NEWMONT Corp /DE/ Q1 FY26 earnings call NEM

A magnitude 4.5 earthquake near Cadia on April 14 led to immediate safety protocols, with all underground personnel safely evacuated and no injuries reported. Initial findings indicate limited damage, and underground power and dewatering systems have been restored. Regulatory approval has been received to begin repairs, with surface infrastructure remaining undamaged. The company is currently processing surface stockpiles and expects underground rehabilitation to be completed in 5 weeks, enabling a return to 80% operating capacity, with full recovery anticipated by the end of the second quarter. Second quarter production will be lower due to this temporary mill feed interruption.

Newmont's Q1 performance exceeded expectations despite challenging conditions at several sites, including bush fires at Boddington, extreme snowfall at Brucejack, and record rainfall at Tanami. Boddington has since made a full recovery to normal throughput. This resilience underscores the strength of Newmont's diversified portfolio, which is designed to deliver consistent performance across various operating conditions and capture value from market volatility^🌐. The strong Q1 results provide flexibility to absorb the temporary impact from Cadia's recovery efforts in Q2.

First quarter production was driven by several key factors across the portfolio. Cadia saw a step-up in gold and copper production due to improved throughput and favorable grades. Merian's production increased with access to higher grades from the Merian 2 pit. Ahafo South benefited from higher mining rates and improved underground draw point availability. Yanacocha delivered stronger leach production from high grades at Quecher Main. Penasquito achieved strong co-product production, particularly silver and zinc, from processing stockpiles. Ahafo North's ramp-up continued well in its first full year of commercial production.

Newmont achieved several notable milestones in its execution projects during the quarter. At the Tanami Expansion 2 project, work has fully resumed, with the underground primary crusher commissioned and the materials handling system on track for completion by the end of Q2. Investigations into a fatality at Tanami earlier this year are complete, with learnings being shared. At Cadia, both PC2-3 and PC1-2 projects are progressing well and tracking to plan through key development phases. Development capital is expected to increase in Q2 to advance Cerro Negro expansion, Red Chris feasibility, and the Lihir Nearshore Barrier project.

The enhanced capital allocation framework, underpinned by net cash from operations, prioritizes cash flow in a clear and disciplined manner. It first allocates cash to sustaining capital ($381 million in Q1) and a sustainable total cash dividend ($1.1 billion per year, $0.26 per share declared in Q1). Following these, development capital ($239 million deployed in Q1) and balance sheet management (net cash target of $1 billion +/- $2 billion) are addressed. Excess cash is then allocated to share repurchases, with $2.4 billion executed this quarter, fully completing the previous authorization, and a new $6 billion program approved.

Newmont continues to engage constructively with its Nevada Gold Mines (NGM) joint venture partner, Barrick, focusing on improving NGM's performance and gaining more information regarding the Fourmile project. The process for the notice of default issued in February is open-ended and iterative, involving ongoing discussions and review of information, including exercising audit rights. The company aims for a resolution that ensures NGM operates at the highest possible level, hoping to resolve matters between the partners without third-party intervention.

Newmont is actively engaging with the Minerals Commission and President Mahama in Ghana regarding the request for mining operations to shift to local firms. The company emphasizes a commercially and technically disciplined approach to ensure long-term options for its investments and support government objectives. While local capacity exists for some bulk mining operations, Newmont holds a firm view on technically complex areas, where using local contractors could impact productivity and safety. Discussions are constructive, aiming for solutions that benefit all parties.