Barrick Gold + Newmont Mining Earnings Report Analysis: Good News For Gold?

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A few days ago, Barrick (NYSE: GOLD stock) and Newmont (NYSE: NEM stock) published their Q1 earnings reports, and since the price of gold is now above $2,000 per ounce, I think it is worth seeing how these companies perform.

Starting with Barrick, the production was lower but in line with the company’s expectations, as they said before that it should gradually increase throughout the year, due to maintenance at a few of their mines. During this year, Barrick forecasted a production of 4.2 to 4.6 million ounces, so if the price of gold remains this high and they achieve the forecast, they are probably going to have one of the best years ever.

Despite the lower production, the free cash flow was actually higher than in Q4, standing at $88 million, thanks to lower capital expenditures and higher gold prices.

Barrick has also announced a $0.10 dividend per share, which is the lowest the company can give according to their dividend policy.

Newmont also released the Q1 earnings a few days ago.

We can see that NEM has produced only almost 1.3 million gold ounces and around 300 thousand co-product gold equivalent ounces in metals like copper, silver and zinc.

The AISC were quite high – $1,376 per ounce – due to lower production volumes and a higher global cost of production. Of course, they expect this to decrease throughout the year, although I believe we should be prepared to see AISC in this price range going forward, not only from Newmont. I’ll talk about this in more detail a bit later, after we finish the report.

The free cash flow was a negative $45 million, due to a lower production, higher capital spending and the timing of working capital changes. To be fair, looking at this number over such a short period is not that useful. If it is negative at the end of the year, then yeah, maybe there is a problem.

Also worth paying attention to, the capital expenditures were 20% higher versus one year ago, reaching $526 million. What’s even more concerning is the fact that this was mostly due to a higher sustaining capital needed. If this is the effect of inflation, it’s probably here to stay, and it could have a significant effect on the company’s free cash flows, especially when gold prices are lower.

Newmont Mining still has $2.7 billion in cash and $800 million in short-term deposits, with approximately $6.5 billion of total liquidity available. So, despite the higher CAPEX, they shouldn’t have that many issues – especially if gold remains at around this level. Also, the net debt to adjusted EBITDA ratio is at only 0.6, which is a pretty good indicator of a healthy company.

The dividend for the quarter is going to be 40 cents per share, which is actually the same as the adjusted EPS. If the price of gold remains around $2,000 per ounce, we could be looking at a total dividend of $1.8 or even more. For the current price, that would be a yield of around 3.8%, although it wouldn’t be impossible to see Newmont pay even more.

For example, if the price of gold is going to even $2,100, we could be talking about a maybe $3 dividend, for a yield of around 6.4%, which can be very attractive, especially if you bought this when the stock price was lower.

Other videos:
Stellantis Stock Analysis – https://youtu.be/of2uv0npYsc
Vale Stock Analysis – https://youtu.be/9lF8RE7QbVQ
Rio Tinto Stock Analysis – https://youtu.be/YQdRjA234y8
Barrick Gold Stock Analysis – https://youtu.be/ghCZw1iBXvM
Newmont Mining Stock Analysis – https://youtu.be/cHPWUZL7o5M
Intel Stock Analysis – https://youtu.be/GInKzdUUEm0
Verizon Stock Analysis – https://youtu.be/gqapzyhuMdk

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On my channel, you will find a wide variety of stock analyses – from gold miners such as Barrick Gold (NYSE: GOLD) and Newmont Mining (NYSE: NEM) to tech stocks like Alphabet (NYSE: GOOG/GOOGL), Apple (NYSE: AAPL), Intel (NYSE: INTC) and even other commodity producers such as Vale (NYSE: VALE) and Rio Tinto (NYSE: RIO).

Although I mostly focus on value investing, there will also be plenty of high-yield dividend stocks being analysed on the channel, especially if I believe that there is value in there.

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0:00 Barrick Gold Earnings Report Analysis
1:51 Newmont Mining Earnings Report Analysis
4:29 Good News For Gold?

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