Newmont Corporation Initiation of coverage · 2021. 2. 9. · Newmont Corporation | 9 February 2021 3 Valuation: US$76.34/share and rising Based on nine measures across three methodologies,

9 February 2021 Even with investment in new growth projects, we expect Newmont’s pre-

financing cash flows to increase by 47.4%, from US$2.6bn to US$3.9bn (or

US$4.83/share) by FY25 and to continue to increase thereafter as past

investment is brought to account and net debt potentially extinguished. At

the same time, shareholders will also benefit from a market-leading

dividend as well as a share buyback programme of approximately the

same order of magnitude.

Year end Revenue

(US$m) PBT

(US$m) EPS* (US$)

DPS (US$)

P/E (x)

Yield (%)

12/18 7,253 738 1.35 0.56 43.9 0.9

12/19 9,740 3,693 1.33 1.44** 44.5 2.4

12/20e 11,492 3,283 2.40 1.45 24.7 2.4

12/21e 12,737 3,612 2.73 2.05 21.7 3.5

Note: *EPS are normalised, excluding amortisation of acquired intangibles and exceptional items. **Includes special dividend of US$0.88/share.

The world’s largest gold mining company

Newmont is the world’s largest gold mining company with forecast production of

6.5Moz in FY21 plus a further c 1.0Moz of gold equivalent ounces (at prevailing

prices cf 1.3Moz AuE guidance at indicative prices) out of an attributable (end-

FY19) reserve base of 95.7Moz and an attributable reserve & resource base of

199.3Moz (calculated at US$1,200/oz) in top tier jurisdictions. It seeks to

distinguish itself from its peers, among other things, via its high environmental,

social and governance (ESG) standards, its management strength and experience,

its operating model, its capital discipline, its track record of returns, its methodical

approach to project development and its conservatism (eg reclassifying a portion of

Goldcorp’s reserves back into resources in 2019).

Several sources of future growth

Nevada Gold Mines will enter harvest mode from FY23 and, one year later, two of

its three major new projects (Tanami Expansion 2 and Ahafo North) will also begin

to contribute materially towards production and profitability. Yanacocha Sulphides

will begin contributing in FY26 and further upside exists in the fact that three of

Newmont’s most profitable operations (Nevada Gold Mines, Penasquito and

Merian) are all currently mining below reserve grade.

Valuation: US$76.34/share with plenty of upside

Based on nine measures across three methodologies, our blended average

valuation of Newmont’s shares is US$76.34/share. Stated alternatively, we

calculate that Newmont’s current share price of US$59.30/share discounts a real

cost of equity of 7.7%, which is approximately double that implied by prevailing

market conditions. This puts it on a premium rating relative to its peers, but may be

justified by the company’s size, track record and that fact that almost all of its

operations are in top tier jurisdictions. However, Newmont remains cheap relative to

its own historical valuation measures, which, on average, imply a share price over

US$100/share.

Newmont Corporation Initiation of coverage

The sustainable leader

Price US$59.30

Market cap US$47,642m

Net debt (US$m) as at end-September 1,849

Shares in issue 803.4m

Free float 99.7%

Code NEM, NGT

Primary exchange NYSE (NEM)

Secondary exchange TSX (NGT)

Share price performance

% 1m 3m 12m

Abs (3.8) (11.3) 37.3

Rel (local) (6.0) (20.5) 16.6

52-week high/low US$70.4 US$39.5

Business description

Founded in 1916, Newmont is the world’s leading

gold company with a world-class portfolio of assets

in North and South America, Australia and Africa. It

is the only gold producer in the S&P 500 Index and

is widely recognised for its ESG practices and as a

leader in value creation, safety and mine execution.

Next events

2020 reserve & resource statement (and webcast)

10 February 2021

Q420/FY20 results 18 February 2021

Ahafo North decision H121

Yanacocha Sulphides decision H221

Analyst

Charles Gibson +44 (0)20 3077 5724

[email protected]

Edison profile page

Metals & mining

Newmont Corporation is a

research client of Edison

Investment Research Limited

https://www.edisongroup.com/company/Newmont

Newmont Corporation | 9 February 2021 2

Investment summary

Company description: World’s largest gold producer

Newmont is the world’s largest gold mining company. It has a global operating model and is

building upon a firmly embedded a culture to lead the gold sector in creating value for shareholders

by 1) delivering superior operational execution, 2) sustaining a global portfolio of long-life assets

and 3) leading the sector in profitability and responsibility. At the same time, it has a broadly

diversified portfolio of assets in geo-stable areas and represents a liquid, conservative and

attractive defensive investment in a sector that has not always generated acceptable returns for its

shareholders. Total attributable reserves and resources amount to 199.3Moz and, over the course

of the coming decade, its target is to produce a sustainable 6.0–7.0Moz gold pa plus an additional

1.4–1.6Moz of co-product gold equivalent ounces (AuE) at an all-in sustaining cost (AISC) declining

to US$800–900/oz by FY24. In addition to its existing production base, Newmont has three major

new projects either in, or near, development (the Tanami Expansion 2, Ahafo North and Yanacocha

Sulphides) and is entirely unhedged with respect to the gold price.

Gold and gold equities

Unsurprisingly, the single biggest single external factor influencing the market for gold equities and

Newmont’s share price is the gold price itself. Over the course of the past twelve months, the gold

price has increased by 17.0%, from US$1,570/oz to US$1,838/oz (NB Newmont calculates that it

generates an additional US$400m per annum for every US$100/oz by which the gold price

appreciates), while the NYSE Arca Gold BUGS index (of which Newmont is a constituent) has

increased by 24.8% – demonstrating that, in the current environment, gold equities have reprised

their geared relationship to the gold price. While we can make a case for speculation driving the

gold price to either US$3,000/oz (eg more government stimulus and monetary base expansion) or

US$1,400/oz (Federal Reserve total US monetary base tapering), in our valuation of Newmont in

this report, we have taken a balanced view and assumed that it will fall back in real terms, before

flattening off at US$1,524/oz in 2027. Note that this treatment is conservative in that, in the long-

term, the gold price has traditionally increased at an average rate of 2.0% pa in real terms.

Moreover, while we accept that a short period of Federal Reserve tapering is a possibility, we do not

believe that the fundamental reversal of the gold bull market will occur until real interest rates in the

US (defined as the Fed Funds rate less the CPI inflation rate) exceed 4% on a sustainable basis –

on which basis we believe that gold assets should form a core part of any balanced portfolio (see A

golden future, published on 11 June 2020).

Strategy and management

Newmont has a highly disciplined and relatively conservative management philosophy. No further

M&A is required and the portfolio of world class mines in top tier jurisdictions should support steady

to rising production for the next 20+ years. The company tests all capital investments based on a

bottom of cycle forecast of US$1,200/oz gold and seeks to maintain its base dividend and net debt/

EBITDA below 1x at this gold price. Management teams work rigorously within this framework,

ensuring good capital discipline at the corporate level and a declining cost profile. This enables the

company to return excess cash from higher gold prices and does this through a combination of

incremental variable dividends and share buy-backs. Under the president and CEO, Tom Palmer

(only the 10th CEO in the company’s 100-year history), Newmont has continued to advance its

industry-leading ESG framework, with ambitious targets and initiatives across the business. In

recognition of this, the company has been ranked the number one gold mining company in the Dow

Jones Sustainability Index for six years in succession, from 2015 to 2020.

https://www.edisongroup.com/sector-report/edison-gold-report/



Valuation: US$76.34/share and rising

Based on nine measures across three methodologies, our blended average valuation of Newmont’s

shares is US$76.34/share. Unsurprisingly, our valuation of the company is extremely sensitive to

the cost of equity assumed. Within this context, it is notable that our blended average valuation of

US$76.34/share is within 5.0% of our valuation of Newmont assuming an 8.4% nominal (6.3% real)

cost of equity (derived from long-term equity returns of 9% and 30-year break-evens implying future

inflation of 2.5%). Alternatively, we calculate that Newmont’s current share price of US$59.30/share

discounts a real cost of equity of 7.7%, which is approximately double that implied by conditions

prevailing in financial markets (see Exhibit 19 and Exhibit 20). Were these conditions to become

accepted as the ‘new normal’, we estimate that Newmont’s share price could rise to in excess of

US$100/ share. This puts it on a premium relative to its peers, but may be justified by the

company’s size, track record and the fact that almost all of its operations are in top tier jurisdictions

(see Exhibit 2). However, Newmont remains cheap relative to its own historical valuation measures

which, on average, also imply a share price over US$100/share.

Sensitivities

Edison’s valuation of Newmont in absolute terms, in particular, is acutely sensitive to assumptions

surrounding the future rate of real gold price appreciation. The absolute valuations quoted in the

Valuation paragraph above, in particular, assume an ex-growth terminal multiple. However, in

general, they increase by c 17% for every one percentage point of real, long-term cash flow growth

assumed. For example, long-term revenues growing at a real 2.0% pa (ie the average long-term

real rate of appreciation of the gold price) combined with flat real terms costs would imply an

average 6.3% increase in cash flows over a five-year period (assuming a 29% initial margin

condition) and this assumed growth would, in turn, justify a price for Newmont shares in excess of

US$100/share. In the shorter term, we estimate that a 10% increase in the gold price above our

assumptions will result in EBITDA on average 16.5% higher than our expectations in the period

FY21–23, with EPS 39.6% higher and cash flow per share 18.0% higher (and vice-versa for a lower

gold price).

Financials: Net debt low and diminishing

Newmont had net debt on its balance sheet of US$1.8bn at the end of Q320, which equated to a

gearing (net debt/equity) ratio of 8.2% and a leverage (net debt/[net debt+equity]) ratio of 7.5%. We

expect net debt to have remained broadly flat in Q420 under the influence of an accelerating capex

programme. Even at this level of net debt, however, we estimate that end-FY20 gearing will amount

to just 9.0% and leverage just 8.3%. Hereafter, we forecast that Newmont will generate cash at a

rate approaching US$5bn pa, of which around c US$2.2bn will be expended in capex and a further

c US$1.5bn in dividends to shareholders. On this basis, we would expect Newmont to be net debt

free in late in FY22, although this is subject to future investment decisions and may also be delayed

depending on the extent to which the company buys back shares under its share buyback

programme (sanctioned, so far, at a rate of US$1bn over the next 18 months). In the meantime, it

boasts a dividend that puts it among the top five yielding large-cap global gold mining stocks

globally and well in excess of the S&P 500 index’s dividend yield (see Exhibit 23), as well as having

a share buyback programme of a similar order of magnitude.


Company description: World’s largest gold producer

Based in Denver, Colorado, Newmont is the world's largest gold mining company with

approximately 31,600 employees and a world-class portfolio of assets in Nevada, Colorado,

Ontario, Quebec, Mexico, the Dominican Republic, Australia, Ghana, Argentina, Peru and

Suriname. It is the only gold producer in the S&P 500 Index and is widely recognised for its ESG

practices and as a leader in value creation, safety and mine execution.

History

Ancien regime

Newmont was founded by William Boyce Thompson in 1916 as a holding company for his mineral

and mining interests. According to company folklore, the name Newmont is a conflation of Montana

(where Colonel Thompson was born and raised) and New York (where he made his fortune).

After joining his father in a number of mining and lumber ventures in the 1890s, Colonel Thompson

moved east to New York to become a mine promoter and stockbroker at Hayden, Stone & Co,

where he amassed a fortune developing low-grade, large-scale porphyry copper deposits. His

successes included the Shannon Copper Company (now part of the Morenci open pit in Arizona,

the largest in the US), Nevada Consolidated (which eventually became a part of Kennecott), Mason

Valley (where a smelter town was named after him), the Magma mine at Superior, Arizona, which

became a major copper producer, and the promotion of the high-grade Inspiration Copper

Company also in Arizona. In addition to copper, he also financed lead, zinc and coal mines,

steelworks and promoted the Nipissing Silver deposit in Ontario and his interests were distributed

from as far north as Canada to as far south as Peru. His portfolio of non-mining interests included

refinancing the American Woollen Company, launching the Cuba Cane Sugar Company, gaining

control of Pierce-Arrow Motors, organising the Wright-Martin Aero Company and serving on the

boards of the Metropolitan Insurance Company, Sinclair Oil and Gulf Sulphur, among others. He

retired from the New York stock exchange in 1915 and created Newmont Mining Corporation in

1916 to house his mining interests.

