Newmont Mining’s Position for 2018 and Subdued Outlook for Gold



Newmont Mining’s performance YTD

Newmont Mining (NEM) has returned 5.8% year-to-date (or YTD) through December 18, 2017. It is almost on par with the performance of the VanEck Vectors Gold Miners ETF (GDX), which has gained 5.2% YTD

Among its close peers, it has outperformed Barrick Gold (ABX) and Goldcorp (GG), which returned -11.1% and -8.2%, respectively, YTD. Kinross Gold (KGC), on the other hand, has outperformed Newmont with a YTD gain of 30.9%.

NEM has emerged as a leaner and more operationally efficient firm after its portfolio optimization. Its financial leverage has also declined, which had been a major investor concern.

This change has helped the company relative to outperforming its peers when precious metal stocks, on the whole, are not doing well.

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Management update

Newmont Mining (NEM) hosted its investor day on December 6, 2017, during which it provided an update on its operations and its project pipeline. It also provided updated guidance on production and costs.

The company also mentioned how it plans to position itself going forward. One of the key takeaways from the conference call for the investors was a 50% hike in dividends going forward. NEM will provide additional details on this topic in February 2018.

Investor sentiment

Investors are looking forward to Newmont Mining’s expected performance in 2018 after a decent 2017. In this series, we’ll gauge Newmont Mining’s outlook in 2018 and beyond by looking at its production growth, expected cost progression, and cash flow generation capability.

We’ll also see how analysts view NEM’s prospects. We’ll wrap up this discussion by looking at the company’s relative valuation and potential upside or downside.


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