Newmont: A Golden Opportunity?

Newmont is the world’s largest gold mining company and one of the leading players in the global mining industry. Known for its large portfolio of high quality mines in stable countries, the company combines scale, long mine lives, and strong exposure to gold, copper, and other metals. With several growth projects, ongoing exploration around existing mines, and a clear focus on its best assets, Newmont aims to strengthen its position as the leading company in the sector while driving long term growth. The question remains: Does this gold mining leader deserve a spot in your portfolio?

This is not a financial advice. I am not a financial advisor and I only do these post in order to do my own analysis and elaborate about my decisions, especially for my copiers and followers. If you consider investing in any of the ideas I present, you should do your own research or contact a professional financial advisor, as all investing comes with a risk of losing money. You are also more than welcome to copy me

For full disclosure, I should mention that I do not own any shares in Newmont Corporation at the time of writing this analysis. If you would like to copy or view my portfolio, you can find instructions on how to do so here. If you want to purchase shares or fractional shares of Newmont Corporation, you can do so through eToro. eToro is a highly user-friendly platform that allows you to get started on investing with as little as $50.

The Business

Newmont Corporation was founded in 1916 and has grown into the world’s largest gold mining company. The company operates a globally diversified portfolio of large scale mining assets across North and South America, Australia, Africa, and Papua New Guinea. Its business model is centered on finding, developing, and operating long life mines that primarily produce gold, while also producing copper, silver, zinc, and lead. This means Newmont manages the full process from exploring the ground for valuable resources to building mines, extracting the metals, processing them, and selling the final output to refiners and smelters. By controlling the entire process, the company is able to oversee quality, improve efficiency, and manage costs throughout the life of each mine. Gold is by far the most important part of the business and accounts for the majority of revenue, while the production of other metals provides additional income and helps lower the overall cost of producing gold. Most of Newmont’s gold is initially produced in the form of doré bars, which are semi refined bars containing mainly gold and silver that are later refined into pure bullion. In addition to gold, Newmont also produces copper and other metal concentrates that are sold for further processing. This gives the company exposure not only to gold demand from investors and jewelry markets but also to long term trends such as electrification and infrastructure spending through copper demand. Newmont’s operations are built around a portfolio of high quality, long life mines such as Cadia, Boddington, Tanami, Lihir, Ahafo, and its interest in Nevada Gold Mines. These assets have large reserves and long production lives, which gives the company good visibility into future production and cash flow. At the end of 2025, Newmont reported more than 118 million ounces of proven and probable gold reserves, making it the reserve leader among publicly listed gold companies. This large reserve base is a major strength because it means Newmont has many years of future production already identified. The acquisition of Newcrest further strengthened the business by adding world class assets and increasing exposure to copper, while the sale of non core assets has helped management focus on the highest quality mines and projects. This disciplined approach improves the overall quality of the portfolio and supports stronger long term returns. Newmont’s competitive moat is primarily built on scale, asset quality, financial strength, and geographic diversification. The mining industry itself creates high barriers to entry because building a major mine requires enormous upfront investments in exploration, land, equipment, infrastructure, environmental approvals, and technical expertise. These high capital requirements make it extremely difficult for new competitors to build a portfolio that can compete with Newmont. Scale is one of the company’s most important competitive advantages. As the largest player in the gold mining industry, Newmont benefits from economies of scale in purchasing equipment, working with suppliers, and managing large projects. Its size also gives it easier access to financing at lower costs than smaller mining companies, which is very important in an industry where new projects can cost billions of dollars. This financial strength gives Newmont the flexibility to fund expansions and acquisitions without relying too heavily on issuing new shares. Another important advantage is the quality and diversification of its mine portfolio. Unlike smaller mining companies that may depend heavily on one or two assets, Newmont operates across several regions and countries, with a significant share of its reserves located in relatively stable countries such as the United States, Canada, and Australia. This reduces the risk that problems in one region, such as political issues, regulatory changes, or operational disruptions, will significantly impact the entire business. The long life of its mines also strengthens the moat because finding new gold deposits is increasingly difficult and expensive. Newmont’s large land position and project pipeline give management flexibility to invest in the most attractive projects depending on gold prices and expected returns. This allows the company to capture more upside when gold prices are strong while remaining resilient during weaker parts of the commodity cycle. The combination of unmatched scale, high quality long life assets, global diversification, and strong financial flexibility creates a competitive position that is difficult for smaller mining companies to replicate.