Thompson made a number of trips to Russia around the time of the revolution ostensibly to

encourage the formation of a democratic government. For his work there, he was a awarded the

honorary title of colonel by the American Red Cross.

In the US, he was prominent behind the scenes in the Republican party, a presidential elector and

party chair. He served on the board of the Federal Reserve Bank of New York from 1914 to 1919

and was twice a delegate to the Republican National Convention in 1916 and 1920. In 1921, he

declined nomination for a cabinet post under President Warren Harding.

He became ill in 1925, while scouting for mining properties in South Africa, and died of pneumonia

in 1930. He is buried at Sleepy Hollow cemetery on the outskirts of New York City.

By the time of his death, Newmont Mining had developed into one of the world’s largest financiers

of copper mining projects.

Organisation and reorganisation

One of Newmont’s earliest investments included grassroots funding of Sir Ernest Oppenheimer’s

Anglo American Corporation of South Africa in 1917 (the forerunner of today’s Anglo American

(AAL) and, then, more of a diamond company than a gold one), giving Newmont a 25% interest in

the newly created company. Note that, had Newmont followed its interest in AAL, then 25% of AAL’s

current market capitalisation would today have a value of c US$11.0bn.


In 1925, Newmont diversified via the acquisition of oil interests in Texas. Eventually, Newmont's oil

interests would encompass more than 70 blocks in the Gulf of Mexico as well as production assets

in the North Sea.

In 1929 (shortly before the death of Colonel Thompson), Newmont became an operating company

in its own right with the acquisition of California's Empire Star Mine. By 1939, it was operating a

further 11 gold mines, all in North America. However, it also maintained its interest in southern

Africa and, in the decades around the middle of the 20th century, it had controlling interests in both

the Tsumeb copper mine in Namibia and the O’Okiep Copper Company in South Africa.

Watershed

The company’s transition into the modern era began with its discovery of the world’s first invisible

gold at Carlin in Nevada in the early 1960s. The Carlin Trend (or Unconformity) as it is now called is

a belt of gold deposits, approximately 5 miles (8km) wide and 40 miles (60km) long, located in the

north-east of Nevada extending in a north-north-westerly direction. It was created approximately

350 million years ago by a collision between the North American Plate and a terrane that induced

higher crustal temperatures and pressures and numerous hot springs along the suture zone.

Several episodes of subsequent subsurface magmatism are known to have occurred and, during

each of these, hot springs brought dissolved minerals (including gold and silver) toward the surface

where they precipitated out, primarily in Paleozoic limy sediments. Gold was discovered in the area

as early as the 1870s. Owing to its fine and disseminated nature however, the potential of the

region was largely overlooked and, prior to 1964, only c 22,000oz of gold had been produced (ie an

average rate of only 240oz per year). However, Newmont opened the world’s first open-pit gold

mine there in the early 1960s and, in 1971, began to use heap leach technology on lower-grade

ores (NB perhaps not coincidentally, South African gold production peaked in 1972) and, in the 57

years since its discovery, more than 70Moz gold have been produced (ie at an average rate in

excess of 1Moz per annum), making Carlin the largest gold discovery in north America in the 20th

century and one of the world’s richest mining districts.

Growing pains

In the 1980s, Newmont thwarted five takeover bids: from Cecil Rhodes’s Consolidated Gold Fields

(Cons Gold, the forerunner of Gold Fields of South Africa), the legendary business magnate, oil

tycoon and corporate raider, T. Boone Pickens, Minorco (then the off-shore arm of Anglo American),

Hanson (the ultimate buyer of Cons Gold after the latter’s successful defence against Minorco) and

Sir James Goldsmith. NB None of these takeover bids was independent of any of the others and

readers with an interest in the history of mining, gold, mining finance, the Oppenheimer family,

Consolidated Gold Fields, Anglo American/Minorco/De Beers, imperial, post-imperial and apartheid

relationships and one of the most acrimonious attempted takeovers in corporate history are strongly

advised to read Consolidated Gold Fields in Australia: The Rise and Decline of a British Mining

House, 1926–1998, published by ANU Press.

Restructuring

After 1987, Newmont underwent a major restructuring. This included a divestment programme

involving all of its copper, oil, gas and coal interests and the payment of a US$33/share dividend to

shareholders (to put this into context, in the first half of 1987, Newmont’s share price averaged just

US$34.76/share). A year later, it moved its headquarters from New York to Denver.

Growth

In 1997, Newmont merged with the Santa Fe Pacific Corporation to form North America’s largest

gold producer. Starting in 2000, there then followed one and a half decades of rapid, but targeted,

corporate development, including:

https://www.jstor.org/stable/j.ctv12sdxn3.28?seq=18#metadata_info_tab_contents

https://www.jstor.org/stable/j.ctv12sdxn3.28?seq=18#metadata_info_tab_contents


◼ On 21 June 2000, it announced a merger with Battle Mountain Gold.

◼ In February 2002, it completed the acquisition of Normandy Mining and Franco-Nevada.

Newmont faced competition in its bid for Normandy from AngloGold. However, it eventually

outbid the South African company to become the world's largest gold producer, with annual

production in excess of 8Moz pa.

◼ In 2007, Newmont eliminated its 1.5Moz legacy hedge book to make itself the world's largest

unhedged gold producer.

◼ In 2008, it acquired Miramar Mining Corporation and its Hope Bay deposit in the Canadian

Arctic.

◼ In late 2008, Newmont moved its headquarters from Denver to the suburb of Greenwood

Village, Colorado.

◼ In 2009, it purchased the remaining one-third interest in Boddington Gold Mine that it did not

already own from AngloGold Ashanti.

◼ In April 2011, it acquired Fronteer Gold for C$2.3bn.

◼ In 2019, it acquired Canada's Goldcorp which, once again, had the effect of making it the

largest gold producer in the world. Under the terms of the agreement, Newmont undertook to

acquire all outstanding equity of Goldcorp at an exchange ratio of 0.3280 Newmont shares plus

US$0.02 in cash for each Goldcorp share. At the time of the announcement, the consideration

represented a 17% premium based on Newmont’s and Goldcorp’s 20-day volume weighted

average price and implied an equity value for the latter of US$10bn and an enterprise value of

US$12.5bn, with Newmont and Goldcorp shareholders owning c 65% and 35% of the

combined entity, respectively. The transaction was approved unanimously by both boards of

directors and, in the case of Goldcorp, also on the unanimous recommendation of a special

committee of independent directors. To date, Newmont reports that it has exceeded the

synergies that it estimated could be generated from the merger of the two companies – among

other things, this has included resolving the dispute around transportation at Penasquito within

one year of the merger being completed. While it was not an explicit goal of the merger at the

time, one of its unintended consequences has been that the enlarged Newmont has no need of

executing any further merger & acquisition activity for potentially three decades as it instead

focuses on generating returns organically from its portfolio of existing assets.

In addition to buying assets, Newmont has shown itself willing to divest itself of them as and when it

deems such sales appropriate. Since its acquisition of Goldcorp, this has included the sale of its

stake in Continental Gold for a cash consideration of US$260m, the sale of Red Lake for cash

proceeds of US$375m (plus potentially a further US$100m, contingent upon future exploration

success) and its 50% stake in Kalgoorlie to Northern Star for US$800m, also in cash, thereby

meeting its target of US$1.0–1.5bn in divestments within the space of a year.

Piece de resistance

Just as it was concluding its acquisition of Goldcorp, Newmont simultaneously concluded a deal

with Barrick whereby the two agreed to combine their Nevada Carlin assets into a joint venture

owned 38.5% by Newmont and 61.5% by Barrick, called Nevada Gold Mines. Assets contributed to

the joint venture by Newmont included Carlin, Twin Creeks, Phoenix, Long Canyon and Lone Tree,

while assets contributed by Barrick included Goldstrike, Cortez, Turquoise Ridge, Gold Rush and

South Arturo plus an assortment of associated processing and other infrastructure.

At the moment of its creation, the new joint venture comprised 10 underground and 12 open-pit

mines, two autoclave facilities, two roasting facilities, four oxide mills, a flotation plant and five heap

leach facilities. Within this portfolio were three of the world’s top 10 tier one gold assets, namely

Goldstrike/Carlin, Cortez and Turquoise Ridge/Twin Creeks), with potentially another one

(Goldrush) to add to its ranks. In 2018, total production from these assets amounted to 4.1Moz gold


(cf total production from South Africa that year of 130t, or 4.2Moz), making the Nevada complex by

far the largest single gold mining entity in the world and more than twice as big as its next nearest

rival.

At the time of the transaction, Barrick estimated that it could extract synergies from the combined

entity of US$500m per year in the first five years of operation, worth an estimated US$4.7bn in total

before tax, including:

◼ optimisation of ore sources and production schedules at appropriate plants,

◼ optimisation of administration and regional business centres,

◼ optimisation of transport and warehousing costs and facilities,

◼ optimisation of supply chain costs, and

◼ optimised utilisation of resources and exploration potential via a district-wide geological

approach.

These, in turn, would create a virtuous cycle, leading to:

◼ lower costs and higher free cash flows,

◼ lower cut-off grades,

◼ increased reserves and resources, and

◼ longer profitable mine lives.

Geography

Newmont has interests in 17 gold mining assets, comprising 14 operating mines and three near-

term projects. Of the 14 operating mines, it deems nine to be ‘world class’ (NB with three

complexes being contributed by Nevada Gold Mines) with one further ‘emerging world class’ asset

in the form of Merian in South America (see Exhibit 1) plus six further mines. All of the three near-

term projects are related to Newmont’s portfolio of world-class assets.

A map of the geographical locations of Newmont’s 17 assets is as follows:

Exhibit 1: Newmont portfolio of assets

Source: Newmont.

Newmont is the owner and operator of each of the assets indicated, with the exceptions of Nevada

Gold Mines, in which it has a 38.5% interest (see above) and which is proportionately consolidated


for accounting purposes (see below), and Pueblo Viejo, in which it has a 40% interest and which is

also operated by Barrick and is accounted for as an associate.

Otherwise, the veracity of Newmont’s statement that it limits its investments to ‘top tier’ jurisdictions

may be judged by the following graph, which shows the Fraser Institute’s index of ‘Investment

Attractiveness’ for all 75 jurisdictions covered in its latest survey. Jurisdictions in which Newmont

has an interest in a mining operation are highlighted. Of note is the fact that only two jurisdictions –

the Dominican Republic (where Newmont is the minority partner in the Pueblo Viejo mine) and

Santa Cruz in Argentina (where Cerro Negro is located) – are in the lower half of survey’s range of

results.

Exhibit 2: Fraser Institute index of Investment Attractiveness (Newmont jurisdictions highlighted)

Source: Fraser Institute

In addition to its producing and near-producing assets, Newmont has interests in an extensive

portfolio of exploration assets including, but not limited to, Coffee and Galore Creek (in Canada)

and Nueva Union and Norte Abierto (in Chile). A map showing the locations of these assets, among

others, is available on Newmont’s website.

