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What Boosted Newmont and Goldcorp Stock in 1Q18



Newmont and Goldcorp

Newmont Mining (NEM) stock rose 2.4% in 1Q18 while Goldcorp (GG) stock rose 4.5%. These gains were significant, as the VanEck Vectors Gold Miners ETF (GDX) fell 7.7%.

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Newmont’s earnings beat

Newmont Mining reported an earnings beat in 4Q17. The company’s production and unit costs were in line with its guidance. While the company is expecting its unit costs to rise in 2018, it is expecting them to be much lower than its current unit costs as new production comes online. The company was also successful in replacing its reserves for the first time in five years in 2017. Its reserves stood at 68.5 million ounces at the end of 2017, flat with 2016 due to additions and revisions fully replacing depletion. Newmont also provided an update on its project pipeline, which is on schedule.

Goldcorp’s earnings beat

Goldcorp (GG) also beat 4Q17 earnings expectations. Investors seemed pleased with the company’s performance and future guidance. The company’s 20-20-20 growth plan also seemed to be on track, boosting investors’ confidence in GG’s future growth and profitability. The company maintained that its production was on track to increase 20% to 3.0 million ounces by 2021. All-in sustaining costs are expected to reduce to $700 per ounce by 2021.

Like Newmont, Goldcorp has one of the strongest project pipelines in the sector. Its expansionary projects underpin its expected 20% growth in reserves by 2021.

Goldcorp’s proven and probable gold reserves as of June 30, 2017, were 53.5 million ounces—an improvement of 26.5% year-over-year. In contrast, most of its peers’ (NUGT) (RING) reserves have declined. Barrick Gold (ABX), for example, reported a 25% fall in its 2017 reserves, which came in at 64.5 million ounces. Kinross Gold’s (KGC) reserves also fell, by 16% year-over-year in 2017 to 25.9 million ounces.


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