Management

Natascha Viljoen serves as the CEO of Newmont Corporation, a role she assumed in January 2026 after previously serving as the company’s President and COO. Her appointment marked a historic milestone as she became the first woman to lead Newmont in its more than 100 year history. She brings more than three decades of experience in the global mining industry and is widely recognized for her deep operational expertise, strong focus on safety, and disciplined approach to capital allocation. With a background rooted in engineering and mine operations, Natascha Viljoen’s leadership style is highly aligned with the priorities that matter most in a capital intensive and cyclical industry such as mining. Before becoming CEO, Natascha Viljoen joined Newmont in 2023 as COO and was later promoted to President and COO. In these roles, she was responsible for overseeing the company’s global operations, major projects, studies, and its health, safety, security, and environmental teams. Her promotion to CEO reflects the strong execution she demonstrated in improving operational consistency and portfolio quality during a transformational period for the company, including the integration of Newcrest and the divestiture of non core assets. This hands on operational experience means she entered the CEO role with a deep understanding of Newmont’s asset base, cost structure, and long term project pipeline. Prior to joining Newmont, Natascha Viljoen served as the CEO of Anglo American Platinum, one of the world’s largest platinum producers. During her tenure there, she built a reputation for operational excellence, disciplined capital deployment, and a strong emphasis on safety and sustainability. Earlier in her career, she also held senior leadership positions at BHP and Lonmin, giving her extensive experience across multiple commodities and geographies. This broad background is particularly valuable at Newmont, where managing a global portfolio of complex mining assets requires both technical expertise and strong execution capabilities. Natascha Viljoen holds an engineering degree and an Executive MBA, which together provide a strong combination of technical and business leadership skills. Her background as an engineer gives her a strong technical foundation, which is especially important in a mining company where long term value creation often comes from operational improvements, cost control, and disciplined project development rather than branding or pricing power. Since becoming CEO, Natascha Viljoen has outlined a clear set of strategic priorities that build directly on the work she led as COO. She has emphasized that safety remains the highest priority across the organization, while also embedding efficiency, cost discipline, and capital discipline into everything the company does. She has made it clear that Newmont’s focus is on being the best owner and operator of its assets by driving continuous improvement and greater operational consistency. Another key priority under her leadership is to develop the highest return projects in the portfolio, ensuring that the company has decades of future production ahead of it. At the same time, she has placed a strong emphasis on improving per share metrics and returning capital to shareholders in a predictable manner, which reflects a disciplined and shareholder focused mindset. What stands out about Natascha Viljoen is that she combines deep operational expertise with a clear focus on shareholder returns. In a business like Newmont, where long term success depends heavily on project execution, cost control, reserve replacement, and disciplined capital allocation, these qualities are particularly important. Her experience leading large scale mining businesses across multiple companies and commodities suggests that she is well suited to guide Newmont through its next phase of growth while maintaining a strong focus on efficiency, resilience, and long term value creation. Given her strong operational background and clear priorities around safety, discipline, and shareholder returns, Natascha Viljoen appears well positioned to strengthen Newmont’s position as the leading global gold mining company.

