Newmont Goldcorp Corporation NEM entered an agreement to sell the Red Lake Complex in Ontario, Canada, to Evolution Mining Limited gold producer based in Australia. Newmont Goldcorp expects to receive $375 million in cash and contingent payments of up to $100 million on completion of the deal.
The transaction, which is anticipated to close in the first quarter of 2020, strengthens the company’s balance sheet, streamlines its assets base and provides continued exposure to resource discoveries at Red Lake.
Evolution Mining will pay Newmont Goldcorp $20 million for each 1 million ounces of new gold resources added to the Red Lake resource base over 15 years, under the terms of the $100-million contingent payment. The contingent payment is applicable for the first 5 million ounces of new resources.
Newmont Goldcorp plans to use the proceeds from the transaction to aid its capital allocation priorities of returning cash to shareholders, investing in word-class portfolio and maintaining an investment-grade balance sheet.
Shares of the company have gained 16.3% in the past year compared with 52.1% growth of the industry.
Newmont Goldcorp reported net income from continuing operations of $2,226 million or $2.71 per share in third-quarter 2019 against net loss of $161 million or 31 cents per share in the year-ago quarter. Its adjusted earnings per share of 36 cents missed the Zacks Consensus Estimate of 40 cents.
The company’s revenues were $2,713 million in the third quarter, up 57.2% year over year. However, the top line lagged the Zacks Consensus Estimate of $3,016.9 million.
Newmont Goldcorp ended the third quarter with $2.7 billion of consolidated cash. Its net debt was $4.8 billion, up from $1.1 billion in the year-ago quarter.
The company expects attributable gold production of 6.3 million ounces for 2019, down from 6.5 million ounces mentioned earlier.
For 2019, all-in sustaining costs for gold are projected to be $965 per ounce, down from $975 stated earlier. Costs applicable to sales for gold are projected at $715 per ounce compared with $735 mentioned previously.
Newmont Mining Corporation Price and Consensus
Newmont Mining Corporation price-consensus-chart | Newmont Mining Corporation Quote
Zacks Rank & Stocks to Consider
Newmont Goldcorp currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include Kirkland Lake Gold Ltd. KL, Agnico Eagle Mines Limited AEM and Franco-Nevada Corporation FNV.
Kirkland Lake Gold has a projected earnings growth rate of 96.3% for the current year. The company’s shares have surged around 105% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Agnico Eagle has a projected earnings growth rate of 168.6% for the current year and a Zacks Rank #2 (Buy). The company’s shares have rallied roughly 66% in a year.
Franco-Nevada has an estimated earnings growth rate of 46.2% for the current year. It presently carries a Zacks Rank #2. The company’s shares have gained roughly 44% in a year.
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