Position Record
AvoidMedium convictionLapsed

Newmont Corporation

NEMNYSE

Avoid. Operational value trap in a gold bull market.

Thesis
Newmont presents deep value as an unhedged, balance-sheet-repaired gold major generating record cash flows and aggressive capital returns from non-core asset sales. However, historical underperformance, persistent grade declines, planned operational downtime, and rising capital intensity mean the stock trades at an operational discount that cannot be closed by commodity tailwinds alone.
Key assumption
I assume that volume and grade headwinds cap earnings leverage: I assume declining head grades, scheduled mill shutdowns, and lower output (such as the 4% attributable production drop) prevent Newmont from achieving full operating leverage during secular gold price rallies. I assume portfolio optimization permanently lowers structural costs: I assume the completed divestiture of non-core operations (from the Goldcorp/Newcrest deals) and debt reduction permanently lower all-in sustaining costs (AISC) and eliminate acquisition-related write-downs.
What would prove me wrong
Sustained operational turnaround and production beats: organic production accelerating past guidance alongside unit AISC trending well below industry averages, proving tier-1 assets can grow volume without capital inflation. Secondly, a sharp reversal in gold prices: a macroeconomic shift (e.g., real interest rate surges, dollar strengthening) driving gold back down, exposing Newmont’s high operating fixed costs and stalling buybacks.
Entry$90.73
Price at lapse$124.39
Price move+37.1%not a position
Benchmark+11.5%S&P 500
Worth avoiding−25.6 ppagainst holding the index
Stood10 months
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Summary

  • American
  • Gold mining company
  • World’s largest gold mining corporation
  • 1921 incorporated, 1916 founded
  • Gold mines in the US, Canada, Mexico, DR, Australia, Ghana, Argentina, Peru and Suriname
  • Newmont also mines copper, silver zinc, lead
  • Bought Goldcorp, Newcrest. Partial owner of Nevada Gold Mines
  • Started as a holding company investing in mineral and oil related companies. 1929 became a mining product by acquiring a gold mine.
  • In 1980s thwarted five takeover bids — who sought to break the company apart and sell its assets.
  • In 1987 defending against a $6.3 billion bid, the company paid $33 per share to all shareholders, borrowing $1.75 of 2.2 billion in cash to fund this.
  • To reduce this debt they divested out of all of their copper, oil, gas, and coal interests.
  • Moved headquarters from New York to City to Denver in 1988
  • Then merged with Santa Fe Railroad
  • In 2002 they became the world’s largest gold producer by purchasing Normandy Mining and Franco-Nevada
  • 2007 — eliminated its 1.5 million ounce legacy hedge book to make Newmont the world’s largest unhedged gold producer. Hedging uses financial contracts to lock in a future selling price for a portion of its gold production. Hedging was largely phased out in the industry during the 1990s.
  • Not many big environmental controversies. Most recent was in New South Wales in 2025, fined 250k.

Fundamental

  • NEM’s large rise in net income in 2025 is attributed primarily to higher gold prices, secondarily to slightly lower costs (AISC), and also divestiture of non-core assets (mostly in acquired companies) and elimination of debt.
  • Have been outperforming EPS estimates by 20-30% in the last 4 quarters.
  • High revenue per employee.
  • 1.1% dividend yield — lower payout ratio now, formerly high payout ratio
  • P/S has been rising but P/E mostly stagnant in the last 4 quarters. They recorded negative net income in 2022 and 2023 due to goodwill impairment and acquisition-related costs.
  • TradingView analysts give min -1.9% performance in 1y with max +32.3%. 19 strong buys, 1 strong sell.
  • 29.92% effective tax rate
  • Stock Analysis.com — Low $72, average $97.17 price targets
  • Low insider holding %, high institution holding %
  • Financially and debt-wise — NEM is very strong (8/10 - 9/10). Very stable and improving recently. Sustainable with gold volatility?
  • Profitability — strong within industry and especially relative to recent years. Is this sustainable?
  • Poor momentum (RSI)
  • Poor growth — average within industry
  • High days inventory vs history

Technical

  • NEM is performing well this year particularly due to the increase in gold prices ($2,518/oz to $3,539/oz). However, they have not been able to fully take advantage of these increases, due to a 4% YoY decrease in attributable gold production during Q3 2025, due to lower gold grades and planned shutdowns.
  • Gold is having its biggest year since 1979 driven by inflation concerns, poor USD performance, central banks investing in gold due to sanctions
  • 190,000 tones of gold has been mined, while the below-ground stock of gold reserves is estimated to be about 50,000 tones.
  • Other competitors have outperformed NEM in share price over most time scales, however, NEM presents strong value. This outperformance is largely due to some assets underperforming in production, tailwinds from mergers and acquisitions and high costs.
  • Beta = 0.44

Updates (1)

The note above is unedited. Anything that changed goes below it, dated.

Debt reduction measures warrant a re-appraisal of Newmont Corp

I am upgrading Newmont from avoid to neutral and will evaluate a possible buy upgrade because the numbers show the business is in far better shape than expected. Newmont now ranks near the very top of its peer group, driven by aggressive debt reduction and massive cash returns to shareholders. Strong profitability also proves that selling off non-core assets successfully protected profit margins from production headwinds. While mine grades and volume remain long-term worries, the company’s elite financial health and high payout make it too strong to call a value trap.