The Numbers

The first number we will look into is the return on invested capital, also known as ROIC. We want to see a 10-year history, with all numbers exceeding 10% in each year. For Newmont, the numbers have historically been underwhelming, although the sharp improvement in the past two years is clearly encouraging. The most important thing to understand is that Newmont operates in an industry where low ROIC is far more common than in consumer, software, or branded goods businesses. Mining is one of the most capital intensive industries in the world. Developing a major mine often requires billions of dollars in upfront investment in land, equipment, processing plants, and environmental approvals, and it can take many years before that capital begins to generate revenue. Once production starts, the returns are earned gradually over very long mine lives, often 15 to 30 years. This naturally keeps ROIC lower because the amount of capital tied up in the business is very large compared to annual earnings. Another reason Newmont’s ROIC has often been low is the cyclical nature of gold prices. Gold miners do not control the price of their product, so profitability is heavily influenced by the gold price and production costs. Looking at the period from 2016 through 2023, ROIC mostly ranged between 3,9% and 7,1%, with an especially weak 1,5% in 2023. This reflects the combination of volatile gold prices, rising operating costs such as labor, fuel, and materials, and a very large invested capital base. Newmont has also historically carried a broad portfolio of mines and development projects, some of which generated lower returns than the company’s best assets. This means a lot of capital was tied up in parts of the business that were not producing strong enough earnings. The sharp increase in ROIC to 10,0% in 2024 and 18,4% in 2025 is largely driven by three factors. First, gold prices increased significantly, which has a major impact on profitability because much of Newmont’s cost base is relatively fixed in the short term. When the gold price rises sharply, a large part of that increase flows directly to operating profit, which can cause ROIC to improve very quickly. Second, the company has improved the quality of its portfolio following the Newcrest acquisition and the subsequent sale of non core assets. Management has been focusing more on high quality, long life, and higher return mines while selling weaker assets, which means the remaining business is now earning more on every dollar invested. Third, management has become more disciplined around cost control and capital allocation, which is important in an industry that historically has often prioritized production growth over returns. The key question is whether this level of ROIC can continue. My view is that it is unlikely Newmont will sustain ROIC close to 18% through the full commodity cycle. A large part of the recent improvement is clearly tied to the strong gold price environment, and this creates strong profit growth in good years. If gold prices remain elevated, then double digit ROIC is absolutely possible over the coming years, and Newmont may be able to stay above 10%. However, if gold prices weaken or costs rise again, ROIC will likely come down. For that reason, I would not assume that 18,4% is the new normal. That said, I do believe returns should remain structurally better than they were in the earlier part of the decade. The company now has a stronger portfolio, a more focused asset base, and a clearer emphasis on disciplined capital allocation and shareholder returns. While the very high level seen in 2025 may not be sustainable every year, I believe Newmont can likely generate ROIC in the high single digits to low double digits over a full cycle, which would be a meaningful improvement from its historical average and a sign that management is building a stronger business than in the past.

The next numbers are the book value + dividend. In my old format this was known as the equity growth rate. It was the most important of the four growth rates I used to use in my analyses, which is why I will continue to use it moving forward. As you are used to see the numbers in percentage, I have decided to share both the numbers and the percentage growth year over year. To put it simply, equity is the part of the company that belongs to its shareholders – like the portion of a house you truly own after paying off part of the mortgage. Growing equity over time means the company is becoming more valuable for its owners. So, when we track book value plus dividends, we’re essentially looking at how much value is being built for shareholders year after year. For Newmont, the numbers have been more volatile than what we typically see in high quality consumer or software businesses, but that is very normal for a mining company. The main reason is that equity is heavily influenced by commodity prices, acquisitions, and the value of the company’s mines and reserves. When gold prices are strong, profitability usually improves significantly, which helps build equity. On the other hand, when gold prices weaken, operating costs rise, or the value of certain mines comes under pressure, equity growth can slow or even decline. The large increase in 2019 was primarily driven by the acquisition of Goldcorp, which significantly expanded Newmont’s asset base and reserve portfolio. A similar dynamic can be seen in 2023, where equity increased strongly following the acquisition of Newcrest. Large acquisitions often cause sharp increases in book value because the acquired assets, reserves, and operations are added to the balance sheet. This means part of the growth in equity in those years comes from expansion through acquisitions rather than purely from organic growth. The weaker years, such as 2021 and 2022, reflect the cyclical nature of the mining industry. During these periods, earnings were pressured by a combination of lower relative gold price support compared to recent years and rising costs for labor, fuel, and materials. In mining, costs can move quickly, while the selling price of gold is fully determined by the market. This can lead to significant swings in profitability and therefore in retained equity. In addition, the value of mining assets on the balance sheet can sometimes be adjusted through impairments or write downs if expected returns from a mine decline, which can also reduce equity. The strong increase to a record high in 2025 is very encouraging. This was likely driven by the combination of significantly stronger gold prices, improved profitability, and the benefits from portfolio optimization following the Newcrest acquisition. Management has been focusing on higher quality mines and selling weaker assets, which means the balance sheet is now supported by a stronger portfolio of long life assets. Higher earnings in a strong gold environment naturally support equity growth, and this is one of the key reasons book value reached a new high. Looking ahead, I do expect equity to continue growing over time, but probably not in a smooth straight line. For a company like Newmont, equity growth will likely remain somewhat volatile because it depends heavily on gold prices, cost inflation, and any future acquisitions or asset sales. If gold prices remain elevated and management continues its disciplined approach to capital allocation, then further growth in equity is very likely. However, investors should expect periods where equity growth slows or temporarily declines, simply because mining is a cyclical and capital intensive industry. Over a full cycle, I would expect the long term trend to remain upward, especially now that the company has a stronger and more focused portfolio than it had earlier in the decade.

