Newmont Corporation: A Good Quarter Overall With Record Free Cash Flow
The well-known gold mining company Newmont Corporation (NYSE:NEM) is based in the United States and operates in North America, South America, Australia, and Africa. This article is an update to one I wrote on March 18, 2025.
As the top producer of gold in the world, Newmont Corporation also holds one of the biggest gold reserves in the business. The company reported 134.1 million ounces of attributable gold reserves at the end of 2024. About 125.5 million ounces of this total are regarded as Tier 1 reserves, which represent long-lived, high-quality assets with robust margins and minimal geopolitical risk.In addition to its gold holdings, Newmont has sizable reserves of byproduct metals. The company's attributable reserves of metals, including copper, silver, lead, zinc, and molybdenum, total about 89.5 million gold equivalent ounces.
Warning! GuruFocus has detected 7 Warning Signs with NEM.
The second quarter of 2025 earnings was announced by Newmont Corporation on July 24, 2025. The following shows the revenue per metal for 2Q25. Gold accounted for 86.2% of the total revenue.
As of the second quarter of 2025, Newmont Corporation remains the world leader in gold production, with a targeted portfolio of about ten Tier 1 producing mines. These include large operations that are renowned for their size, longevity, and low cost profiles, such as Tanami, Boddington, Ahafo, Penasquito, and Cadia. In 2025, Newmont completed its strategic divestiture program, selling six non-core assets, including Musselwhite, Eleonore, and Akyem. These sales generated up to $4.3 billion in proceeds, strengthening the company's balance sheet. This move allowed Newmont to focus on core operations while returning value to shareholders through disciplined portfolio management and cash flow optimization.
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Newmont also holds 38.5% of Nevada Gold Mines, a joint venture with Barrick Gold (NYSE:B) that consists of several lucrative locations in Nevada. By concentrating more on high-quality operations following the recent sale of non-core assets, Newmont has reaffirmed its dedication to ethical mining, operational excellence, and long-term value creation for stakeholders and shareholders. The mines that have produced gold in 2Q25 for Newmont are listed below.
Note: Others in the chart represent the gold production residual from the mines sold.
Newmont produced about 1.478 million ounces of gold in 2Q25, which was marginally less than the previous year because of recent divestitures of more expensive, non-core assets, which was an excellent move in my opinion.
In 2Q25, Newmont faced a mixed quarter. While higher grades at Cadia and Penasquito boosted output, challenges emerged elsewhere. A serious safety incident at the Red Chris project halted operations after two underground collapses. Meanwhile, the Merian mine in Suriname faced a 48% production drop and rising costs, prompting layoffs of up to 15% of staff.
Despite these setbacks, key operations like Nevada Gold Mines and Pueblo Viejo performed well, positioning Newmont for a stronger second half. The gold equivalent production was 1.87 million GEOs, with 393,000 gold equivalent ounces this quarter from co-product metals.
The company profited from a robust gold market despite the decline in production, selling its gold at an average realized price of roughly $3,320 per ounce, which was a considerable increase over the previous year, as we can see below:
Gold prices are expected to remain strong through the second half of 2025 and into 2026, driven by a mix of economic uncertainty and structural demand. Central banks, especially in emerging markets, continue to accumulate gold as a hedge against inflation and currency risk. At the same time, constrained mine supply and high sovereign debt levels in major economies support gold's appeal. With real interest rates still low and the U.S. dollar under pressure, gold retains its position as a preferred safe-haven asset.
Adding to the bullish sentiment, the U.S. labor market showed unexpected weakness in July. Only 73,000 jobs were created, which is far below expectations, and, more importantly, downward revisions to previous months signaled a significant slowdown. Despite Jerome Powell's wait-and-see stance, this labor softness raises the possibility of rate cuts by the Federal Reserve, possibly as early as September. Lower rates would probably help gold prices and further devalue the dollar. When taken as a whole, these patterns suggest that the gold market will remain strong into 2026.
For Newmont's stock, rising gold prices are a potent tailwind that boosts investor appeal and profitability. Since the price of gold is significantly higher than the company's all-in sustaining costs, which in 2Q25 averaged $1,593 per ounce (see chart below), Newmont enjoys remarkable margins, which support robust cash flow and profits.
