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Newmont Corp.’s stock fell 6% Thursday to put it on track for a nearly five-year low, after the gold miner said it’s planning to sell assets and reduce its dividend as it refocuses its portfolio.
The stock
NEM,
was trading around $31 putting it in sight of its May 22, 2019 close at $31.32.
The Denver-based company closed its acquisition of Australia’s Newcrest Mining in November and is now taking a hard look at its assets and projects with a view to maximizing profit.
The $15 billion deal, the biggest transaction in gold-mining history, has created the world’s biggest gold miner with “robust copper optionality,” as the company described it in a statement on Thursday. Copper is an attractive commodity right now given its use in EVs and renewable-energy infrastructure.
Newcrest has added five active mines and two advanced projects to Newmont’s global footprint, which includes mines in Ghana, Canada and Australia.
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The company is planning to focus on its Tier 1 portfolio, which includes 11 managed Tier 1 and emerging Tier 1 assets and three non-managed operations. It’s seeking to divest six non-core assets, including Éléonore, Musselwhite, Porcupine, CC&V, Akyem and Telfer operations, as well as two non-core projects, Havieron and Coffee.
“This portfolio provides our shareholders with exposure to the highest concentration of Tier 1 assets in the sector, each with the scale and mine life to generate strong free cash flows, and all located in the world’s most favorable mining jurisdictions,” Chief Executive Tom Palmer said in a statement.
The company is expecting to produce 6.7 million ounces of gold by 2028.
As part of a new capital allocation strategy and return of capital framework, Newmont is planning to reduce debt by $1 billion to about $8 billion through free cash flow and divestment proceeds. It’s committed to maintaining an investment-grade balance sheet and is targeting about $7 billion in available liquidity, including $3 billion of cash and an increased $4 billion five-year corporate revolving credit facility.
It is planning to limit capital spend to about $1.3 billion a year and will reward shareholders with a $1 billion buyback program over the next 24 months. But it lowered its quarterly dividend to 25 cents from 40 cents previously. The dividend is payable March 28 to shareholders of record as of March 5.
The company announced the moves as it reported fourth-quarter earnings, showing a loss of $3.139 billion, or $3.22 a share, wider than the loss of $1.477 billion, $1.86 a share, in the year-earlier period. The loss includes $1.9 billion of impairment charges recorded at year-end and costs of $427 million stemming from the integration of Newcrest.
Excluding one-time items, per-share earnings came to 50 cents, ahead of the 44-cent FactSet consensus.
Sales rose to $3.957 billion from $3.200 billion, also ahead of the $3.436-billion FactSet consensus.
The company also completed the transition of its COO after a five-month handover period. New COO Natascha Viljoen replaced Rob Atkinson, who will also step down from the executive leadership team on May 2.
The stock is down about 30% in the last 12 months, while the S&P 500
SPX
has gained 25%.
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