Assets and projects

Newmont groups its assets according to the continents on which they are located. It is beyond the

scope of this report to provide detailed descriptions of each of Newmont’s assets in the space

available. Such descriptions, including technical documents, are all readily available on Newmont’s

website and also on Sedar.com. However, the briefest possible description of each of its 17

producing and near-producing assets, by continent, is as follows:

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

Chu

but

La R

ioja

Gua

tem

ala

Dom

inic

an R

epub

licZ

ambi

aV

enez

uela

DR

C (

Con

go)

Mal

iN

icar

agua

Men

doza

Rio

Neg

roZ

imba

bwe

Cal

iforn

iaJu

juy

Was

hing

ton

New

Bru

nsw

ick

New

Mex

ico

Neu

quen

Ecu

ador

Col

ombi

aN

amib

iaP

apua

New

Gui

nea

San

ta C

ruz

Nov

a S

cotia

Bur

kina

Fas

oM

inne

sota

Mon

tana

Bol

ivia

New

Sou

th W

ales

Bra

zil

Bot

swan

aC

atam

arca

Vic

toria

New

Zea

land

Gre

enla

ndS

outh

Afr

ica

Guy

ana

Mex

ico

Sur

inam

eS

alta

NW

TM

anito

baF

ranc

eC

olor

ado

Nor

way

Alb

erta

Wyo

min

gN

ewfo

undl

and

& L

abra

dor

Indo

nesi

aN

unav

utB

ulga

riaP

eru

Yuk

onT

asm

ania

San

Jua

nG

uine

a (C

onak

ry)

Brit

ish

Col

umbi

aQ

uebe

cC

hile

Ont

ario

Que

ensl

and

Uta

hN

orth

ern

Ter

ritor

yT

urke

yS

aska

tche

wan

Sw

eden

Ariz

ona

Idah

oIr

elan

dS

outh

Aus

tral

iaP

ortu

gal

Ala

ska

Nev

ada

Fin

land

Wes

tern

Aus

tral

ia

Inve

stm

ent a

ttrac

tiven

ess

inde

x

https://www.newmont.com/operations-and-projects/global-presence/default.aspx


Exhibit 3: Newmont Australian assets

Name Ownership

(%)

Approx. percent of attributable

NEM FY20 production (%)

Approx. percent of attributable

NEM FY20 pre-tax profit (%)

Description

Tanami* 100.00 9.0 12.7 540km north-west of Alice Springs, Tanami is the second largest underground mine in Australia using long-hole open stoping with paste backfill to exploit sheeted quartz vein mineralisation. Recovery is via gravity concentration, leaching and carbon-in-pulp (CIP) extraction. Throughput is being expanded from 2.3Mtpa to 2.6–2.8Mtpa.

Tanami Expansion (TE 2)*

100.00 N/A N/A The TE 2 project will deepen and expand the existing underground mine to access the Auron deposit below the Callie orebody and the Federation and Liberator discoveries. The expansion will involve the construction of a 1,460m shaft to access ore down to a depth of 2,140m and will produce c 100koz gold pa at an increased throughput rate of up to 3.5Mtpa and will extend the life of the mine to beyond 2040 for an initial capital outlay of c US$700–750m.

Boddington* 100.00 11.9 12.8 Situated near Australia’s south-western extremity, Boddington is located on the Saddleback Greenstone Belt and uses conventional truck and shovel open-pit techniques to mine two pits (the North and South). Reopened in 2010, it has now become Australia's largest gold mine, eclipsing the Super Pit. Recovery is via flotation to a copper-gold concentrate and carbon-in-leach (CIL) to form dore.

Source: Newmont, Edison Investment Research. Note: *Deemed ‘world class’ or ‘emerging world class’.

Exhibit 4: Newmont South American assets

Name Ownership

(%)

Approx. percent of attributable NEM

FY20 production (%)


FY20 pre-tax profit (%)

Description

Yanacocha* 51.35 3.6 3.3 Yanacocha is located in the Cajamarca region of the Northern Highlands of Peru and is the largest gold mine in South America and the fourth largest in the world. It is a high sulphidation epithermal deposit and is mined via the truck and shovel/loader method. Processing is via heap leach and vat leach, carbon-in-column (CIC), sulphidation, acidification, recycling and thickening and Merrill-Crowe precipitation.

Yanacocha Sulphides*

51.35 N/A N/A The Yanacocha Sulphides project involves expanding and extending production at Yanacocha beyond 2028 until 2041 at a rate of 0.5Moz AuE pa until 2030 and 6.5Moz overall over the life of the mine for an initial capital outlay of US$2.1bn. All additional infrastructure will be constructed within the mine’s existing footprint and production is expected to be achieved in 2024.

Merian* 75.00 6.2 8.5 Merian is located in the north-east of Suriname close to the border with French Guiana and lies within lower Proterozoic-aged rocks of the Guiana Shield. Gold mineralisation is associated with quartz veins and breccias and is mined via conventional truck and shovel techniques in two open pits (Maraba and Merian II) with three further pits planned (Maraba South, Kupari and Merian I). The process plant is designed to treat 8–12Mtpa and treatment is via gravity separation, vat leaching, CIP, elution and solvent extraction-electro winning.

Cerro Negro 100.00 4.1 3.0 Cerro Negro is located in south, central Argentina and is an example of a low

sulphidation, epithermal gold-silver deposit. It is mined via a combination of transverse and longitudinal long-hole sublevel stoping methods with cemented rock backfill. In certain areas a modified Avoca mining method is also used. Processing is via comminution, thickening, leaching, Merrill-Crowe precipitation using zinc and dore smelting.



Exhibit 5: Newmont North American assets

Name Ownership

(%)


FY20 production (%)



Description

Musselwhite 100.00 1.9 (0.3) Musselwhite is an underground mine and one of the largest in both Canada and the world. Mineralisation is predominantly in meta-chemical sediments (banded iron formations) with gold contained within cross-cutting veins and veinlets that are mined via overhand and underhand cut-and-fill and longhole stoping techniques. Recovery is by gravity separation, concentrate leach, vat leach and CIP methods. Having been suspended in March 2020 owing to the coronavirus, output is now ramping up to full capacity following successful commissioning of the mine’s conveyor and material handling systems, which will reduce haul distances as ore crushed at depth is hoisted from the underground crushers and brought to surface for processing.

Éléonore 100.00 3.6 1.4 Located in the James Bay region of northern Quebec, Eleonore is an underground mine that uses open stoping, transverse open stoping and longitudinal retreat methods combined with consolidated backfill to exploit the Roberto deposit, which is a clastic sediment-hosted stockwork disseminated end member. Recovery is via standard crushing, grinding, gravity concentration, sulphide flotation, cyanide leaching and gold recovery via a CIP circuit.

Porcupine 100.00 5.8 5.5 Porcupine is located in Timmins and is also one of the largest mines in both

Canada and the world and is situated on Archaean rocks in the Porcupine Camp of the western Abitibi Greenstone Belt to the north of the regionally significant Porcupine-Destor fault. Gold mineralisation is found in a number of settings and consists of quartz carbonate veins, quartz stockworks and gold associated with disseminated sulphides. Production is via a combination of techniques, including gravity concentration, cyanide leaching, CIP recovery, stripping, electro-winning and refining.

Nevada Gold Mines*

38.50 24.0 16.1

(underlying 21.4)

The Nevada Gold Mines complex comprises 10 underground and 12 open-pit mines, two autoclave facilities, two roasting facilities, four oxide mills, a flotation plant and five heap leach facilities. Mining is via a variety of open pit (eg truck and shovel) and underground (eg drift & fill, mechanised cut-and-fill, longhole stoping, longhole open stoping and transverse stoping) methods. Recovery is via run-of-min (ROM)/dump leaching, vat leaching, pressure oxidation, resin-in-leach (RIL), CIL, CIP, roasting and solvent extraction & electro-winning (among others).

Cripple Creek & Victor (CC&V)

100.00 5.0 3.7 CC&V is an epithermal alkalic deposit, located near the centre of Colorado. It is open pit and mined via a truck and shovel/loader method. Processing is by heap leach for lower grade ores and mill for higher grade ores both via a CIP plant.

Penasquito* 100.00 9.3 19.4 Located in the north-east corner of Zacatecas, Penasquito is the fifth largest silver mine in the world and the second largest in Mexico. Mining is via conventional truck-and-shovel methods exploiting deposits that are considered to be examples of breccia pipe deposits developed as a result of intrusion-based hydrothermal activity. Processing is via a nominal 25ktpd heap leach gold and silver recovery facility and a nominal 130ktpd sulphide plant.

Pueblo Viejo* 40.00 N/A – equity accounted

N/A – equity accounted

Operated by Barrick with Newmont holding a 40% interest, Pueblo Viejo is located in the north-central region of the Dominican Republic in the Sánchez Ramírez Province and is one of the two largest gold mines in the Americas and the eighth largest in the world. It was also the first mine to be exploited by the Spanish in America. Its geology is that of a high sulphidation epithermal deposit and it is mined in two open pits (Moore and Monte Negro) by conventional truck and shovel techniques. Processing of the (refractory) ore is by comminution, pressure oxidation, hot curing, washing, iron precipitation, copper sulphide precipitation, neutralisation, cooling, lime boiling, CIL, carbon acid washing and stripping, electro-winning and refining.



Exhibit 6: Newmont African assets

Name Ownership

(%)


FY20 production (%)



Description

Akyem 100.00 6.5 6.8 Located in the Birim North District of the Eastern region of Ghana, 167km north-west of Accra, Akyem is an orogenic gold deposit of both oxide and primary mineralisation situated on the northern portion of the gold-bearing East Ashanti belt. Gold is found within greenschist facies metasediments that extend for kilometres both vertically and laterally and occurs in pyrite and secondarily as native gold in quartz veins. Mining is via the open-pit truck and shovel/loader method. Processing is via a large, conventional semi-autogenous mill and a ball mill in closed circuit configuration, followed by a CIL circuit, elution and refining for dore recovery.

Ahafo* 100.00 8.4 6.7 Ahafo is located 307km north-west of Accra on the Sefwi Volcanic belt and comprises two active open pits (Subika and Awonsu) mined by conventional truck and shovel methods and one underground mine (at Subika) that is mined by a contractor currently in the process of transferring from long-hole open stoping to shrinkage mining. Processing is via comminution, vat leaching, a CIL circuit, elution and solvent extraction-electro winning. After an open-pit stripping campaign and a simultaneous period of underground development, production at Ahafo is expected to increase throughout 2021, while costs decline.

Ahafo North* 100.00 N/A N/A Located 50km to the north of the existing Ahafo mine, Ahafo North is targeting

production of c 250koz pa via the construction of a standalone 3.5–4.0Mtpa mill (among other things), for an initial capital outlay of c US$750m.


Within the context of the above tables, investors should note that the average contribution to

production and profitability for each of the 13 assets that are currently consolidated (either wholly or

proportionately) into Newmont’s accounts is 7.7% (being 100/13). Otherwise, the sum of all of the

contributions may not add up to 100% owing to 1) rounding and 2) a very small (<1.0%)

contribution to both from Red Lake in FY20 before it was sold.

In addition, it should be noted that Nevada Gold Mines’ contribution to pre-tax profitability is

adversely affected by its effectively carrying all of Newmont’s central general and administrative

charges. In the absence of this cost, we estimate that it would contribute a more proportionate

21.4% of aggregate pre-tax profitability.

Circa 1Moz pa new production poised to be sanctioned in FY21

Material organic growth in production and profitability is already evident within Newmont’s portfolio

of assets, at both Boddington and Ahafo, which are on the cusp of concluding multi-year stripping

campaigns, after which production and profitability are expected to increase materially. In addition,

Musselwhite will benefit both from a recovery from being placed on coronavirus-enforced care and

maintenance and from the operation of its new conveyor system, which will reduce haul distances,

as ore crushed at depth is hoisted from underground and brought to the surface for processing.

Beyond this organic growth however, Newmont also has three major new projects on the verge of

board approval, which are summarised below.

Historically speaking, Newmont has been notable within the sector for declining to rush the

development of a number of mega-projects in its portfolio, preferring instead to advance a series of

medium-sized projects on a faster timeline. However, the development of the Yanacocha Sulphides

project in Peru marks a decisive departure from that strategy. This shift will a) provide the first big

test of Newmont’s management in developing a large-scale project for a number of years and b)

allow it to re-build capability in the area. In this respect, Yanacocha represents an excellent first

initiative, in that it is a brownfields development within the existing footprint of mining operations,

thereby facilitating permitting, infrastructure and the company’s social licence to operate.

Funding for Tanami Expansion 2 (TE 2) has been approved and the project is in execution stage;

investment decisions regarding Ahafo North and Yanacocha Sulfides are expected later this year.


Tanami Expansion 2 (TE 2)

TE 2 is expected to increase average annual gold production at Tanami by c 150–200koz pa for the

first five years of operation, to reduce operating costs by c 10% and to secure the mine as a long-

life, low-cost producer. In addition, it has the potential to extend the mine’s life beyond 2040 via the

addition of a 1,460m hoisting shaft and supporting infrastructure to achieve production of 3.5Mtpa

and provide a platform for future growth.

