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ACF Equity Research

Research from ACF Equity Research

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Thematic (Sector/Industry)

Silver (Ag) is half store of value and half industrial metal. A hawkish Federal Reserve and spiking bond yields will create significant headwinds for the Ag price 2H22E. Any expectations for global recession, leading to an industrial cycle downturn will also push the silver price down. In 2H22E we assess that both weakening industrial activity (&gt;50% of global silver demand) and monetary policy trends will exert downward pressure on silver’s price. Beyond YE22E the physical silver supply deficit remains a positive for the silver price. As the world transitions to greener forms of energy and transport, the commensurate increasing use of silver in electronics and photovoltaics should support structural demand growth and so raise silver’s mid-term price beyond YE22E because of the structural silver supply deficit.

Silver (Ag) is half store of value and half industrial metal. A hawkish Federal Reserve and spiking bond yields will create significant headwinds for the Ag price 2H22E. Any expectations for global recession, leading to an industrial cycle downturn will also push the silver price down. In 2H22E we assess that both weakening industrial activity (&gt;50% of global silver demand) and monetary policy trends will exert downward pressure on silver’s price. Beyond YE22E the physical silver supply deficit remains a positive for the silver price. As the world transitions to greener forms of energy and transport, the commensurate increasing use of silver in electronics and photovoltaics should support structural demand growth and so raise silver’s mid-term price beyond YE22E because of the structural silver supply deficit.

Silver Thematic ACF Equity Research 11082022

Leading International Investment Research, Edison Investment Research

Edison Investment Research

Leading International Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

Equity Bottom-Up

Newmont’s Q222 results are scheduled for release on 25 July. This report updates our forecasts for Q2–Q422 for metals prices and production costs, as well as output from Nevada Gold Mines (NGM) and Pueblo Viejo, which were announced by Barrick on 14 July.

Newmont’s Q222 results are scheduled for release on 25 July. This report updates our forecasts for Q2–Q422 for metals prices and production costs, as well as output from Nevada Gold Mines (NGM) and Pueblo Viejo, which were announced by Barrick on 14 July. 

Newmont Corporation - A high-dividend safe haven

Despite slightly lower production and higher costs in Q122, Newmont’s financial performance was within 6% of our prior expectations and exceeded them once adjusted for a one-off, exceptional pension settlement charge. As a result, despite a 6.5% lower prevailing gold price than at the time of our last note published on 21 April, we have only modestly reduced our adjusted net EPS forecast for the year by just 6.4%.

Despite slightly lower production and higher costs in Q122, Newmont’s financial performance was within 6% of our prior expectations and exceeded them once adjusted for a one-off, exceptional pension settlement charge. As a result, despite a 6.5% lower prevailing gold price than at the time of our last note published on 21 April, we have only modestly reduced our adjusted net EPS forecast for the year by just 6.4%.

Newmont Corporation - Empowering sustainability

After a fourth quarter result that was 13.7% ahead of our expectations, we expect Newmont’s financial performance to be restrained in the first two quarters of FY22, principally as a result of lingering constraints owing to the coronavirus pandemic. However, we believe that it will then pick up again strongly and, at current gold prices, we have therefore upgraded our FY22 basic adjusted net EPS forecast by 7.8% (Exhibit 6).

After a fourth quarter result that was 13.7% ahead of our expectations, we expect Newmont’s financial performance to be restrained in the first two quarters of FY22, principally as a result of lingering constraints owing to the coronavirus pandemic. However, we believe that it will then pick up again strongly and, at current gold prices, we have therefore upgraded our FY22 basic adjusted net EPS forecast by 7.8% (Exhibit 6).

Newmont Corporation - Building it piece by piece

Newmont’s Q321 results were closely in line with our prior forecasts (see Exhibits 1 and 2), albeit with relative outperformance from its Australian operations largely offsetting underperformance from its North American ones, where output continued to be adversely affected by lingering coronavirus disruptions. In conjunction with its Q3 results, Newmont updated its guidance for FY21 to gold production of 6.0Moz (cf 6.2–6.8Moz previously) at a cost applicable to sales of US$790/oz (cf US$750/oz previously). However, this was always likely after its announcement of 5 October outlining some of the challenges faced in commissioning the autonomous haulage system at Boddington, including severe weather and heavy rainfall. Nevertheless, performance in Q421 is still expected to show a material improvement over the first three quarters of the year, as the rains abate in Western Australia and Africa, and North America returns to a more normal operating environment. As a result, adjustments to our forecasts for Q421 and FY21 in the wake of Q3 results have been negligible (see Exhibit 4).

Newmont’s Q321 results were closely in line with our prior forecasts (see Exhibits 1 and 2), albeit with relative outperformance from its Australian operations largely offsetting underperformance from its North American ones, where output continued to be adversely affected by lingering coronavirus disruptions. In conjunction with its Q3 results, Newmont updated its guidance for FY21 to gold production of 6.0Moz (cf 6.2–6.8Moz previously) at a cost applicable to sales of US$790/oz (cf US$750/oz previously). However, this was always likely after its announcement of 5 October outlining some of the challenges faced in commissioning the autonomous haulage system at Boddington, including severe weather and heavy rainfall. Nevertheless, performance in Q421 is still expected to show a material improvement over the first three quarters of the year, as the rains abate in Western Australia and Africa, and North America returns to a more normal operating environment. As a result, adjustments to our forecasts for Q421 and FY21 in the wake of Q3 results have been negligible (see Exhibit 4).

Newmont Corporation - Q321 results in line with prior expectations

United States

Newmont Mining Corporation acquires, explores, and develops mineral properties. The Company produces gold from operations in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico. Newmont also mines and processes copper in Indonesia.

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Newmont Mining (NEM US)

Silver Thematic ACF Equity Research 11082022

Silver (Ag) is half store of value and half industrial metal. A hawkish Federal Reserve and spiking bond yields will create significant headwinds...

ACF Equity Research

Newmont Corporation - A high-dividend safe haven

Newmont’s Q222 results are scheduled for release on 25 July. This report updates our forecasts for Q2–Q422 for metals prices and production costs,...

Edison Investment Research

Newmont Corporation - Empowering sustainability

Despite slightly lower production and higher costs in Q122, Newmont’s financial performance was within 6% of our prior expectations and exceeded...

Edison Investment Research

Newmont Corporation - Building it piece by piece

After a fourth quarter result that was 13.7% ahead of our expectations, we expect Newmont’s financial performance to be restrained in the first two...

Edison Investment Research

Newmont Corporation - Q321 results in line with prior expectations

Newmont’s Q321 results were closely in line with our prior forecasts (see Exhibits 1 and 2), albeit with relative outperformance from its...

Edison Investment Research

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Market Cap (USDm)

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