Fitch Ratings has assigned an 'A-' rating to Newmont Corporation's proposed senior unsecured note issuance comprised of: $1 billion two-year notes and $1 billion 10-year notes.
Proceeds of the new notes are to be used to repay the outstanding balance under the Newmont revolving credit facility and for general corporate purposes.
The ratings reflect Newmont's leading size, scale and operational diversification, relatively low jurisdictional risk, strong liquidity and modest leverage.
Key Rating Drivers
Leading Size/Scale: Newmont's unrivalled size, scale and operating diversification result in a business profile in the 'A' category. The company's closest peers, Barrick Gold Corporation (NR) and Agnico Eagle Mines Limited (BBB+/Stable), have lower annual production, fewer operations and fewer mines with more than 300,000 ounces of gold production per year.
De-leveraging Portfolio Optimization: Fitch believes Newmont's focus on tier one assets and projects will result in decreased net debt from proceeds from the sale of non-core assets, lower over-all cash costs, and optimization of maintenance and development capital spending. Fitch expects gross debt to decline to about $8 billion after the repayment of the new two-year notes and for net debt to decline to roughly $5 billion given the company's liquidity targets of a minimum $3 billion in cash and $4 billion in availability under its $4 billion revolving credit facility.
Development Spending to Increase Production: Newmont guides to production increasing to 6.7 million ounces by 2028 from 5.5 million ounces in 2023 and for average costs attributable to sales declining to $900/oz. in 2028 from $1,050/oz. in 2023. Guidance for non-core asset gold production in 2024 is 1.3 million ounces with an average costs attributable to sales of $1,400/oz.
Fitch expects Newmont's development capital spending to average $1.3 billion per year over the next five years. Key projects include: stripping at Boddington to result in strong gold and copper grades starting in 2026; the completion of the second expansion at Tanami; stripping at Penasquito's Penasco Pit to bring forward a higher proportion of gold ounces in 2025; the completion of the Ahafo North mine coming on line in 2025; the commissioning of the second block cave at Cadia; and additional production at Lihir beginning in 2025 from simplifying the mine plan and improved operating performance.
Average Cost Profile: Fitch expects Newmont to maintain an average overall cost position in the second quartile of the global cost curve, noting the curve is relatively flat. The consolidated average of Newmont's 2024 cost attributable to sales guidance for its core assets is $1,011/oz.
Gold Price Sensitivity: Fitch forecasts EBITDA at $5.0 billion in 2024. Newmont states that a $100/oz. change in the gold price from a $1,900/oz. assumption would change revenues by $675 million. Fitch's gold price assumptions are $1,800/oz. in 2024, $1,600/oz. in 2025 and $1,500/oz. in 2026. Fitch's mid-cycle assumption is $1,500/oz., which compares to the average over the past three years of $1,847/oz. and YTD average of about $2,030/oz.
Conservative Financial Profile: Newmont's financial flexibility and financial structure are consistent with the 'A-' category. Newmont aims to self-fund development projects and make strategic partnerships focused on profitable growth, while reducing debt and returning cash to shareholders.
Newmont's annualized fixed dividend is $1.00/share, and the company has a $1 billion share repurchase program to be executed over the next 24 months with excess free cash flow and proceeds from asset divestitures. Newmont has a net debt to adjusted EBITDA target of less than 1.0x. The ratio was calculated by Newmont as 1.1x as of Dec. 31, 2023.
Derivation Summary
Newmont is the largest gold producer by volume, with 2023 consolidated gold production of 5.5 million ounces from 12 managed operations and its 38.5% interest in the Nevada Gold Mines JV (with Barrick). Newmont also has a 40% interest in the Pueblo Viejo mine (with Barrick), accounted for as an equity investment, that had 2023 production of 224,000 ounces (attributable basis).
Going forward, the company will focus on its 10 tier one operations, which are guided to produce 5.3 million ounces of gold on a consolidated basis in 2024 increasing to 6.7 million ounces by 2028. This compares with Agnico Eagle Mines Limited's (BBB+/Stable) 2024 gold production guidance of 3.35- 3.55 million ounces and Kinross Gold Corporation's (BBB/Stable) 2024 gold equivalent production guidance of 2.1 million ounces (+/- 5%).
Newmont's 2024 all-in sustaining costs per ounce guidance is $1,400 compared with Agnico Eagle's all-in sustaining costs per ounce guidance of $1,200-$1,250, Kinross' all-in sustaining costs of sales per gold equivalent ounce guidance of $1,360 (+/- 5%) and AngloGold Ashanti plc's (BBB-/Negative) all-in sustaining costs per ounce guidance of $1,500 - $1,600. Newmont expects costs to drop beginning in 2025 with the end of stripping campaigns at Penasquito and Boddington and to drop further thereafter with completion of additional projects.
Newmont's EBITDA net leverage was about 0.7x compared with Agnico Eagle at 0.7x and Kinross at 1.1x, as of Sept. 30, 2023. Fitch expects Newmont's leverage to be higher in 2024 but for the company to manage to its net debt/EBITDA target of 1.0x or below thereafter.
Key Assumptions
Gold prices at $1,800/oz. in 2024; $1,600/oz. in 2025; and $1,500/oz. thereafter.
2024 production at guidance of 6.6 million ounces on a consolidated basis.
2024 Capex at guidance $3.1 billion declining thereafter to roughly $2.8 billion per year.
Dividends and share repurchases consistent with shareholder return framework.
No change additional change in debt after the new notes are issued.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
An upgrade is unlikely given high concentration in a single commodity.
Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
EBITDA leverage sustained above 1.5x or EBITDA net leverage sustained above 1.0x;
All-in sustaining cost position increases above the low third quartile;
Material shift in production toward higher risk countries;
Deviation from moderate financial policies through price and investment cycles, including sustained negative FCF linked to more ambitious dividend or share buyback programs;
Inability to maintain average mine life above 10 years.
Liquidity and Debt Structure
Robust Liquidity: As of Dec. 31, 2023, Newmont had cash on hand of $3.0 billion and full availability under the $3.0 billion revolving credit facility due March 2026. The facility was amended to increase the size to $4 billion and extend the maturity to Feb. 15, 2029. Financial flexibility benefits from positive FCF before dividends, likelihood of asset sales proceeds to repay the $1 billion new notes due 2026, scant other near-term maturities and broad capital market access. The revolver has a net debt/capitalization maximum covenant of 62.5% (complied at 18% as of Sept. 30, 2023).
Issuer Profile
Denver, CO-based Newmont Corporation is the world's largest gold producer, with 2023 consolidated gold production of roughly 5.5 million ounces and attributable proven and probable gold reserves of 135.9 million ounces. It has operations in North America, South America, Australia, Papua New Guinea and Ghana.
Date of Relevant Committee
03 November 2023
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
NEWMONT CORPORATION 