Ahafo North

In Newmont’s estimation, Ahafo North is ‘the best unmined gold deposit in West Africa’, with

c 3.5Moz of reserves plus a further c 1Moz of additional resources (see Exhibit 7, below) and

‘significant upside potential to extend Ahafo North’s current 13-year mine life’. Once in production, it

will add to Newmont’s existing footprint in Ghana, including the four open-pit mines and stand-alone

mill that it operates at Ahafo South, c 30km distant. In the first five full years of production (2024–

28), Ahafo North is expected to add 300koz pa to Newmont’s production profile at an AISC of

US$600–700/oz and an estimated capital cost of US$700–800m. Over its full 13-year life, it is

forecast to contribute c 250koz of gold to Newmont’s attributable production profile per annum

Yanacocha Sulfides

As its name implies, the Yanacocha Sulfides project will develop the first phase of Yanacocha’s

sulphide deposits, including an integrated processing circuit, including an autoclave. After a three-

year development period, the project is expected to add c 500koz gold equivalent per annum (in the

ratio 50% Cu by value, 40% Au and 10% Ag) for five years (2026–2020) at an AISC of US$700–

800/oz and an investment of c US$2.1bn (of which 51.35% is attributable to Newmont).

The first phase of the project will focus on developing the Yanacocha Verde and Chaquicocha

deposits to extend Yanacocha’s operations beyond 2040 with the second and third phases having

the potential to extend the mine’s life for multiple decades thereafter.

After these three projects, Newmont has a material pipeline of other potential projects for

development, including (but not limited to) Coffee, Akyem underground, Oberon (Tanami), Long

Canyon Phase 2, Sabajo extension (Merian), Galore Creek, Norte Abierto, Nueva Union, Apensu

underground (Ahafo), Cripple Creek & Victor (CC&V) underground and Cerro Negro district

expansions.

Reserves and resources

A summary of Newmont’s reserves and resources, by asset, is provided in the following table.

Ordinarily, Newmont reports its resources exclusive of reserves. In this case however, we have

aggregated reserves with resources in order to provide an indication of the full mineral inventory

attributable to the company.


Exhibit 7: Newmont attributable resources and reserves, by asset

Asset Category Reserves & resources Reserves Reserve & resource life at current

processing rate (years)

Reserve life at current processing

rate (years) Tonnes

(kt)

Grade

(g/t)

Contained gold (koz)

Tonnes

(kt)

Grade

(g/t)

Contained gold (koz)

CC&V Total 277,600 0.53 4,710 150,100 0.58 2,800 14.1 7.6

Musselwhite Total 19,500 5.36 3,360 9,900 6.57 2,090 15.0 7.6

Porcupine Total 410,600 0.97 12,790 49,500 1.77 2,820 105.6 12.7

Éléonore Total 13,600 5.19 2,270 7,400 5.38 1,280 7.5 4.1

Penasquito Total 976,400 0.41 12,910 441,500 0.57 8,080 24.3 11.0

Noche Buena Total 30,000 0.36 350 0 0.00 0 N/A N/A

Sandman Total 2,300 1.49 110 0 0.00 0 N/A N/A

Coffee Total 58,100 1.43 2,670 0 0.00 0 N/A N/A

Galore Creek Total 650,900 0.25 5,300 0 0.00 0 N/A N/A

Conga Total 474,700 0.59 8,970 0 0.00 0 N/A N/A

Yanacocha Total 251,900 0.93 7,570 113,700 0.98 3,570 >20.0 *20.0

Merian Total 146,900 1.18 5,560 87,700 1.23 3,480 15.6 9.3

Cerro Negro Total 21,200 7.14 4,870 8,400 9.63 2,600 29.7 11.8

Pueblo Viejo Total 157,700 2.29 11,590 47,600 2.49 3,810 25.4 11.0

Nueva Union Total 687,200 0.45 9,890 341,100 0.47 5,150 N/A N/A

Norte Abierto Total 1,642,600 0.51 26,800 598,800 0.60 11,620 N/A N/A

Alumbrera Total 55,100 0.38 680 0 0.00 0 N/A N/A

Boddington Total 931,100 0.61 18,300 566,300 0.66 11,930 23.4 14.2

Tanami Total 65,800 4.30 9,100 33,200 5.32 5,680 25.1 12.7

Ahafo Total 171,700 1.94 10,810 110,000 1.74 6,170 16.2 11.0

Ahafo North Total 62,600 2.23 4,490 45,100 2.39 3,470 18.4 13.3

Akyem Total 130,100 1.92 8,040 55,300 1.45 2,580 8.5 7.0

Nevada Total 443,900 2.29 32,650 219,100 2.64 18,600 16.1 8.3

Total Measured/Proven 1,202,300 1.02 39,600 683,000 1.30 28,600

Total Indicated/Probable 4,966,000 0.82 130,280 2,201,700 0.95 67,130

Total Inferred 1,450,600 0.63 29,420 0 0.00 0

Total Total 7,618,900 0.81 199,300 2,884,700 1.03 95,730

Total (GEO) Measured/Proven 53,154 32,538

Total (GEO) Indicated/Probable 204,294 108,836

Total (GEO) Inferred 50,738 0

Total (GEO) Total 308,186 141,374

Source: Newmont. Note: *Based on Yanacocha Sulphides project processing rate. GEO = gold equivalent ounces, with by- and co-

products converted at the following prices: Au US$1,200/oz, Cu US$2.75/lb, Ag US$16.00/oz, Zn US$1.20/oz, Pb US$0.95/lb.

Relative to 2018, reserves in 2019 declined by 7.4Moz (or 6.9%) on an underlying basis, almost

exclusively owing to mining depletion. However, this was more than made up for by a 10.8Moz

(16.4%) underlying increase in measured and indicated resource ounces (excluding reserves) and

a 2.0Moz (or 6.8%) increase in inferred resources. Newmont’s updated reserve and resource

statement is scheduled to be released on Wednesday 10 February 2021. Although it probably does

not need to in any conventional sense, given the size and scale of its existing reserves and

resources, in FY21, Newmont has US$250m budgeted for exploration, with a target of replacing

two-thirds of mining depletion 'via the drill bit’.

Of particular note in Exhibit 7 is the material (48–55%) uplift in Newmont’s reserves and resources

(by value) once co- and by-products are taken into account. Whereas Newmont’s current market

capitalisation of US$47.6bn and (end-FY20 forecast) enterprise value (EV) of US$49.6bn equate to

multiples of US$248.83 per resource ounce and US$518.04 per reserve ounce, respectively, if by-

and co-products are taken into account, these reduce to only US$160.92 per gold equivalent

resource ounce and US$350.79 per gold equivalent reserve ounce.

Sustainability

Unlike some mining companies, Newmont sets great store by its involvement in and performance

among the less quantifiable aspects of mining, such as ESG standards and climate and

sustainability initiatives, effectively believing these to form an essential prerequisite in establishing


and securing the company’s social licence to operate. Historically, initiatives that it has either

undertaken or subscribed to include:

◼ Being a founding member of the Partnering Against Corruption Initiative (2003)

◼ Being a supporter of the Extractive Industries’ Transparency Initiative (2003 and 2004)

◼ Establishing a Safety & Sustainability Board committee (2004)

◼ Issuing its first sustainability report (2004)

◼ Being an initial signatory of the International Cyanide Management Code (2005)

◼ Appointing the company’s first chief sustainability officer (2007)

◼ Disclosing annual carbon (CDP), climate and water data (2007)

◼ Adopting the Conflict-Free Gold Standard (2013)

◼ Establishing annual public sustainability targets (2014)

◼ Being an early adopter of the UN Guiding Principles on Business and Human Rights Reporting

Framework (2015)

◼ Including sustainability and safety targets in executive and employee compensation plans

(2016)

Once again, the length of this note is insufficient to recognise all of the company’s achievements in

this area of operations. However, the following is a very brief summary of its goals and

commitments in these spheres.

ESG

Newmont is registered under the Science-based Target Initiative (SBTi), which is aligned with the

Paris Agreement and, every year, it is assessed according to S&P Global’s SAM Corporate

Sustainability Assessment (CSA), which is an annual evaluation of companies' sustainability

practices and enables its performance to be benchmarked on a wide range of industry-specific

economic, environmental and social criteria that are relevant to the growing number of

sustainability-focused investors. Perhaps an indication of the importance that it ascribes to ESG

may be seen from the fact that Newmont’s longstanding general counsel now reports directly to the

board on ESG matters. Within this context, the company has set itself the following targets and

objectives in 2021 (among others):

◼ Environmental

– Climate: reduce Scope 1 & 2 emissions by 30% by 2030; reduce Scope 3 (supply chain

and partnership) emissions by 15% and increase renewable electricity generation by 10%

(NB Newmont’s longer-term target is to be carbon neutral by 2050)

– Water: improve water efficiency and increase multi-stakeholder watershed governance

participation

– Improve site level performance through full implementation of International Council on

Mining & Metals’ performance expectations, including the new Global Tailing standard,

supported by integrated assurance and compliance audits

◼ Social

– Achieve local Indigenous People’s employment targets

– Achieve local supplier spend targets globally, by region and also by country

– Ensure the full recovery of employees and host communities from the COVID-19 pandemic

◼ Governance

– Achieve annual supplier human rights targets at 100% of sites/regions

– Increase representation of women and nationals (note that Newmont announced that it had

achieved gender pay parity on 8 September 2020)


Specific initiatives that are currently under consideration at the company in order to meet these

goals (among others) include:

◼ Solar and wind projects at Penasquito, Ahafo, Boddington and Cerro Negro.

◼ Microgrid improvements at Merian, Porcupine and Tanami.

◼ The development of specific integrated energy data and metrics systems to drive efficiency and

performance

In support of its targets, Newmont is publishing its inaugural Climate Strategy report in 2021, which

is aligned with the Task Force for Climate Related Financial Disclosures (TCFD) and is budgeting

US$500m in expenditure on climate initiatives over five years. As such, its intention is as much to

compete effectively with non-mining companies on matters of climate, sustainability and ESG as

with mining companies. Nevertheless, in recognition of its efforts in these areas to date, it has been

ranked as the number one gold mining company in the Dow Jones Sustainability Index for six years

in succession, from 2015 to 2020.

Board, management and culture

In March 2020, Newmont’s Corporate Governance & Nominating Committee in conjunction with the

board of directors determined that the size of the board could be reduced from 15 to 11 members

while still achieving the appropriate balance between promoting robust dialogue and accountability

while ensuring diverse expertise, perspectives and skills. As a consequence, five directors retired

from the board upon completion of their terms in April 2020 and after the integration of Goldcorp

and one new nomination was made.

In the aftermath of the reduction, Newmont’s board continues to consist of a broad range of

backgrounds, experiences, talents and nationalities as well as continuing to reflect its commitment

to diversity. Of the 11 members of the board:

◼ 11 have risk management experience,

◼ 10 have mergers and acquisitions experience,

◼ 10 have international business experience,

◼ eight have environmental and social responsibility experience,

◼ eight have government/regulatory experience,

◼ eight have health and safety experience,

◼ eight have finance expertise,

◼ seven have public company chair or lead director experience,

◼ seven have compensation expertise,

◼ six have operational delivery experience,

◼ five are women,

◼ five have public company CEO experience,

◼ five have innovation and technology expertise,

◼ five have extractive industry experience,

◼ five have designated audit committee financial expertise,

◼ four are non-Americans,

◼ four have accounting experience, and

◼ one is a leading academic.

As well as gold, the board has collective experience of a wide range of other extractive industries,

including coal, iron ore, copper and aluminium, other industries (such as banking, fertiliser,


industrial gases and defence) and other companies (eg Rio Tinto, De Beers/Anglo American,

Jacuzzi and Elizabeth Arden).

Newmont’s officers comprise an executive leadership team of eight individuals (four of whom are

profiled on the final page of this report) and 25 further key officers who operate under the direction

of the board of directors.

