Newmont posts Q1 production dip, unveils $506m divestment
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The news: Newmont has reaffirmed its full-year guidance despite a fall in gold production during the March quarter, and said it will divest its Fruta del Norte asset for USD330 million ($506 million) to Lundin Gold.
The numbers: Newmont's gold production decreased 4% quarter on quarter to 1.68 million ounces. Average realised gold price was USD2,090 in the March quarter, an increase of USD86 per ounce over the prior quarter, as global gold prices climbed.
Gold costs applicable to sales (CAS) totalled USD1.7 billion for the quarter, with gold CAS per ounce largely in line with the prior quarter at USD1,057 per ounce. Gold all-in sustaining costs was also largely in line with the prior quarter at USD1,439 per ounce, with a slight improvement from lower sustaining capital spend.
Newmont also announced that Canadian miner Lundin Gold, of which Newmont is the largest shareholder, has agreed to buy out 100% of the Fruta del Norte gold mine in Ecuador for a total consideration of USD330 million.
The divestment is part of a portfolio optimisation strategy, whereby Newmont has committed to delivering at least USD2 billion in near-term cash improvements within the first two years.
Newmont, which is dual-listed on the ASX and Nasdaq, saw shares surge 12.46% during Thursday's session in New York.
The company's shares surged 14.46% to $66.01 at market open on the ASX.
The context: The gold miner said the production decline during the quarter was primarily due to lower production at its Tanami site due to a planned mill shutdown and seasonal rainfall impacts, as well as ongoing stripping campaigns at its Boddington and Akyem sites.
Lower production was also delivered from the non-managed joint venture at Navada Gold Mines, while negative impacts were partially offset by higher production at Peñasquito and Yanacocha, as well as a full quarter of ownership of the sites acquired in the Newcrest takeover.
Newmont reaffirmed its full-year guidance and said FY24 production is expected to be second-half weighted.
What they said: Newmont's CEO and president Tom Palmer said: "Newmont delivered a strong first quarter operational performance, producing 2.2 million gold equivalent ounces and generating over $1.4 billion in cash from operations before working capital changes".
The source: ASX announcement
