Newmont/NEM

Newmont has been plagued by a number of issues.

Firstly, integrating Newcrest, always difficult to do in a period of high inflation, with costs moving around.

Secondly, handling the aftermath of negative opinion, which thinks that NEM overpaid for NCM. You can see the acquired assets, below, and how the market values it.

The strategic rationale for the deal continues to make sense to us; the world’s best gold assets in the safest jurisdictions, with plenty of synergies available.

That said, at the best of times NEM doesn’t have a great track record of consistent profits, and integrations and synergy extractions can be hard.

Strikes and equipment downtime didn’t help, but at least some of that industrial action has finished.

More broadly, some of the other issues, including wildfires and the weather are, hopefully, one-offs.

NEM’s grades are stable

But production issues aside, perhaps the biggest issue has been that steady escalation in cost. The gold price might have gone from $1600 to $2000oz, but cash costs went from $1000oz to $1400-$1500oz.

Looking forward, management outlines a fairly rosy view of increased production, + asset disposal of some of the higher cost non-core mines (6 to be sold) and, when combined with operational improvements + synergies, is meant to see the AISC drop to ~$1200.

Obivously, that would be quite transformational if NEM can execute. The market remains highly skeptical, as suggested by the very first cab off the rank question on the Q&A call.

The 6 assets in sell sell-down should provide some useful catalysts, as and when that occurs, although this will take some time.

For now, we watch with interest.

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