Newmont has adopted a collegiate approach to management and a number of aspects of the

culture that it is seeking to embed differentiate it from others in the sector and are worthy of

consideration. The first concerns cyclicality. Newmont’s CEO, Tom Palmer, has being quoted as

saying that he is ‘trying to drive the cyclicality out of the company’. While this cannot be completely

true, given that Newmont is unhedged, one among many cultural initiatives deployed is that virtually

everyone at the company is required to plan around a gold price of US$1,200/oz with respect to

margin, cost and investment decisions – thereby embedding a culture of capital discipline

throughout the company rather than merely at the upper echelons. Another important initiative is the

so-called ‘separation of Church and state’. According to this initiative, all of the technical aspects

pertaining to a mine’s (or project’s) operation are first reported to the CEO. After due consideration

and, if necessary, alteration, these are then provided to the mine’s manager as a template against

which to perform, rather than vice-versa.

COVID-19

A number of Newmont’s operations have been affected to date by the coronavirus pandemic. Mines

put onto ‘care and maintenance’ at various points during the course of the year include

Musselwhite, Éléonore, Penasquito, Yanacocha and Cerro Negro, in relation to which, Newmont

has incurred costs of US$171m up to the end of Q3, plus a further US$67m in direct costs in

responding to the pandemic, including:

◼ wide-ranging controls at both Newmont’s offices and mine sites,

◼ the maintenance of effective testing, quarantine and contact tracing procedures,

◼ wages, direct operating costs for critical activities and non-cash depreciation for sites ramping

up from care and maintenance or continuing to operate at reduced levels,

◼ incremental COVID-19 specific costs for activities such as additional health and safety

procedures, increased transportation and community fund contributions, and

◼ the disbursement of c US$9m from Newmont's US$20m Global Community Support Fund to

ensure employee and community health, food security and local economic resilience through

partnerships with local governments, medical institutions, charities and non-governmental

organisations.

In addition, progress on the development of the Tanami Expansion 2 has also been impeded.

While such negative effects of the crisis have been widely reported, however, less so have been the

unintended positive consequences. Largely as a result of being forced to do so by the pandemic,

Newmont reports that it has learnt important and material lessons regarding the distribution of its

personnel, for example, including the possibilities of remote working, which will aid it in streamlining

its labour force and lowering costs in the future.

Even so, as of Q420, all previously affected mines have, to all intents and purposes, returned to

normal operating levels.

https://www.newmont.com/about-us/leadership/default.aspx


Assumptions

The gold price

Edison’s gold price assumptions have now been updated to reflect the passage of time since 2020.

In our last note on the subject (see A golden future, published on 11 June 2020), Edison argued that

the recent, sharp increases in the total US monetary base might be expected to support a (nominal)

gold price of US$1,892/oz and potentially as high as US$3,000/oz. While there is a historically

strong and statistically significant correlation of 0.909 between the gold price and the total US

monetary base from 1967 to 2018, there is very little visibility as to how, or to what extent, the total

US monetary base may be expected to evolve. Currently, we know that it is expanding at a rate of

approximately US$98bn per month, which equates to an expected increase in the gold price

(derived via the historical correlation) of approximately US$391/oz pa. Anecdotally, the total US

monetary base may probably be expected to continue to increase for a time until the COVID-19

crisis has been managed and then to flatten off for a discrete period until a period of tapering is

attempted by the Federal Reserve (in a similar fashion to the aftermath of the global financial

crisis). However, neither the extent of any increases nor the extent of any subsequent tapering nor

the timing of either is easy to judge. In consequence, Edison’s strategy is to maintain a flat, nominal

gold price of US$1,892/oz into the future.

In the absence of more general deflation, a flat, nominal gold price of US$1,892/oz is, self-evidently,

a declining gold price in real terms, which is an unlikely long-term scenario, given that the gold price

has historically increased by 2.0% per annum in real terms from 1914 to 2018 (see Portents of

economic weakness, Gold: Doves in the ascendant). During the period 2013–18, the gold price was

relatively flat, averaging US$1,270/oz. Its average price in 2018 was also US$1,271/oz – both of

these levels were arguably supported by the marginal cost of production. If this level is then

increased at 2% per annum from 2018, it may be compared with the flat nominal (declining real)

price scenario previously described, as shown in the exhibit below:

Exhibit 8: Edison updated real gold price pricing scenarios and forecast (US$/oz)

Source: Edison Investment Research

As may be seen from the chart above, the two lines cross between 2026 and 2027 at a level

fractionally above US$1,500/oz. All Edison’s gold company valuations are conducted in real terms.

Consequently, and in the absence of much immediate visibility as to the evolution of the total US

monetary base, Edison’s gold price scenario for valuation purposes continues to assume that the

gold price will remain at US$1,892/oz in flat nominal terms (ie declining in real terms) until the price

(in real terms) crosses with the increased US$1,271/oz 2018 price. At that point we (conservatively)

assume that the price will flatten out (in real terms) at US$1,524/oz. This compares with our

analysis in 2020 only inasmuch as the base year from which deflation is deemed to occur has been

moved from 2020 to 2021. A table comparing the difference between our real terms gold price

forecasts last year and this is as follows:

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

1,800

1,900

2022 2023 2024 2025 2026 2027 2028

US

dol

lars

per

oun

ce

US$1,892/oz (flat) nominal deflated (US$/oz) Real gold price from US$1,271/oz in 2018 (US$/oz)

Edison (real) forecast (US$/oz)


https://www.edisongroup.com/sector-report/gold-doves-in-the-ascendant/24838/

https://www.edisongroup.com/sector-report/gold-doves-in-the-ascendant/24838/


Exhibit 9: Edison gold price forecasts 2021 vs 2020

Year of (real) gold price forecast 2022 2023 2024 2025 2026 2027 onwards

2021 (real) gold price forecast (US$/oz) 1,819 1,749 1,681 1,617 1,554 1,524

2020 (real) gold price forecast (US$/oz) 1,681 1,617 1,554 1,494 1,494 1,494

Source: Edison Investment Research.

In simple terms, the consequence of the gold price remaining higher for longer into 2021 is that we

are now assuming that the (real) gold price will similarly stay higher for longer and will flatten out at

a higher level, later. For 2021, we are assuming that the current spot price (US$1,838/oz at the time

of writing) will prevail for the remainder of the year.

Note that this method of gold price forecasting may be contrasted with our prior methodologies,

which were set out in our report Portents of economic weakness, Gold: Doves in the ascendant.

For other metals, our assumed prices are the current spot price (in the short term). In the long term,

they are:

◼ zinc US$2,315/t, or US$1.05/lb

◼ copper US$6,405/t, or US$2.90/lb

For silver, our assumed prices are governed by silver’s long-term correlation with the gold price,

since the latter was demonetised in 1971, as follows:

Exhibit 10: Edison silver price forecasts

Year FY22 FY23 FY24 FY25 FY26 FY27 Long-term

Real silver price (US$/oz) 29.63 28.53 27.47 26.45 25.47 24.99 24.99


Production and costs

Newmont groups its assets by continent with the exception of its Carlin assets, which are grouped

separately as Nevada Gold Mines. Production and cost and capex guidance is provided by mine

site on a 13–14-month basis (ie now for FY21) and, beyond that, on a continental basis. The

following is a comparison of Edison forecasts compared with publicly available guidance provided

by the company for the period 2021–23 for each of Newmont’s four continental mine groupings and

its one complex grouping.

Newmont’s Australian region comprises Boddington and Tanami. In 2021, production at Boddington

will benefit from improvements to achieve its full potential under Newmont’s eponymous production

philosophy, simultaneously sustaining mill throughput at greater than 40Mtpa and also taking

advantage of higher grades in the South Pit. In 2022 and 2023, Boddington will continue to benefit

from mining higher-grade ore coupled with improved efficiency provided by Autonomous Haulage

before transitioning to stripping the next layback in 2023 at the same time as the TE 2 is beginning

to ramp up.

Exhibit 11: Edison and Newmont Australian regional production and cost forecasts and guidance

Q420e 2021e 2022e 2023e

Edison Edison Newmont Edison Newmont Edison Newmont

Attributable production (koz) 299 1,330 1,330 1,444 1,400–1,500 1,456 1,400–1,500

Costs applicable to sales (US$/oz) 678 652 650 601 550–650 599 500–600

Source: Edison Investment Research, Newmont

Newmont’s African region comprises Ahafo and Akyem. In 2021, Ahafo will benefit from higher

tonnages delivered from Subika, while Akyem benefits from a higher grade. In 2022 and 2023,

Ahafo will continue to benefit from higher grades, although this will be partially offset by mine

sequencing at Akyem. The ramping up of production is also scheduled to begin at Ahafo North in

2023.


Exhibit 12: Edison and Newmont African regional production and cost forecasts and guidance

Q420e 2021e 2022e 2023e


Attributable production (koz) 220 915 915 1,030 1,000–1,100 1,130 1,100–1,200



Newmont’s North American region comprises CC&V, Musselwhite, Porcupine, Éléonore and

Penasquito. Penasquito is scheduled to mine slightly higher grades in 2021, while sustaining Full

Potential programme improvements at its mill. It will also benefit from a full year of operations

following coronavirus-related disruptions in 2020, as will Eleonore and Musselwhite. At the same

time, Porcupine will benefit from higher underground and open-pit tonnes mined, partially offset by

lower leach pad production at CC&V.

Exhibit 13: Edison and Newmont North American regional production and cost forecasts and guidance

Q420e 2021e 2022e 2023e




Source: Edison Investment Research, Newmont.

In 2022 and 2023, Penasquito will mine lower-grade, harder ore from the Chile Colorado pit while

stripping the next phases of the Penasco pit from 2022 until 2024. At the same time, grades will

improve at Porcupine from the Borden underground and Hollinger open-pit mines in 2022, before

Hollinger begins to ramp down in 2023.

Newmont’s South American region comprises Yanacocha (51.35% owned, fully consolidated),

Merian (75% owned, fully consolidated), Cerro Negro and Pueblo Viejo (40% owned, equity

accounted). For the purposes of its guidance, Newmont’s share of production from Pueblo Viejo is

included in attributable production; given that it is equity accounted however, neither its revenue nor

costs are included in Newmont’s revenue or costs etc, although it accounts for the overwhelming

majority of ‘equity income of affiliates’ (reported post-tax).

Exhibit 14: Edison and Newmont South American regional production and cost forecasts and guidance

Q420 2021e 2022e 2023e


Attributable production (koz)* 340 1,076 1,075 1,101 1,050–1,150 1,057 1,000–1,100

Pueblo Viejo production (koz) 106 325 325 335 335 375 375

Attributable production (koz) 234 751 750 766 765 682 675


Source: Edison Investment Research, Newmont. Note: *Includes attributable production from Pueblo Viejo (equity accounted).

Cerro Negro, which was placed on coronavirus related ‘care and maintenance’ in 2020, is expected

to return to full production in 2021, partially offsetting Merian’s transition to mining harder rock and

Yanacocha transitioning to a primarily leach operation, while simultaneously developing the first

phase of its sulphide resources. Output is then expected to increase with increased production and

flexibility in 2022 and 2023 as Cerro Negro mines ore from five to six ore sources under the

auspices of Full Potential productivity improvements. At the same time, output from Merian and

Yanacocha will be slightly lower owing to mine sequencing.

Newmont proportionately consolidates its production and costs, etc, from its 38.5% interest in

Nevada Gold Mines. Otherwise, detailed guidance is provided by the operator, Barrick, and merely

rendered into its proportionate share by Newmont, albeit with the explanation that ‘2021 and 2022

are years of investment in the future of NGM.'


Exhibit 15: Edison and Newmont Nevada Gold Mines production and cost forecasts and guidance

Q420e 2021e 2022e 2023e





In the meantime, Newmont’s capital expenditure guidance over a slightly longer period, from 2021

to 2025, is as follows:

Exhibit 16: Newmont capital expenditure guidance, FY21–25 (US$m)

2021e 2022e 2023e 2024e 2025e

Total consolidated capital 1,900 2,300–2,500 2,200–2,400 1,400–1,600 1,100–1,300

Consolidated sustaining capital 1,000 900–1,100 900–1,100 900–1,100 900–1,100

Consolidated development capital 900 1,300–1,500 1,200–1,400 400–600 100–300

Total attributable capital 1,800 2,000–2,200 1,900–2,100 1,200–1,400 1,100–1,300

Attributable sustaining capital 950 900–1,100 900–1,100 900–1,100 900–1,100

Attributable development capital 850 1,000–1,200 900–1,100 200–400 100–300

Source: Newmont

Of note within the context of Newmont’s overall guidance is the sharp decline in capital expenditure

between 2023 and 2024 as the capital phases at its three major new development projects (TE 2,

Ahafo North and Yanacocha Sulphides) in particular are completed and the mines begin to

contribute meaningfully to the company’s production, profitability and cash flows. It is also

consistent with its analysis that ‘2021 and 2022 are years of investment in the future of NGM.’

