Newmont Corp. reported sharply higher net income of $806 million, or $1 per share, and adjusted net income of $856 million, or $1.06 per share, for the fourth quarter of 2020.
The company predicted 1.37 million ounces of gold this year from its share of Nevada Gold Mines.
Newmont’s earnings beat market expectations for the fourth quarter. Zacks Consensus Estimate was for earnings of 95 cents per share, rather than $1.06 for the adjusted net income. Newmont’s share price was $56.14, down $1.11 in afternoon trading Friday.
The company also announced a dividend of 55 cents per share for the fourth quarter, up 38% over the third quarter, and a total declared dividend for the year 2020 of $1.45 per share.
“In 2020, Newmont achieved record performance, including $3.6 billion of free cash flow and ending the year with over $5.5 billion of consolidated cash. These results enable Newmont to lead the industry in shareholder returns, invest in organic growth and maintain financial flexibility,” President and Chief Executive Officer Tom Palmer said.
He said in the earnings call Thursday that for every $100 increase in the gold price above $1,200 an ounce, there is a $400 million incremental free cash flow that goes entirely to Newmont’s account.
The net income for the fourth quarter was up $269 million from the 2019 quarter primarily due to higher realized gold prices, according to the Denver-based company. The average realized gold price was $1,852 in the 2020 quarter, up $374 per ounce over the 2019 quarter.
For the year 2020, Newmont announced gold production of 5.9 million ounces, down 6% from 6.29 million ounces in 2019, primarily due to temporary COVID-19 shutdowns at the Yanacocha Mine in Peru And Cerro Negro in Argentina, lower grades mined at Ahafo in Ghana and the sale of the Red Lake Mine in Canada and the sale of Newmont’s share of Kalgoorlie in Australia.
There also were more than 1 million attributable gold equivalent ounces of co-products produced in the year, according to the company.
For the fourth quarter, Newmont produced 1.63 million ounces, compared with 1.83 million gold ounces in the 2019 quarter.
The quarterly production included 342,000 gold ounces for its 38.5% share of Nevada Gold for the fourth quarter, and its share of NGM production for the year was 1.33 million ounces for the year. Nevada Gold Mines is a joint venture of Barrick Gold Corp. and Newmont. Barrick holds 61.5% of NGM and is the operator.
Companywide for the year 2020, Newmont’s cash costs averaged $756 per ounce and all-in sustaining costs were at $1,045 per ounce.
Newmont expects to produce 6.5 million ounces of gold this year, and the company’s reserves lead the industry, with more than 94 million ounces of gold mineral reserves and reserves of 65 million gold equivalent ounces from other metals.
Palmer said in the earnings conference call that “reserves are the lifeblood of a mining company.”
He also said Newmont has “nine world-class assets with mine lives exceeding 10 years,” and the company will produce more than 6 million gold ounces per year “for the next decade.”
Newmont plans to spend roughly $215 million on exploration this year, including 80% at near-mine expansion efforts, and Palmer said in the earnings call that the company policy is to have exploration and operations people work together, rather than “duplicate efforts.”
Palmer praised the company’s safety efforts in 2020 that resulted in the lowest personal injury rate in Newmont’s history.
“While generating record value for shareholders, we also achieved record safety performance and the lowest injury rate in company history,” Palmer said in the earnings report. “As we complete our 100th year, we will remain focused on delivering superior operational performance whilst creating value and improving lives through sustainable, responsible mining.”
Chief Operating Officer Rob Atkinson said Newmont “remains very diligent” managing COVID-19 and safety protocols.
Atkinson also reported that four of the autonomous trucks coming for the Boddington Mine in Australia have been commissioned. The autonomous trucks are expected to improving mining rates, he said.