Why is the Newmont share price rocketing 15%?

Man in mining hat with fists raised and eyes closed looking happy and excited about the Newcrest share price

The Newmont Corporation (ASX: NEM) share price is catching the eye on Friday and is on course to end the week in style.

In morning trade, the gold miner’s shares climbed 15% to a new 52-week high of $66.24.

Its shares have eased back a touch since then but remain up 13% at the time of writing.

Why is the Newmont share price rocketing?

Investors have been buying the gold miner’s shares this morning after its released a fourth quarter update that was ahead of expectations.

According to the release, Newmont’s attributable gold production decreased 4% to 1,675,000 ounces quarter on quarter. This was driven primarily by lower production at Tanami due to a planned mill shutdown and seasonal rainfall impacts. In addition, the ongoing stripping campaigns at Boddington and Akyem weighed on production volumes.

The average realised gold price was US$2,090 for the quarter, which is up US$86 per ounce over the prior quarter. This comprises US$2,082 per ounce of gross price received, a favourable impact of US$19 per ounce mark-to-market on provisionally-priced sales, and reductions of US$11 per ounce for treatment and refining charges.

Newmont’s gold costs applicable to sales (CAS) per ounce was largely flat quarter on quarter to US$1,057 per ounce, whereas its gold all-in sustaining cost (AISC) was also flat at US$1,439 per ounce. The latter means an average margin of US$651 per ounce.

What about profits?

The sum of the above was the company reporting adjusted EBITDA of US$1,694 million, which represents a 23% increase quarter on quarter from US$1,382 million.

And on the bottom line, the Newcrest owner’s adjusted net income was US$630 million or US$0.55 per diluted share. This is up 39.4% and 19.5%, respectively, on the prior quarter. The latter was significantly better than the market was expecting, with the consensus estimate at US$0.36 per share.

This goes some way to explaining why the Newmont share price is taking off today.

Investors may also be pleased with news that the company has finalised the sale of a stream credit facility and offtake agreement for the Fruta del Norte gold mine in Ecuador for US$330 million. This is part of its plan to monetise non-core assets and deliver at least US$2 billion in near-term cash improvements through portfolio optimisation.

Outlook

Looking ahead, the company has reiterated its FY 2024 guidance. It continues to forecast production of 6.9 million ounces of gold and an AISC of US$1,400 per ounce for the 12 months.

Following today’s gain, the gold mining giant’s shares are now up by a very impressive 44% since the start of March. As a comparison, the benchmark ASX 200 index is down approximately 1.5% over the same period.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.