Note that full details of Newmont’s guidance may be found in its announcement, entitled Newmont

Provides 2021 and Longer-term Outlook, released on 8 December 2020.

Shareholder returns

Newmont has an acute focus on shareholder returns, ostensibly in three forms: dividend yield,

capital appreciation and a share buy-back programme.

Dividend – variable with respect to the gold price

Newmont’s policy is to pay a quarterly dividend that is both stable and predictable as well as being

variable with respect to the gold price.

In FY19, it paid a dividend of US$0.14/share per quarter, with the exception of Q219 when it also

paid a special dividend of US$0.88/share to recognise the value inherent in the Goldcorp

acquisition. At the start of FY20 the quarterly dividend was increased to US$0.25/share and it was

increased, once again, to US$0.40/share at the time of the company’s Q320 results, which were

announced in October. At the time of the last increase, the company also unveiled a new framework

whereby it formally re-based its dividend to a ‘base’ pay-out of US$1.00/share (or US$0.25/share

per quarter), but also stated explicitly that it would return 40–60% of incremental attributable free

cash flow to shareholders that it generated above a gold price of US$1,200/oz.

Under the new framework, Newmont then seeks to adjust the ‘base’ pay-out according to the gold

price in increments of US$300/oz, equating to incremental increases in the dividend of

US$0.60/share per year (or US$0.15/share per quarter). Hence a sustainable gold price above

US$1,500/oz should result in a dividend of US$0.40/share per quarter (being 0.25+0.15=0.40) – ie

the quarterly dividend paid in Q320 – and a sustainable gold price above US$1,800/oz should result

in a dividend of US$0.55/share per quarter (being 0.25+0.15+0.15=0.55) etc. Nevertheless, within

this context, it is worth noting that, should Newmont decide to pay out nearer 60% of incremental

attributable free cash flow to shareholders that it generates above a US$1,200/oz gold price, rather

than 40%, then there is still scope for the quarterly dividend to increase even further.

https://www.newmont.com/investors/news-release/news-details/2020/Newmont-Provides-2021-and-Longer-term-Outlook/default.aspx

https://www.newmont.com/investors/news-release/news-details/2020/Newmont-Provides-2021-and-Longer-term-Outlook/default.aspx


However, all dividends need to be approved by the board of directors on a quarterly basis and due

regard will be given to the perceived volatility of the gold price in this respect. As such, a gold price

either momentarily above US$2,100/oz or momentarily below US$1,500/oz will not – for example –

automatically result in a change in the dividend (either upwards or downwards) unless the board

deems that level newly sustainable.

For practical purposes, in the short term, Edison has assumed that a gold price averaging in excess

of US$1,800/oz for two successive quarters will result in a dividend of US$0.55/share per quarter.

Otherwise, we assume that the dividend will either be (or revert to) US$0.40/share.

Share buyback programme

One key aspect of Newmont’s variable gold price dividend is that it allows flexibility in balancing

returns between distributions to shareholders and its share buyback programme, rather than fixed

or inflexible dividends necessarily cannibalising share buybacks. On 14 January 2021, Newmont

announced that its board of directors had sanctioned a share repurchase programme for up to

US$1.0bn of common equity over the next 18 months. The programme will be executed at the

company’s discretion and builds upon a similar US$1.0bn programme in 2020, which retired 22m

shares at an average price of US$45 per share for an implied total consideration of US$990m and

contributed towards the US$2.7bn returned to shareholders by Newmont via its combined dividend

and share buyback policies since January 2019. Note that, at a gold price of US$1,200/oz,

Newmont’s shareholder returns programme is structured so that c 50% of Newmont’s free cash flow

is retained within the company and 50% is returned to shareholders via its dividend and buyback

programmes. Notwithstanding its importance however, owing to the inherent uncertainty

surrounding how many shares will be repurchased under the programme and at what price, for the

purposes of its valuation of Newmont (below), Edison assumes that all returns to shareholders are

in the form of income and capital appreciation.

Forecasts

Edison has derived full financial forecasts for Newmont over the life of its operations based on its

guidance. While there are many numbers, estimates, forecasts, measures and metrics to consider

in relation to Newmont, perhaps the best summary of its immediate prospects is provided by the

following graph demonstrating the effect of the aforementioned guidance combined with Edison’s

assumptions on the company’s operational and pre-financing cash flows over the course of the next

five years.

Exhibit 17: Edison forecast of NEM operating & pre-financing cash flows, FY17–25e (US$m)


While we expect a dip in pre-financing cash flows in FY21 relative to FY20 therefore, this may be

largely attributed to the absence of an estimated US$1.4bn in net sales proceeds that were

recorded in FY20 in addition to a 29.7% increase in capital expenditure. Cash flows from operations

0

1,000

2,000

3,000

4,000

5,000

6,000

2017 2018 2019 2020 2021 2022 2023 2024 2025

Net cash provided by (used in) operating activities Operational and investing cash-flow (US$m)


are nevertheless anticipated to continue to increase. From their nadir of US$2.6bn in FY22

therefore, we expect Newmont’s pre-financing cash flows to increase by 47.4% to US$3.9bn in

FY25 and to continue to increase thereafter.

Valuation considerations and sensitivities

Newmont is a multi-asset company that has shown a willingness and desire to trade assets in the

past in order to maintain production, reduce costs and maximise shareholder returns. As a result,

rather than our customary method of discounting maximum potential dividends over the life of

operations back to FY21, we have opted to discount forecast dividends back over five years from

the start of FY21 and then to apply an ex-growth terminal multiple to forecast cash flows in that year

(ie FY25). In the normal course of events, we would exclude exploration expenditure from such a

calculation on the basis that it is an investment. In the case of Newmont, however, we have

included it in our estimate of future cash flows on the grounds that it may be a critical component of

ongoing business performance in its ability to continually expand and extend the lives of the

company’s assets via exploration.

Our estimate of Newmont’s pre-financing cash flow in FY25 is US$4.83 per share (cf US$1.22 per

share in FY18). On this basis, our terminal valuation of the company at end-FY25 would be

US$48.33/share if based on an assumption of zero growth in cash flows beyond FY25 and a

standardised 10% discount rate. In conjunction with forecast intervening dividends, this terminal

value would then discount back further to a net present value of US$44.75/share at the start of

FY21 (again, based on the assumption of zero growth in cash flows beyond FY25 and a

standardised 10% discount rate).

Exhibit 18: Newmont forecast valuation and cash flow per share, FY21–25e (US$/share)


This analysis inherently excludes any value to Newmont from its other development assets, such as

Coffee, Galore Creek, Conga, Norte Abierto and Nueva Union, which together represent combined

reserves and resources of 54.77Moz attributable to Newmont. It is also conservative in its use of a

standardised 10% discount rate and in its assumption of zero growth in cash flows after FY25.

These factors are considered in turn, below.

Discount rate sensitivity

The question of discount rates has long been a vexed one. The long-term nominal equity return has

been 9% and 30-year break-evens are currently expecting 2.5% inflation, which would imply a real

equity return of 6.3% (1.09/1.025). Long-term real bond returns have been 2.5%.

Typically, in valuing mining companies, Edison employs a standardised real discount rate of 10%.

While adequate for junior miners however, where the greatest risk is typically operational, this

metric requires more attention for senior gold producers.

0.00

1.00

2.00

3.00

4.00

5.00

6.00

42.00

43.00

44.00

45.00

46.00

47.00

48.00

49.00

2021 2022 2023 2024 2025

Operational and investing cash-flow per share (US$/share, RHS) Valuation (US$/share, LHS)


In the opinion of Edison’s senior economist, with real US 10-year yields at -1%, the bond market is

not, at present, a very good guide to discount rates and is only consistent as a basis for deriving

equity weighted average costs of capital on the assumption of a very weak outlook for long-term

GDP and profit growth.

However, if inflation is 2% (the Federal Reserve’s target), real GDP growth – and by implication

long-term real yields – is 2% (roughly in line with population and productivity growth) and the risk

premium is 2–4%, then, adding those together, the cost of equity should be in the range 6–8% (or

4–6% in real terms with inflation at 2%). According to Bloomberg, Newmont’s beta relative to the

S&P 500 Index is 0.74. Combining these would imply a nominal cost of equity for Newmont of 5.5–

7.0% (eg 2+2+[0.74*2]) or a real cost of equity of 3.4–4.9% with inflation at 2%.

As an alternative, Professor Pablo Fernandez of the IESE Business School conducts an annual

survey of analyst risk premiums. The most recent is entitled Annual Survey: Market Risk Premium

and Risk Free Rate used for 81 countries in 2020. Out of a total of 2,156 responses, the average

market risk premium for the United States was found to be 5.6% (within a range 2.6–13.4%) and

the average risk-free rate 1.8% (approximately 0.8 percentage points lower than the equivalent rate

in 2019). Again, applying Bloomberg’s beta of 0.74 would imply a nominal cost of equity for

Newmont of 5.9% (being 1.8+[0.74*5.6]) or a real cost of equity of 3.8% with inflation at 2%. In the

meantime, the US 10-year Treasury bond is currently yielding 1.1%. Applying this instead would

imply that Newmont’s cost of equity is 5.2%, or 3.1% in real terms.

Alternatively, US junk bonds are currently yielding 4.5%. If these are considered as only a little less

risky than equity, then it would imply a market cost of equity closer to 6%, in which case, Newmont’s

cost of equity may be estimated (depending on the risk free rate applied) at 4.7–4.9%, or 2.7% to

2.9% in real terms (assuming long-term inflation at 2%).

Finally, Ashwath Damodaran from Stern School of Business at New York University estimates a

total equity risk premium for the US market (last updated 8 January 2021) of 4.72%, on which

basis, we estimate that Newmont’s cost of equity would be 4.6–5.3%, or 2.5–3.2% in real terms

(assuming a 2% inflation rate).

A summary of all of these estimates of Newmont’s cost of equity is as follows:

Exhibit 19: Summary range of estimates for Newmont cost of equity

Estimate basis Edison (US junk bond yields)

Stern Business School (country default or CDS

spreads and bond rating)

IESE Business School survey

Edison (real GDP & target inflation rate)

Historical returns

Estimated NEM real cost of equity (%)

2.7–2.9% 2.5–3.2% 3.8% 3.4–3.9% 6.3%


All of Edison’s valuations of mining companies are conducted in real terms. According to our

forecasts, Newmont could be net debt free by the end of FY22 (see Financials section on page 28).

Thereafter, it should not be necessary to consider its cost of debt as a component part of its cost of

capital. Obviously, in theory, this would result in a higher cost of capital to the company than if

higher levels of debt and leverage were employed. However, this benefit is offset by the higher

levels of risk associated with more highly leveraged companies. In the light of these considerations,

a summary of Edison’s valuation of Newmont at a range of costs of equity is as follows:

Exhibit 20: NEM valuation sensitivity to real discount rate

Real discount rate (%) 2.5% 3.0% 3.2% 3.4% 3.8% 3.9% 4.0% 5.0% 6.0% 6.3% 7.0% 7.7% 8.0% 10.0%

NEM terminal valuation (US$/share)

193.34 161.12 151.05 142.16 127.20 123.94 120.84 96.67 80.56 76.72 69.05 63.04 60.42 48.33

NEM valuation in FY21 (US$/share)

189.23 157.05 146.99 138.12 123.19 119.93 116.84 92.75 76.71 72.89 65.27 59.30 56.71 44.75


http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.html


As such, it may be stated that Newmont’s share price is currently discounting a cost of equity

(highlighted in Exhibit 20, above) approximately twice that implied by current conditions prevailing in

the debt and equity markets at the present time (above).

Note that the average discount rate implied by all of the above sources and methodologies is

3.275%, on which basis the terminal valuation of Newmont (assuming an ex-growth terminal

multiple) would be US$147.59/share and its current value US$143.54/share).

