Newmont Mining’s Balance Sheet: As Strong as It Gets



Debt tender

Newmont Mining (NEM) completed its $500 million debt tender, which targeted near-term maturities and the highest interest rate debt. The company repaid $274 million of notes due in 2019 and $226 million due in 2039. The debt tender effectively lowered the company’s interest expense by $28 million per year.

Newmont Mining continues to target between $800 million–$1.3 billion in debt reduction through 2018. The company has been successful in reducing its debt by 35% since 2013 to reach $3.4 billion at the end of 2015.

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Strong balance sheet

Newmont Mining (NEM) lowered its net debt by 37% since 2013. Its net debt-to-forward EBITDA ratio is close to 1.2x, which is impressive. The company also noted during the call that it is committed to maintaining an investment-grade (BND) balance sheet across the gold price cycle.

To achieve this, the company is targeting a net debt-to-EBITDA of 1x at a gold price of $1,200 per ounce and is seeking to lower its absolute level of gross debt.

Newmont’s net debt-to-forward EBITDA also compares quite favorably with its peers. Based on this parameter, its financial leverage is lower than that of Barrick Gold (ABX), Yamana Gold (AUY), and Goldcorp (GG).

Portfolio optimization

Newmont Mining (NEM) has realized $1.9 billion in sales proceeds from the sale of its non-core assets since 2013. The latest sale is the equity stake in Regis for $184 million. The cash realized from asset sales have been used in self-funding projects, paying down debt, and returning cash to shareholders.

During the call, the company compared how its portfolio has changed after divesting the non-core assets and reinvestments. It mentioned that the mine life has increased by two-thirds, costs have been reduced by 20%, and its technical and social risk profile has improved.

Continue to the next part of this series for a discussion of whether Newmont Mining can continue to grow its free cash flows.


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