Finally, we will analyze the free cash flow. Free cash flow, in short, refers to the cash that a company generates after covering its operating expenses and capital expenditures. I use levered free cash flow margin because I believe that margins provide a better understanding of the numbers. Free cash flow yield refers to the amount of free cash flow per share that a company is expected to generate in relation to its market value per share. Newmont’s free cash flow has historically been very volatile, which is exactly what we would expect from a large gold miner. Unlike consumer or software companies, Newmont’s cash generation is heavily influenced by commodity prices, production volumes, and the level of capital spending required to maintain and expand its mines. This explains why free cash flow has moved significantly from year to year, ranging from just 97 million in 2023 to a record 7.299 million in 2025. One of the main drivers of this volatility is the gold price. When gold prices rise, a large part of that increase flows directly into operating cash flow because many of Newmont’s costs are relatively fixed in the short term. This was clearly visible in 2020, when free cash flow rose sharply to 3.580 million, and even more so in 2025, when it reached a record high of 7.299 million. The free cash flow margin also reached 32,2%, which is by far the strongest level in the past decade. This reflects both significantly higher gold prices and strong operational execution across the portfolio. Another important factor is capital expenditure. Mining companies need to continuously invest large amounts of cash to maintain production, extend mine life, and develop future projects. This includes spending on equipment, processing plants, infrastructure, environmental requirements, and mine development. As a result, free cash flow can remain lower than operating profits in years where investment activity is elevated. This was one reason why free cash flow was relatively modest in 2021 and 2022 despite still healthy margins. The extremely weak level in 2023 was partly due to operational disruptions and partly due to the impact of the Newcrest acquisition and the broader transformation of the portfolio. The record free cash flow in 2025 is clearly encouraging, but I would be careful about assuming that this level will continue every year. A large part of the improvement is linked to the exceptionally strong gold price environment, which may not remain at current levels indefinitely. Free cash flow for a gold miner is inherently cyclical. If gold prices remain elevated, then Newmont should continue generating very strong free cash flow and double digit margins. However, if gold prices normalize lower or capital spending increases significantly, free cash flow will likely come down from the 2025 peak. For that reason, I would not view 2025 as the new baseline, but rather as a very strong point in the cycle. That said, I do believe Newmont is likely to remain a strong free cash flow generator going forward. The company now has a stronger portfolio following the Newcrest acquisition and the sale of weaker non core assets. Management has also become increasingly focused on cost discipline and capital allocation. This should support structurally better cash generation than what we saw earlier in the decade, even if it remains volatile from year to year. Newmont uses its free cash flow in three primary ways. First, it reinvests in the business to maintain and extend the life of its mines, as well as to develop its highest return growth projects. This is essential in mining because reserves are depleted over time and must be replaced through development and exploration. Second, the company maintains a strong balance sheet and liquidity position to ensure resilience through commodity cycles. This is particularly important in a cyclical industry where profitability can change quickly. Third, a significant share of free cash flow is returned to shareholders. Management has clearly stated that dividends remain a core priority and that excess cash, after reinvestment and balance sheet needs, is increasingly being used for share repurchases. In 2025, Newmont returned a substantial amount of cash to shareholders through both dividends and buybacks, and management has signaled that this will continue in a predictable manner. This means investors can expect Newmont’s free cash flow to support both long term growth and meaningful shareholder returns, although the level will likely continue to move with the gold price cycle. The free cash flow yield suggests that Newmont is trading around fair value. However, we will revisit the valuation later in the analysis.

