Newmont Mining (NEM) September 2024 Valuation Model and Risk Framework
Newmont Mining (NEM) Sept 2024 Valuation Model and Risk Framework
This NEM valuation model includes an asset/SOTP valuation, financial forecasts, segment breakdown, and detailed operating model. Assumptions can easily be adjusted by the user.
Newmont has Tier 1 gold assets and should continue to grow production while seeing lower all-in sustaining costs over time. It is known to have one of the best portfolios in the gold industry. It has also recently identified >$2 billion of assets to sell to refine its portfolio and help fund dividends.
In the related report we will share, using a 6.5x fwd multiple, the stock is 25% undervalued using the current gold price deck.
Business:
Newmont is a gold producer with significant operations and/or assets in the US, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, and Ghana. The company had attributable proven and probable gold reserves of 96.1 million ounces and an aggregate land position of approximately 23,700 square miles. Newmont is also engaged in the production of copper, silver, lead, and zinc. While the company's sales mostly come from refined gold, the end product of their operations is doré bars. The company generates most of its revenue outside the US.
Operations
Newmont's operations are organized in five geographic regions; North America, Nevada, Australia, Africa, and South America.
The company's North America segment (about 30% of sales) consists primarily of Cripple Creek &Victor (CC&V) in the US, Musselwhite, Porcupine, and Éléonore in Canada, and Peñasquito in Mexico.
The Nevada segment (roughly 30% of sales) consists of almost 40% interest in Nevada Gold Mines (NGM) in the US, which is accounted for using the proportionate consolidation method.
Australia segment (some 20%) consists primarily of Boddington and Tanami in Australia, while the Africa segment (some 15%) consists primarily of Ahafo and Akyem in Ghana.
South America segment (almost 15%) consists primarily of Yanacocha in Peru, Merian in Suriname, Cerro Negro in Argentina, and its 40% equity interest in the Pueblo Viejo mine in the Dominican Republic.
In addition, the company generates about 85% of its sales from gold, followed by silver with almost 5%, while the rest is generated by copper, lead, and zinc.
Overall, gold sales from doré production generate about 70% of total sales, while sales from concentrate and other production account for some 30%.
Geographic Reach
About 70% of the Colorado-based Newmont's sales come from the spot market in the UK, with some 10% coming from South Korea. Mexico, Japan, Philippines, Germany, the US, Switzerland, and other countries account for the rest. Newmont holds aggregate land position of approximately 23,700 square miles of land.
Sales and Marketing
Newmont sold about 5.8 million ounces of gold, which is either used as an investment or finds a variety of end uses, including jewelry, electronics, dentistry, industrial and decorative uses, medals, medallions, and official coins.
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