Newmont Corporation (NYSE:NEM) reported a 29% increase in free cash flow for the second quarter, reaching $2.21 billion, despite a 13% decline in gold production. The strong performance was driven by higher bullion prices, which offset the lower output.
The company's free cash flow per attributable gold ounce, a proxy for cash conversion, rose 47% year-over-year to approximately $1,705, compared to $1,157 in the same period last year. This metric, which is not a disclosed operating margin, also includes cash flows from metals other than gold.
Newmont's realized gold price for the quarter climbed 33% to $4,414 per ounce, while by-product all-in sustaining costs (AISC) increased 18% to $1,621 per ounce. The spread between realized price and AISC widened 44% to $2,793 per ounce.
Looking ahead, the company faces headwinds. Spot gold finished Thursday at around $4,043, about 8% below Newmont's second-quarter average realized price. Management anticipates higher unit costs in the third quarter, driven by increased sustaining and development expenditures, stronger oil prices, higher gold-linked royalties, and potential working capital reversals.
Newmont reported adjusted earnings of $2.10 per share, beating analyst estimates of $1.99. Revenue rose 15% to $6.12 billion, but fell short of the $6.36 billion forecast. The stock closed the regular session at $94.72, down 1.1%, and slipped further in after-hours trading to around $93.75.
The production decline was attributed to a seismic disruption at the Cadia mine and scheduled mine sequencing at other locations, including Ahafo South, Peñasquito, and Yanacocha. Cadia resumed normal operations by mid-June. The company maintained its full-year guidance at 5.26 million attributable ounces, with a margin of plus or minus 5%, and kept its by-product AISC guidance steady at $1,680 per ounce.
Newmont has been aggressively returning cash to shareholders. Since its April earnings announcement, the company has distributed $1.9 billion through dividends and share buybacks, with $1.7 billion allocated to buybacks, including over $600 million in July alone. These repurchases have reduced the share count by over 100 million since February 2024, roughly 9% of the former total. As of June, Newmont held $9 billion in cash and $3.4 billion in net cash.
CEO Natascha Viljoen described the quarter as “another quarter of strong operational and financial performance.” The company reported attributable gold production of 1.29 million ounces and record free cash flow for the second quarter.
Upcoming peer results from Agnico Eagle Mines (NYSE:AEM) and Kinross Gold (NYSE:KGC) are scheduled for July 29, coinciding with the conclusion of the Federal Reserve's two-day policy meeting, which could influence gold prices.
