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Newmont Goldcorp’s Financial Position versus Peers after Q1

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Significant debt reduction

Newmont Goldcorp’s (NEM) debt rose significantly at the peak of the cycle due to expensive acquisitions, which have now been brought under control. The company’s net debt was $0.8 billion at the end of the first quarter compared to ~$0.9 billion at the end of the fourth quarter and $1.9 billion at the end of 2016.

Its net debt-to-adjusted EBITDA multiple was 0.3x at the end of the first quarter compared to 0.8x at the end of the first quarter of 2017. Due to NEM’s repayment of debt and higher earnings, this ratio has improved from 1.3x at the end of 2015 to 0.3x currently.

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Superior financial profile

Newmont’s net debt-to-EBITDA multiple looks more attractive than that of its peers (GDX) (NUGT). Newmont is doing the best on this ratio, which indicates a high debt-repayment capability for the miner from its forward earnings.

Barrick Gold’s (GOLD) debt repayment ratio was 1.0x at the end of Q1. Kinross Gold (KGC) and Agnico Eagle Mines (AEM) have ratios of 1.3x and 1.6x, respectively.

Free cash flow

Newmont Goldcorp generated $349.0 million in FCF (free cash flow) in the first quarter versus $35 million in Q1 2018. This increase is mainly due to the completion of underground development projects in Africa and North America. For fiscal 2018, the company generated $805 million in FCF, a decline of 37%. The decline followed unfavorable working capital changes and higher capital expenditures.

With Newmont Mining’s strong balance sheet and continued free cash flow generation, the company continues to invest in executing its growth strategy and returning cash to shareholders.

You can read A Look at These Gold Miners’ Financial Health after Q1 Results for more on comparative analysis of miners.

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