Debt

Another important area to investigate is debt, and we want to see whether a business has a reasonable level of debt that could be paid off within three years. To assess this, we divide total long term debt by earnings. When applying this measure to Newmont, the result shows that it would take approximately 0,74 years of earnings to pay off its long term debt. This is comfortably below the three year threshold and therefore very reassuring. Hence, I do not believe debt is a concern when considering an investment in Newmont. It is also encouraging that Newmont has made debt reduction a priority in both 2024 and 2025 and has set a target of keeping total debt below $8 billion. This commitment to maintaining a conservative balance sheet suggests that debt should not be a concern going forward either.

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Risks

A decline in commodity prices is a risk for Newmont because the company’s earnings, cash flow, and overall valuation are highly dependent on the prices of the metals it produces. Gold is by far the most important driver of the business, but Newmont also has meaningful exposure to copper, silver, lead, and zinc. Since the company does not control the market prices of these commodities, its financial performance can change significantly when prices move. This is especially important because mining is a high fixed cost business. Once a mine is built, a large portion of the costs, such as labor, equipment maintenance, energy infrastructure, and environmental compliance, remain relatively stable in the short term. As a result, when commodity prices fall, revenue can decline much faster than costs, which puts significant pressure on margins and profitability. Gold price movements are particularly important because gold accounts for the majority of Newmont’s revenue. A substantial decline in the gold price would directly reduce revenue, operating profit, and free cash flow. This would also likely impact the company’s ability to return capital to shareholders through dividends and share repurchases. The same applies, although to a smaller extent, to copper and the other metals Newmont produces. Copper has become increasingly important following the Newcrest acquisition, which means weakness in copper prices could also weigh on earnings and cash generation. Lower commodity prices can also affect Newmont’s long term growth. Developing new mines and expanding existing ones requires significant capital investment. If gold or copper prices fall, management may decide to delay or cancel projects because the expected returns are no longer attractive. While this may be the right decision from a capital allocation perspective, it can reduce future production growth and reserve replacement. Over time, this could impact the company’s long term production profile. Commodity prices are influenced by many factors outside Newmont’s control. These include interest rates, inflation expectations, central bank policies, the strength of the U.S. dollar, economic growth in major countries such as the United States and China, jewelry demand, industrial demand, and investor sentiment. For example, higher interest rates can reduce the attractiveness of gold because gold does not generate income, while a stronger U.S. dollar often puts pressure on commodity prices more broadly. Changes in investor preferences, such as shifts toward other assets like cryptocurrencies or equities, can also affect demand for gold.

The uncertainty in estimates is a risk for Newmont because mining is a business built heavily on assumptions about what lies underground and how profitably it can be extracted over many years. Unlike companies that can quickly adjust production based on visible demand, miners must make large investment decisions long before they know the actual results. Before developing a mine, Newmont relies on pre feasibility and feasibility studies that estimate how much ore is available, the grade of the ore, how much metal can be recovered, how much it will cost to build the mine, and what the ongoing operating costs will be. These assumptions are critical because they determine whether a project is expected to generate an attractive return. The challenge is that these estimates are based on geological models, drill samples, and engineering assumptions rather than complete certainty. Even with extensive exploration, the actual ore body may differ from what was expected. The shape of the deposit can be more complex, ore grades can be lower, and recovery rates can fall short of expectations. For example, if the gold content in the rock is lower than assumed, Newmont may need to process significantly more material to produce the same amount of gold, which increases costs and reduces profitability. Similarly, if the processing facilities recover less metal than planned, the economics of the mine can deteriorate quickly. Another important area of uncertainty relates to reserves and resources. Newmont reports proven and probable reserves as well as measured, indicated, and inferred resources. While proven and probable reserves are based on a higher degree of confidence, they are still estimates that depend on assumptions about future commodity prices, operating costs, and mine plans. Inferred resources carry even greater uncertainty because they are based on more limited data and may never be converted into economically mineable reserves. This means that a portion of what appears to be future production potential may never actually become profitable production.