However, a tightening operating environment is indicated by declining production volumes and rising costs, which puts pressure on competitiveness and efficiency. Despite these significant obstacles, Newmont is still in a strong position to profit from record gold prices because of its scale and strong margin. The market's perception of this strengthens the stock's long-term investment case as a strong combination of upside and resilience.
For those who have concerns about NEM's performance compared to gold, it's important to understand the differences between gold mining stocks and physical gold. Gold mining stocks represent ownership in companies that explore, extract, and sell gold. The value of these stocks is influenced by gold prices, the performance of the mining company, and production costs. In contrast, gold bullion refers to physical gold, such as bars or coins, which is valued solely based on its metal content. Investing in bullion provides direct exposure to gold, while investing in stocks involves additional operational and market risks.
2. Critical analysis of the second quarter results.
I saw Newmont's second quarter of 2025 as a turning point for the company and the gold industry as a whole. The huge increase in revenue, which came in at $5.317 billion, well above expectations, was what most impressed me. Revenue topped $5 billion for the third consecutive quarter.
Newmont reported a strong net income of $2.061 billion, or $1.85 per diluted share, in 2Q25, marking a $170 million increase from the previous quarter. Adjusted net income was $1.6 billion, or $1.43 per share, comfortably beating analyst expectations. A notable $699 million gain from asset divestments boosted reported profits but is considered a one-time event.
It wasn't just luck; it was powered by an average gold price of around $3,320 per ounce, a figure that would have seemed unrealistic just a year ago. That pricing strength, combined with operational discipline, albeit with some technical issues, helped Newmont unlock serious value.
But even more impressive was the company's record free cash flow of $1.71 billion (see chart below). In a capital-intensive business like mining, that kind of liquidity is rare and crucial. It provides Newmont options: reward shareholders, reduce debt, or reinvest in high-return projects. And the business is doing something about it. The company made it apparent that it is confident in its strategy and financial situation this quarter by authorizing a $3 billion share buyback in addition to announcing a quarterly dividend of $0.25 per share.
The fact that Newmont was still lowering its net debt to $480 million was heartening (see chart below). After several asset sales and careful capital management, net debt has significantly decreased. The company is making its balance sheet more flexible, which is exactly what it needs in a volatile commodity environment.
To me, 2Q25 wasn't just about strong gold prices. It was about what Newmont did with them. Solid revenue, record cash flow, and a cleaner balance sheet show this is a company not just surviving the gold cycle but mastering it.
3. Technical analysis: Ascending Channel Pattern.
Note: The chart has been adjusted to account for the dividend.
Newmont is currently trading within an ascending channel pattern, with resistance at $70.3 and support at $64. The relative strength index (RSI) is at 71, indicating an overbought situation with sell signal flashing. Please look at the chart above for more information.
For 5060% of your position, I advise using a Last-In-First-Out (LIFO) approach. With a second resistance at $72, set your sell target price between $69.75 and $71. It is advisable to use a LIFO strategy for the majority of your investment due to the current level of market uncertainty. Most people agree that an ascending channel is a bullish continuation pattern that forms when the price continuously increases between a support level and a resistance level. However, it often ends with a breakdown, which is unlikely now but could occur in a few weeks.
Making decisions has become increasingly challenging in the current climate of extreme volatility and uncertainty, underscoring the importance of maintaining a healthy cash position.
A wise trading strategy is to watch for the next significant resistance level, which is close to $71, and take small profits gradually above the $69.75 level. On the other hand, a more desirable accumulation zone between $65 and $63 might appear if a breakdown pattern develops.
Starting a modest position around the $65 support level may make sense for those looking for early exposure, particularly given the increasing likelihood that the Federal Reserve will lower interest rates in September, which could lead to a rebound. However, a more serious accumulation should be considered between $62 and $59.4.
Note: It is essential to frequently update the TA chart to remain relevant, as we operate in an extremely volatile environment.
This article first appeared on GuruFocus.
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