial long-term value to their portfolio.
However, mines and projects that are being divested include –
- Eleonore, Canada
- Musselwhite, Canada
- Porcupine, Canada
- Cripple Creek & Victor, USA
- Akyem, Ghana
- Telfer, Australia
- Project Havieron, Australia
- Project Coffee Gold, Canada
Chief Executive Officer Tom Palmer has said – “We have several Tier 2 assets that are delicious assets, run by very good people, but that don’t make our Tier 1 category.”
He also mentioned that Newmont has already received enquiries from interested buyers.
The company will look to divest and generate commercials quickly to stimulate growth. However, 2024 will see Newmont investing heavily in advanced studies and research to increase mine life and efficiency, not just greenfield and brownfield expansions.
Newmont Mining Stock Price Analysis
Despite stock prices hitting an almost 5-year low, analysts are backing Newmont Mining ASX to rally a 50% price retrieval based on fundamental analysis –
- ASX: NEM is currently trading at more than 50% under fair value
- Earnings growth expected at ~45% per annum
- Revenue growth expected at ~15% per annum
- 3.2x Profit-to-Sales ratio against an industry average of 5.4x
- Debt to Equity reduced from 36% to 28.9%
- Above-market Dividend Yield at 5.2% (forecasted to grow to 5.3%)
In short, Newmont Mining ASX is rated highly as a prospective short and long-term stock option. A stabilizing market scenario and the company’s shift in operational dimensions towards more geo-politically stable jurisdictions will further strengthen its position.
Newmont Mining ASX: Investor Outlook
Few other companies can make a stronger case for a potential rally than Newmont for investors considering short or long-term options in the mining sector.
With their USD 15 billion acquisition of Newcrest, the company has secured its position as the largest gold producer in the world.
Stock prices close to a 5-year-low make ASX: NEM one of the most influential stocks in the Australian exchange, with the highest prospects of a strong rally and continued stability beyond the upcoming financial year.
