Newmont (NEM) Q4 2015 earnings summary

Executive summary

• 2015 ended with improved operating safety, efficiency and balance-sheet resilience despite weak metal prices and subdued economic growth; cash generation and production increased.

• Full Potential initiatives generated nearly $800M of performance improvements; favorable oil prices and Australian-dollar exchange rates added tailwinds of more than $350M.

Financial highlights

• Revenue rose 6% YoY to $7.729B as higher gold and copper sales volumes more than offset lower realized prices; attributable net income was $220M vs. $508M.

• Adjusted net income was $507M, or $0.98/share, vs. $545M, or $1.09/share; adjusted EBITDA increased 29% to $2.732B.

• Q4 revenue was $1.816B and continuing-operations loss attributable to shareholders was $247M, or $0.48/share; significant after-tax items included $130M in tax adjustments and $94M in reclamation charges.

• Continuing operating cash flow was $2.157B and free cash flow $756M; both improved from 2014, with free cash flow more than doubling.

• Costs applicable to sales fell 3% to $4.312B, supported by lower unit costs and divestitures of higher-cost assets, partly offset by increased production.

Outlook and guidance

• 2016 guidance was improved in Dec. 2015; longer-term targets include 4.5–5.0M gold oz/year and gold AISC below $1,000/oz.

• Planning uses a $900/oz gold price; stable or rising prices support growth funding, debt reduction and competitive dividends, while lower prices could prompt cost optimization and delayed investment.

• Merian was progressing on time and below budget, targeting commercial production in Q4 2016; Long Canyon was under construction, targeting commercial production in H1 2017.

• Planned growth includes higher-margin ounces from Merian, Long Canyon, CC&V and Tanami, with further pipeline work at Carlin and Ahafo.