| Is the Value over Volume Strategy Working Well for Newmont? | |
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Newmont Mining Is Positioning Itself for Volatile Metal Prices (Continued from Prior Part) Value over volume
Newmont Mining’s (NEM) management emphasized its focus on value over volume (high-cost ounces). This strategy has worked well for the company as it has significantly reduced its all-in sustaining costs (or AISC) and also generated positive free cash flow (or FCF) for the last six consecutive quarters.
During the company’s investor day, management clearly explained what they look for in an asset when they assess it to be of high value. The asset’s mine life, competitive position on the cost curve, net present value, and the potential returns are the major criteria. On the risk side, the management looks at social and economic risk, political and geopolitical risk, as well as technical risk to determine the attractiveness of a particular project.
The above table shows the company’s preferred portfolio approach.
Portfolio changes
To put things into perspective, management showed how these characteristics were lacking in the assets they’ve divested over the last few years. Midas, Jundee, Penmont, and Waihi were some of these divested assets. They had an average life of six years with AISC of $900 to $950 per ounce and constituted higher technical and social risk.
On the other hand, management has reinvested in or acquired other assets, such as Merian, Long Canyon, as well as Cripple Creek & Victor (or CC&V). These assets produced twice as much as divested assets did, with AISC below $800 per ounce. Their average mine life is also higher at more than ten years and a favorable technical risk profile.
Newmont’s peers like Goldcorp (GG), Yamana Gold (AUY), Agnico Eagle Mines (AEM), and AngloGold Ashanti (AU) are also repositioning their portfolios to weather the current gold price (GLD) (IAU) environment.
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PRODUCER |
CODE : AU |
ISIN : US0351282068 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
AngloGold is a gold producing company based in . AngloGold produces gold, copper, silver and zinc in Argentina, in Australia, in Brazil, in Canada, in Ghana, in Guinea, in Mali, in Namibia, in South Africa and in Tanzania, develops gold and iron in Australia, in Brazil, in Colombia, in Congo Dem. Rep. of and in South Africa, and holds various exploration projects in Philippines. Its main assets in production are CRIXÁS, MINERAÇÃO, SAO BENTO, ANGLOGOLD ASHANTI MINERAÇAO and CRIXAS MINE in Brazil, SUNRISE DAM GOLD MINE in Australia, NAVACHAB MINE and NAVACHAB in Namibia, YATELA, MORILA and SADIOLA in Mali, CERRO VANGUARDIA in Argentina, MPONENG (WESTERN DEEP NO. 1 SHAFT), TAUTONA (WESTERN DEEP NO.3 SHAFT), BAMBANANI, TAU LEKOA, MPONENG, SAVUKA, TAU TONA, GREAT NOLIGWA, KOPANANG and CRIPPLE CREEK & VICTOR (CRESSON MINE) in South Africa, SIGUIRI in Guinea, TEBEREBIE, IDUAPRIEM, OBUASI and KUBI in Ghana, GEITA in Tanzania and TROUT LAKE MINE and CALLINAN MINE in Canada, its main assets in development are MOAB KHOTSONG in South Africa, MINAS-RIO in Brazil, LA COLOSA and GRAMALOTE in Colombia, KIBALI (KILO-MOTO) in Congo Dem. Rep. of and TROPICANA in Australia and its main exploration properties are HUALATAN and ER in Peru, MKURUMU in Tanzania, 777 PROJECT and RIVARD in Canada, LOUBOUGOULA, GOODPASTER and ALAMOUTALA (SADIOLA II) in Mali, BAMBADJI in Senegal, MORRO VELHO in Brazil and SIANA in Philippines. AngloGold is listed in Australia, in Germany and in United States of America. Its market capitalisation is US$ 9.7 billions as of today (€ 9.1 billions). Its stock quote reached its lowest recent point on November 23, 2018 at US$ 10.00, and its highest recent level on April 18, 2024 at US$ 23.71. AngloGold has 409 109 984 shares outstanding. |