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Newmont reports strong Q3 operating cash flow of $1B despite gold production dip, revises 2023 outlook

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(Kitco News) - Newmont (NYSE: NEM) (TSX: NGT), the world's largest gold producer, announced today that its Q3 2023 attributable gold production decreased 13% y-o-y to 1.29 million ounces primarily due to lower production at Peñasquito, Akyem and Ahafo.

The company said that in addition, lower than planned production was delivered from the non-managed joint venture at Pueblo Viejo. Attributable gold sales were largely in line with gold production for the quarter.

According to Newmont, the company’s gold costs applicable to sales (CAS) increased 5% to $1,019 per ounce from the prior year quarter primarily due to lower gold sales volumes as a result of the Peñasquito labor strike for the duration of the third quarter of 2023.

Moreover, the company’s gold all-in sustaining costs (AISC) increased 12% to $1,426 per ounce from the prior year quarter primarily due to higher CAS per gold ounce and higher sustaining capital spend.

Newmont's attributable gold equivalent ounce (GEO) production from other metals decreased 81% to 58 thousand ounces primarily due to the suspension of operations at Peñasquito.

Newmont noted that its Q3 2023 revenue decreased 5% from the prior year quarter to $2.5 billion primarily due to lower sales volumes, partially offset by higher average realized gold and copper prices.

The company also reported net income from continuing operations attributable to Newmont stockholders of $157 million or $0.20 per diluted share, a decrease of $61 million from the prior year quarter primarily due to lower sales volumes as a result of the Peñasquito labor strike, as well as higher reclamation and remediation charges.

Adjusted net income was $286 million or $0.36 per diluted share, compared to $212 million or $0.27 per diluted share in the prior year quarter. Primary adjustments to third quarter net income include reclamation and remediation charges of $104 million, changes in the fair value of investments of $41 million, Newcrest transaction-related costs of $16 million and restructuring and severance costs of $7 million.

The company’s consolidated operating cash flow from continuing operations increased 115% from the prior year quarter to $1,001 million primarily due to payments made in the third quarter of 2022 related to 2021 site performance for the Peñasquito profit-sharing agreement.

Adjusted EBITDA increased 10% to $933 million for the quarter, compared to $850 million for the prior year quarter; while free cash flow increased to $397 million from $(63) million in the prior year quarter primarily due to higher operating cash flow.

“Balance sheet and liquidity remained strong in the third quarter, ending the quarter with $3.2 billion of consolidated cash, with approximately $6.2 billion of total liquidity; reported net debt to adjusted EBITDA of 0.7x,” the company said in a statement.

Newmont also announced that its Board of Directors declared a dividend of $0.40 per share of common stock for the third quarter of 2023, within the established framework.

Importantly, Newmont informed that the company has revised its 2023 outlook for the standalone Newmont portfolio to 5.3 million ounces of attributable production, CAS per ounce of $1,000 and AISC per ounce of $1,400, primarily due to the impacts of the strike at Peñasquito and lower production volumes from non-managed joint ventures (Nevada Gold Mines and Pueblo Viejo) and Ahafo.

President and CEO Tom Palmer commented on the results, "Newmont generated $1.0 billion of cash from continuing operations during the third quarter and continued to execute on our long-term strategic plan. As we look ahead to the closing of the Newcrest transaction, we are excited about the long-term value it will bring to both sets of stakeholders and our combined workforce.

“This transaction strengthens our position as the world's leading gold company and sets the standard in safe, profitable and responsible mining. We look forward to closing the transaction on November 6th and providing our first integration update on the combined business in the first quarter of 2024."

Newmont is the world's leading gold company and a producer of copper, silver, lead and zinc. The company's assets located in favorable mining jurisdictions in North America, South America, Australia and Africa. Newmont is the only gold producer listed in the S&P 500 Index. The company was founded in 1921 and has been publicly traded since 1925.

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