Laws and regulations is a risk for Newmont because mining is one of the most heavily regulated industries in the world. Unlike many other businesses, Newmont cannot easily move its assets if the legal environment changes, as its mines are fixed in specific locations and often operate for decades. This means the company is highly exposed to changes in local laws, environmental rules, tax regimes, land rights, and permitting requirements in every country where it operates. Any tightening of regulations, stricter enforcement, or delays in approvals can directly affect production, costs, and long term growth. One of the most important regulatory risks relates to permits and land access. Newmont requires permits for exploration, mine development, water use, tailings storage, emissions, and ongoing production. These approvals are often complex, expensive, and time consuming to obtain. In some cases, existing permits must also be renewed or expanded to allow continued operations. If a permit is delayed, suspended, or denied, production growth can be pushed back for years, and in severe cases existing operations may need to slow down or stop altogether. This is particularly important for long life mines where continued operations depend on future approvals for tailings expansions, lease renewals, or mine life extensions. Environmental regulation is another major risk. Mining operations generate significant waste rock and tailings, consume large amounts of water, and can affect air quality and surrounding ecosystems. Governments around the world are increasing scrutiny on issues such as water usage, carbon emissions, biodiversity, and tailings dam safety. Complying with these requirements often requires substantial capital investments in infrastructure, monitoring systems, environmental controls, and reporting. If Newmont fails to meet these standards, it could face fines, legal liability, forced operational changes, or temporary shutdowns. Tailings management is particularly important. Tailings storage facilities are essential for mining operations, but they also represent one of the biggest operational and legal risks in the industry. A failure of a tailings dam or a leakage incident could cause severe environmental damage, lead to lawsuits and regulatory sanctions, and create major reputational harm. Even without an incident, obtaining approvals for new tailings capacity can be difficult and time consuming. For several of Newmont’s major mines, continued production beyond the current decade depends on securing approvals for expanded tailings storage.

Reasons to invest

Having the best portfolio in the industry is a reason to invest in Newmont because the quality of a mining company’s assets is one of the most important drivers of long term shareholder returns. In mining, not all ounces are created equal. The most valuable mines are those that combine large scale production, low operating costs, long reserve lives, and stable jurisdictions. This is exactly where Newmont stands out. The company has deliberately shaped its asset base around Tier 1 and emerging Tier 1 operations, which means large, long life mines capable of producing significant gold equivalent ounces at attractive costs for more than a decade. These types of assets tend to generate stronger margins, more stable free cash flow, and better resilience during periods of lower commodity prices. One of the biggest advantages of Newmont’s portfolio is the sheer quality and scale of its core assets. Mines such as Cadia, Boddington, Tanami, Lihir, Ahafo, and its interest in Nevada Gold Mines are among the most attractive gold assets globally. These operations offer long mine lives, large reserve bases, and in several cases meaningful copper exposure as well. This combination gives Newmont not only strong current profitability but also excellent long term visibility. Investors can have much greater confidence in future production because many of these mines are expected to continue operating for decades. Another important strength is geographic quality. A large portion of Newmont’s portfolio is located in mining friendly and relatively stable jurisdictions such as the United States, Canada, and Australia. This matters because the quality of a mining asset is not only determined by the ore in the ground, but also by where that ore is located. A world class mine in a politically unstable region can still be a high risk investment. By having many of its most important assets in countries with stronger legal systems, clearer regulation, and better infrastructure, Newmont reduces political and operational risk compared to many peers. The company has also been highly disciplined in improving portfolio quality. Over the past few years, management has accelerated the transformation of the business by integrating the Newcrest assets and divesting non core operations. Selling weaker assets and focusing capital on the highest quality mines improves the overall earnings power of the company. This means that a larger share of production now comes from lower cost and longer life assets, which should support stronger margins and more stable cash generation through the commodity cycle.

Projects and exploration is a reason to invest in Newmont because one of the most important drivers of long term value in mining is the ability to replace reserves, extend mine life, and grow production without relying heavily on expensive acquisitions. Unlike many industries where growth can come from marketing or product launches, mining growth must come from new projects and successful exploration. This is where Newmont stands out. The company has a deep pipeline of high quality development projects and a very active exploration program that supports both near term production growth and long term value creation. One of the strongest examples is Ahafo North, which reached commercial production in 2025. This project is expected to deliver around 300.000 ounces of gold per year and was completed at the lower end of the expected capital range. This is very encouraging because it demonstrates that management can execute large projects on time and with cost discipline. Another important growth driver is Tanami Expansion 2. Once completed, this project should improve access to deeper ore bodies and support higher production over a longer period. Similarly, the work underway at Cadia is highly attractive because Cadia is already one of the best gold and copper assets in the world. Expanding a world class mine is often one of the most value creating uses of capital, as the company can leverage existing infrastructure and operational knowledge. The same logic applies to the mine life extension project at Lihir, which is expected to unlock more than 5 million ounces of low cost production and extend the mine well beyond 2040. Exploration is equally important. Newmont’s exploration strategy is focused heavily on near mine and brownfield opportunities, which means drilling around existing mines where infrastructure is already in place. This is often one of the most profitable forms of exploration because new discoveries can be brought into production with lower capital requirements. For example, the company added approximately 2 million ounces of resources at Ahafo South in 2025 and expects an additional 4 million to 5 million ounces of new reserves in 2026. This could significantly extend mine life and support further underground growth. Brucejack is another excellent example. New discoveries adjacent to the current mine, including very high grade intercepts, increase confidence that the asset can continue generating strong returns for many years. Because this exploration is taking place close to existing infrastructure such as processing facilities, roads, and tailings capacity, the economics are often far more attractive than developing an entirely new mine from scratch.