Cash flow growth rate sensitivity

The above valuation methodology also provides a valuation of US$59.30/share (ie the current

share price) in the event that a long-term real cash flow growth rate of 3.1% is used (in conjunction

with a 10% discount rate). Within this context, investors should note that in August 2019, Edison

calculated that, between 1913 and 2018, the gold price recorded an average (geometric) real return

of 2.0% per annum with a standard deviation of ±16.7% (both calculated assuming that the

distribution of returns is normal – see Portents of economic weakness, Gold: Doves in the

ascendant). The following table demonstrates Edison’s Newmont valuation sensitivity to a range of

real gold price growth rates (being a proxy for real revenue growth assuming a roughly flat long-

term production profile) and a range of real cost price inflation rates.

Exhibit 21: NEM valuation sensitivity to annual real gold price and cost inflation rates

Real gold price growth rate (%) 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%

Real cost inflation rate (%) 0.0% 0.5% 1.0% 1.5% 1.6% 2.0%

Implied 5-year real cash flow growth rate (% geometric)* 6.3% 5.3% 4.3% 3.2% 3.1% 0.0%

Implied NEM terminal valuation (US$/share) 138.87 108.29 88.44 73.36 71.77 48.33

Implied NEM FY21 valuation (US$/share) 100.96 81.98 69.66 60.29 59.30 44.75

Source: Edison Investment Research. Note: Assumes 29% initial pre-tax margin condition and applies a uniform 10% real discount rate.

As such, it could be stated that Newmont’s share price is discounting a flat long-term production

profile, a 2.0% real gold price growth rate and a 1.6% real cost inflation rate. Obviously, this is a

possibility, although a more logical future scenario is that costs should increase at no more than the

rate of inflation – ie zero growth in real terms – with the result that in real terms cash flows should

increase at 6.3% per annum (geometric average over five years) and Newmont’s valuation should

be as depicted in the left-hand column of Exhibit 21, above (highlighted in bold).

Alternatively, at the same time as we calculated a long-term real gold price growth rate of 2.0% per

annum, Edison also calculated that, in the period 1967–2018, it recorded a (geometric) average

nominal growth rate of 9.6% with a (sample) standard deviation of ±24.2% and a population

standard deviation of ±18.5% (NB these calculations are again based on the assumption that

returns are normally distributed). An analysis of our valuation of Newmont using the above

methodology at a variety of different nominal revenue and cost inflation rates (translated into real

terms) over five years is then as follows:

Exhibit 22: NEM valuation sensitivity to annual nominal gold price and cost inflation rates

Nominal gold price growth rate (%) 9.6% 9.6% 9.6% 9.6% 9.6% 9.6%

Nominal cost inflation rate (%) 6.8% 7.6% 8.3% 8.6% 8.9% 9.6%

Implied 5-year real cash flow growth rate (%)* 8.0% 6.0% 4.0% 3.1% 2.0% 0.0%

Implied NEM terminal valuation (US$/share) 261.01 128.09 83.78 71.77 61.63 48.33

Implied NEM FY21 valuation (US$/share) 176.80 94.27 66.76 59.30 53.00 44.75

Source: Edison Investment Research. Note: *Assumes 29% initial pre-tax profit margin condition and applies a uniform 10% real discount rate.

As with the earlier analysis in Exhibit 21, we could similarly state that Newmont’s share price is

discounting a flat long-term production profile, a 9.6% nominal gold price growth rate (as a proxy for

revenue growth) and an 8.6% nominal cost inflation rate, the last of which appears excessive within

the context of current inflation rates both in the US and globally in US dollar terms.


Relative Newmont valuation

Newmont’s valuation on a series of commonly used measures, relative to its peer group of the 10

largest publicly quoted senior gold producers, is as follows.

Exhibit 23: Newmont valuation relative to peers

P/E P/cash flow (x) EV/EBITDA (x) Yield (%)

Company Ticker Year 1 Year 2 Year 3 Year 1 Year 2 Year 3 Year 1 Year 2 Year 3 Year 1 Year 2 Year 3

Newmont (Edison) NEM 24.7 21.7 20.3 11.2 10.3 9.5 9.0 7.8 7.9 2.4 3.5 2.7

Newmont (consensus) NEM 23.5 14.5 13.9 10.6 8.0 8.2 8.8 6.5 6.5 2.0 2.8 2.7

Barrick ABX 19.8 15.7 16.1 7.8 6.6 7.1 7.5 6.7 6.8 1.4 1.6 1.3

AngloGold ANGJ 8.1 6.5 7.9 6.4 5.2 5.4 4.7 3.8 4.1 2.1 2.9 2.9

Polyus PLZL MM 12.0 9.1 8.5 9.3 7.8 6.9 8.0 6.7 6.4 3.8 4.5 5.2

Gold Fields GFI 13.1 7.3 8.4 6.9 5.0 5.0 5.0 3.8 3.9 2.3 3.9 3.9

Kinross K 10.3 8.5 6.4 5.3 4.7 3.8 4.8 4.2 3.3 0.5 1.6 1.6

Agnico-Eagle AEM 39.2 20.1 17.5 15.3 9.5 8.7 12.6 8.1 7.4 1.3 1.9 1.9

Newcrest NCM AU 14.8 14.9 15.7 9.0 8.8 9.4 7.0 7.0 7.5 1.3 1.2 1.2

Harmony HARJ 4.9 3.7 4.3 3.8 3.4 3.6 2.5 2.1 2.3 2.5 3.3 3.0

Endeavour (consensus) EDV 10.3 7.2 7.1 4.6 3.9 3.9 4.9 2.9 3.0 0.0 1.8 3.1

Average (excl NEM) 14.7 10.3 10.2 7.6 6.1 6.0 6.3 5.0 5.0 1.7 2.5 2.7

Source: Edison Investment Research, Refinitiv. Note: Consensus and peers priced on 9 February 2021.

From the table above, it can be seen that, while Newmont commands a premium rating relative to

its peer group on the first three valuation measures, it is materially cheap relative to its peer group

with respect to its dividend yield. Based on consensus forecasts, we estimate that Newmont’s share

price would have to rise by an average of 34.8% for its dividend yield to match those of its peer

group. Based on Edison forecasts, we estimate that its share price would have to rise 54.3%.

However, one further observation about the comparability of the above measures is merited. Given

its policy of proportionately consolidating its interest in Nevada Gold Mines and the fact that it owns

100% interests in the majority of its remaining mining operations (with the exception of Yanacocha

and Merian), estimates of cash flow in particular are also close to estimates of cash flow attributable

to shareholders (Newmont estimates within 3%). This is not always the case in the mining industry,

where fully consolidated earnings and cash flow from assets not owned 100% may not so easily

approximate cash flow attributable to shareholders, making direct comparison using these

measures potentially either difficult or misleading. With that caveat, Newmont’s share price, as

implied by the average rating of its peers applied to both Edison and consensus forecasts over the

course of the three years from FY20 to FY22, is as follows:

Exhibit 24: Edison and consensus EBITDA (US$m) and cash flow/share (US$/share)

forecasts and implied share prices

FY20e FY21e FY22e

Edison EBITDA (US$m) 5,503 6,325 6,307

Consensus EBITDA (US$m) 5,794 7,830 7,866

Share price implied from Edison EBITDA (US$/share) 43.40 39.66 39.12

Share price implied from consensus EBITDA (US$/share) 45.69 49.10 48.79

Edison cash flow (US$/share) 5.30 5.74 6.27

Consensus cash flow (US$/share) 5.66 7.52 7.33

Share price implied from Edison cash flow per share (US$/share) 40.22 35.04 37.53

Share price implied from consensus cash flow per share (US$/share) 42.95 45.89 43.86

Source: Edison Investment Research, Refinitiv

Historical valuation

Since FY13 (in what might be regarded as a low gold price environment), Newmont shares have

traded on an average current year P/E multiple of 24.7x (calculated using the average share price


for the year) within a relatively narrow range of 21.4–28.3x. Over the same period, it has traded on

an average dividend yield of 1.7%, within a range of 0.4–4.0%, or 1.3% within a range 0.4–3.7% if

its US$0.88/share special dividend payment in FY19 is excluded:

Exhibit 25: Newmont current year P/E multiple and (underlying) yield, FY13–19

Source: Edison Investment Research, Bloomberg (average share price during the year).

On the basis that it maintains these average ratings, the share prices implied by both Edison’s and

consensus forecasts for adjusted EPS and dividends over the course of the next four years are as

follows:

Exhibit 26: Edison and consensus EPS and DPS forecasts and implied share prices

US$/share FY20 FY21 FY22 FY23

Edison adjusted EPS forecasts (US$/share) 2.396 2.730 2.924 2.964

Edison DPS forecast (US$/share) 1.450 2.050 1.600 1.600

Consensus adjusted EPS forecast (US$/share) 2.56 4.19 4.30 4.29

Consensus DPS forecast (US$/share) 1.18 1.60 1.66 1.99

Share price implied by Edison EPS forecast (US$/share) 59.30 67.57 72.35 73.35

Share price implied by Edison DPS forecast (US$/share) 108.54 153.45 119.77 119.77

Share price implied by consensus EPS forecast (US$/share) 63.35 103.69 106.41 106.16

Share price implied by consensus DPS forecast (US$/share) 88.33 119.77 124.26 148.96

Source: Edison Investment Research, Refinitiv (1 February 2021)

Valuation

A summary of all of the above valuations of Newmont shares over the course of the next five years

is as follows:

Exhibit 27: Newmont valuation summary (US$/share in years shown)

Basis of valuation FY20 FY21 FY22 FY23 FY24 FY25

Absolute 6.3% real cost of equity and ex-growth terminal multiple 72.89 74.11 75.50 76.66 76.72

Historical Share price implied by Edison EPS forecast (US$/share) 59.30 67.57 72.35 73.35

Historical Share price implied by Edison DPS forecast (US$/share) 108.54 153.45 119.77 119.77

Historical Share price implied by consensus EPS forecast (US$/share) 63.35 103.69 106.41 106.16

Historical Share price implied by consensus DPS forecast (US$/share) 88.33 119.77 124.26 148.96

Peer group Share price implied from Edison EBITDA (US$/share) 43.40 39.66 39.12

Peer group Share price implied from consensus EBITDA (US$/share) 45.69 49.10 48.79

Peer group Share price implied from Edison cash flow per share (US$/share) 40.22 35.04 37.53

Peer group Share price implied from consensus cash flow per share (US$/share) 42.95 45.89 43.86

Average (US$/share) 61.47 76.34 74.02 104.75 76.66 76.72


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2013 2014 2015 2016 2017 2018 2019

Yield (%

)

P/E

(x)

Yield (%, RHS) P/E (x, LHS)


In general, it may be concluded that Newmont’s share price commands a premium rating relative to

its peers. However, it is also indisputably cheap relative to its own historical valuations and,

arguably most importantly, in absolute terms (even assuming zero long-term cash flow growth).

Otherwise, investors’ attention is drawn to the similarity between the average valuation calculated

by Edison for FY20 and Newmont’s year-end share price of US$59.89/share.

Sensitivities

Unsurprisingly, Edison’s forecasts and valuation of Newmont are most sensitive to our assumptions

regarding the gold price. Within this context, there is plenty of scope for prices to diverge from those

predicted as a result of speculative activity. Should speculative activity match levels last seen in

1980, for example (perhaps as a result of virus mutations, vaccine failures and another round of

government economic stimulus), then we believe that the gold price could reach over US$3,000/oz.

In a worst-case scenario (eg conditions – and positive real interest rates, in particular – equating to

those last seen in 2001), then we estimate that the gold price could fall as low as US$1,099/oz in

real (2021) terms – albeit we recognise that there would inevitably have to be a long period of

‘normalisation’ before such conditions could be achieved. Within this context, it is worth noting that

the gold bull market of the 1970s did not peak until real interest rates in the US exceeded 4% on a

sustainable basis in late 1980. Alternatively, assuming that 2020 equates to 2012 (the peak year for

gold in the post financial crisis era), then we estimate that a worst-case scenario would be for the

gold price to fall to US$1,392/oz over the next two years – 24.3% below current levels but

nevertheless still comfortably in excess of the US$1,200/oz price around which Newmont conducts

its planning. Inevitably, which scenario transpires will depend much on the future course of COVID-

19 and the anti-coronavirus vaccines currently being rolled out around the world.

While Edison has considered specific gold price and cost scenarios in Exhibit 21 and Exhibit 22, the

following table provides an indication of the sensitivity of a number of profitability and cash flow

measures to specific changes not only in the gold price, but also the prices of Newmont’s other co-

and by-product metals over the course of the next three years:

Exhibit 28: Newmont profitability and cash flow sensitivity (%) to metals price changes (%)

FY21e FY22e FY23e Measure FY21e FY22e FY23e

-10% Gold price change (%) +10%

-15.5 -16.7 -17.3 EBITDA (US$m) 15.5 16.7 17.3

-31.3 -36.3 -42.1 EPS (US$/share) 32.9 39.7 46.2

-12.8 -17.3 -19.8 Operational cash flow per share (US$/share) 13.5 18.9 21.7

-10% Silver price change (%) +10%

-0.8 -1.0 -1.0 EBITDA (US$m) 0.8 1.0 1.0

-1.6 -2.1 -2.5 EPS (US$/share) 1.6 2.1 2.5


-10% Copper price change (%) +10%

-0.4 -0.4 -0.4 EBITDA (US$m) 0.4 0.4 0.4

-0.8 -1.0 -1.2 EPS (US$/share) 0.8 1.0 1.2


-10% Zinc price change (%) +10%

-0.6 -0.7 -0.8 EBITDA (US$m) 0.6 0.7 0.8

-1.2 -1.5 -1.8 EPS (US$/share) 1.2 1.5 1.8


-10% Lead price change (%) +10%

-0.2 -0.2 -0.2 EBITDA (US$m) 0.2 0.2 0.2

-0.4 -0.4 -0.5 EPS (US$/share) 0.4 0.4 0.5




Financials

Newmont had net debt on its balance sheet of US$1.8bn at the end of Q320, which equated to a

gearing (net debt/equity) ratio of 8.2% and a leverage (net debt/[net debt+equity]) ratio of 7.5%. We

expect net debt to remain broadly unchanged as at end-FY20 under the influence of an

accelerating capex programme, such that gearing will be just 9.0% and leverage just 8.3%.

Hereafter, we forecast that Newmont will generate cash at a rate approaching US$5bn per annum,

of which around c US$2.2bn will be expended in capex and a further c US$1.5bn in dividends to

shareholders. On this basis, we would expect Newmont to be net debt free late in FY22, although

this may be delayed, depending on a) the extent to which the company buys back shares under its

share buyback programme (sanctioned, so far, at a rate of US$1bn over the next 18 months) and b)

the extent to which it embarks on new investment initiatives.


Exhibit 29: Financial summary

Accounts: US GAAP, year-end: December, US$m 2018 2019 2020e 2021e 2022e 2023e 2024e 2025e

INCOME STATEMENT

Total revenues 7,253 9,740 11,492 12,737 12,510 12,003 12,496 12,158

Cost of sales (4,093) (5,195) (5,032) (5,432) (5,222) (5,208) (5,604) (5,609)

Gross profit 3,160 4,545 6,460 7,305 7,288 6,796 6,892 6,549

SG&A (expenses) (244) (313) (265) (260) (260) (260) (260) (260)

R&D costs (350) (415) (333) (390) (390) (390) 0 0

Other income/(expense) (406) (253) (589) (331) (331) (331) (215) (213)

Exceptionals and adjustments (424) 2,210 364 0 0 0 0 0

Depreciation and amortisation (1,215) (1,960) (2,274) (2,438) (2,571) (2,680) (2,891) (2,772)

Reported EBIT 945 3,994 3,593 3,887 3,736 3,135 3,526 3,303

Finance income/(expense) (207) (301) (310) (275) (27) 342 10 24

Other income/(expense) 0 0 0 0 0 0 0 0

Exceptionals and adjustments 0 0 0 0 0 0 0 0

Reported PBT 738 3,693 3,283 3,612 3,709 3,477 3,536 3,327

Income tax expense (includes exceptionals) (419) (737) (716) (1,348) (1,281) (1,059) (1,097) (1,087)

Reported net income 380 2,884 2,712 2,263 2,428 2,419 2,440 2,240

Basic average number of shares, m 533 735 806 802 802 802 802 802

Basic EPS (US$) 0.6 3.8 3.3 2.7 2.9 3.0 3.0 2.7

Adjusted EBITDA 2,584 3,744 5,503 6,325 6,307 5,815 6,417 6,075

Adjusted EBIT 1,369 1,784 3,229 3,887 3,736 3,135 3,526 3,303

Adjusted PBT 1,162 1,483 2,919 3,612 3,709 3,477 3,536 3,327

Adjusted EPS (US$) 1.35 1.33 2.40 2.73 2.92 2.96 2.96 2.65

Adjusted diluted EPS (US$) 1.34 1.33 2.38 2.71 2.90 2.94 2.94 2.63

BALANCE SHEET

Property, plant and equipment 12,258 25,276 23,330 22,794 22,622 22,243 20,851 19,279

Goodwill 58 2,674 2,674 2,674 2,674 2,674 2,674 2,674

Intangible assets 0 0 0 0 0 0 0 0

Other non-current assets 3,122 5,752 6,022 6,022 6,022 6,022 6,022 6,022

Total non-current assets 15,438 33,702 32,026 31,490 31,318 30,939 29,547 27,975

Cash and equivalents 3,397 2,243 4,735 5,275 6,163 7,403 10,071 13,086

Inventories 630 1,014 1,074 1,190 1,169 1,122 1,168 1,136

Trade and other receivables 254 373 346 384 377 362 377 366

Other current assets 996 2,642 2,831 2,831 2,831 2,831 2,831 2,831

Total current assets 5,277 6,272 8,987 9,681 10,540 11,717 14,447 17,420

Non-current loans and borrowings 3,608 6,734 6,669 6,119 5,627 5,213 5,213 5,213

Other non-current liabilities 3,808 8,438 8,502 8,524 8,547 8,569 8,592 8,614

Total non-current liabilities 7,416 15,172 15,171 14,643 14,174 13,782 13,805 13,827

Trade and other payables 303 539 454 490 471 469 505 506

Current loans and borrowings 653 100 100 100 100 100 100 100

Other current liabilities 831 1,746 1,686 1,686 1,686 1,686 1,686 1,686

Total current liabilities 1,787 2,385 2,240 2,276 2,257 2,255 2,291 2,292

Equity attributable to company 10,502 21,420 22,511 23,056 24,118 25,212 26,300 27,143

Non-controlling interest 1,010 997 1,091 1,195 1,310 1,407 1,598 2,134

CASH FLOW STATEMENT

Profit for the year 380 2,884 2,712 2,263 2,428 2,419 2,440 2,240

Taxation expenses 386 832 889 1,490 1,429 1,229 1,263 1,202

Profit before tax 0 0 0 0 0 0 0 0

Net finance expenses 207 301 310 275 27 (342) (10) (24)

EBIT 0 0 0 0 0 0 0 0

Depreciation and amortisation 1,215 1,960 2,274 2,438 2,571 2,680 2,891 2,772

Share based payments 76 97 73 0 0 0 0 0

Other adjustments 749 (2,100) (489) 215 215 215 215 213

Movements in working capital (743) (309) (224) (311) (183) (131) (217) (149)

Interest paid / received (207) (301) (310) (275) (27) 342 10 24

Income taxes paid (236) (498) (961) (1,490) (1,429) (1,229) (1,263) (1,202)

Cash from operations (CFO) 1,827 2,866 4,274 4,605 5,031 5,182 5,329 5,076

Capex (1,032) (1,463) (1,466) (1,901) (2,400) (2,300) (1,500) (1,200)

Acquisitions & disposals net (98) 224 1,442 0 0 0 0 0

Other investing activities (47) 13 (33) 0 0 0 0 0

Cash used in investing activities (CFIA) (1,177) (1,226) (57) (1,901) (2,400) (2,300) (1,500) (1,200)

Net proceeds from issue of shares (98) (479) (521) 0 0 0 0 0

Movements in debt 0 (1,186) 0 (550) (492) (414) 0 0

Dividends paid (301) (889) (1,191) (1,699) (1,329) (1,306) (1,320) (1,352)

Other financing activities (56) (223) (13) 85 77 77 160 490

Cash from financing activities (CFF) (455) (2,777) (1,725) (2,164) (1,743) (1,642) (1,160) (861)

Currency translation differences and other (4) (3) 0 0 0 0 0 0

Increase/(decrease) in cash and equivalents 191 (1,140) 2,492 540 887 1,240 2,669 3,015

Currency translation differences and other 0 0 0 0 0 0 0 0

Cash and equivalents at end of period 3,489 2,349 4,841 5,381 6,269 7,509 10,177 13,192

Net (debt)/cash (864) (4,591) (2,034) (944) 436 2,090 4,758 7,773

Movement in net (debt)/cash over period (864) (3,727) 2,557 1,090 1,379 1,654 2,669 3,015

Source: Company accounts, Edison Investment Research


Contact details Revenue by geography

6900 E Layton Avenue Suite 700 Denver Colorado - 80237 US303 863 7414 www.newmont.com

Management team

President & CEO: Tom Palmer Executive Vice President and COO: Rob Atkinson

Mr Palmer brings extensive experience leading teams and delivering production

while implementing safety culture programmes and improving diversity. Over a career spanning 20 years, he worked in a variety of roles across a number of commodities at Rio Tinto, including general manager, technology for the bauxite & alumina business, general manager, operations at Hail Creek and general manager, asset management at Palabora in South Africa. Immediately prior to joining Newmont, he was the COO of Rio’s flagship iron ore mines in the Pilbara in Australia. He earned a Master of Engineering Science degree and a bachelor of engineering degree from Monash University in Melbourne, Australia.

Mr Atkinson has over 25 years of mining industry experience in a variety of roles

in a variety of jurisdictions. Prior to joining Newmont in June 2019, he was head of productivity and technical support at Rio Tinto responsible for the company's US$5bn productivity improvement strategy and COO of its copper division. During his tenure at Rio, he oversaw the establishment of three technical centres of excellence (Surface Mining, Underground Mining and Processing). Before that he was CEO of Energy Resources of Australia and served as general manager of Weipa Bauxite. He holds a first-class honours degree in mining & petroleum engineering from Strathclyde University in Scotland.

Executive Vice President and CFO: Nancy K Buese Executive Vice President Strategic Development: Randy Engel

Ms Buese was appointed executive vice president and CFO on 31 October 2016, bringing 25 years of experience in finance leadership roles and joining Newmont having most recently served as executive VP and CFO for MPLX and, before that, as executive VP and CEO of MarkWest for 11 years. She is a former partner with Ernst & Young and worked in public accounting for 12 years, having earned a degree in accounting and business administration from the University of Kansas and is a certified public accountant.

Mr Engel has been with Newmont since 1994, serving in various capacities in the areas of business planning, corporate treasury and human resources. After having served as senior vice president, strategy and corporate development for a year, he was elected executive vice president, strategic development in September 2008. He holds a Master of Science degree in finance from the University of Denver and a bachelor’s degree in business administration from the University of Colorado.

Principal shareholders (%)

BlackRock 12.12

Vanguard Group 9.23

State Street 4.50

Van Eck Associates 4.47

FMR LLC 3.56

First Eagle Investment Management 2.42

Deutsche Bank 2.40

21% 20% 22% 15% 22%%

North America South America Australia Africa Nevada


General disclaimer and copyright

This report has been commissioned by Newmont Corporation and prepared and issued by Edison, in consideration of a fee payable by Newmont Corporation. Edison Investment Research standard fees are £49,500 pa for

the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision

of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of

this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information

or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other

factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in

connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or

prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of

investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any

positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to

Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial

Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice

given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having

regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like

instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the

purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the

topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in

relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is

intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making

an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A

marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any

prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article

19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49

of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be

distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further dist ributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide

publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not

offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that

any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Documents

Newmont Corporation Initiation of coverage · 2021. 2. 9. · Newmont Corporation | 9 February 2021 3 Valuation: US$76.34/share and rising Based on nine measures across three methodologies,