An alternative way to invest in gold is a reason to invest in Newmont because the company offers investors exposure to gold through an operating business rather than through physical bullion or a gold ETF. For many investors, gold is attractive as a store of value and as a potential hedge during periods of economic uncertainty, inflation, or market stress. However, owning a gold mining company such as Newmont can provide additional upside beyond simply tracking the gold price. When gold prices rise, Newmont’s revenue, margins, and free cash flow typically improve significantly because much of its cost base is relatively fixed in the short term. This means that the share price can sometimes move more than the gold price itself, giving investors leveraged exposure to gold. This operating leverage is one of the main reasons some investors prefer gold miners over physical gold. If the gold price rises by 10%, Newmont’s profits and cash flow can often increase by more than that because the increase in the selling price flows directly into margins after covering largely stable operating costs. This creates the potential for stronger shareholder returns in periods of rising gold prices. At the same time, investors also gain exposure to the value created through reserve additions, mine expansions, and project development, which physical gold does not offer. Another important reason is income. Unlike physical gold or most gold ETFs, Newmont generates cash flow from its operations and returns part of that cash to shareholders. This includes a dividend and, when free cash flow is strong, share repurchases. For investors who want gold exposure but also appreciate receiving cash returns over time, this can make Newmont particularly attractive. It provides the defensive qualities associated with gold while also offering the potential for income and long term growth in per share value. Newmont also offers this exposure through the strongest reserve base in the industry. The company holds the largest gold reserve and resource base among listed gold miners, which gives investors long term visibility and confidence in future production. With roughly 118 million ounces of gold reserves supported by a much larger resource base, Newmont offers decades of potential production. This means investors are not only buying exposure to today’s gold price but also to future value creation through reserve expansion and mine life extensions. Gold has also historically played an important role as a portfolio diversifier. During periods of economic stress, recession, or market volatility, gold has often held up better than broader equity markets. For investors who believe that gold will continue to serve as a safe haven asset, Newmont can provide a practical and potentially more rewarding way to gain that exposure.

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Valuation

Now it is time to calculate the share price. I perform three different calculations that I learned at a Phil Town seminar. If you want to make the calculations yourself for this or other stocks, you can do so through the tools page on my website, where you have access to all three calculators for free.

The first is called the Margin of Safety price, which is calculated based on earnings per share (EPS), estimated future EPS growth, and estimated future price-to-earnings ratio (P/E). The minimum acceptable rate of return is 15%. I chose to use an EPS of 6,39, which is from the year 2025. I have selected a projected future EPS growth rate of 8%. Finbox expects EPS to grow by 8,7% in the next five years. Additionally, I have selected a projected future P/E ratio of 18, which is double the growth rate. This decision is based on Newmont's historically higher price-to-earnings (P/E) ratio. Finally, our minimum acceptable rate of return has already been established at 15%. After performing the calculations, we determined the sticker price (also known as fair value or intrinsic value) to be $54,56. We want to have a margin of safety of 50%, so we will divide it by 2. This means that we want to buy Newmont at a price of $27,28 (or lower, obviously) if we use the Margin of Safety price.

The second calculation is known as the Ten Cap price. The rate of return that a company owner (or stockholder) receives on the purchase price of the company essentially represents its return on investment. The minimum annual return should be at least 10%, which I calculate as follows: The operating cash flow last year was 10.334, and capital expenditures were 3.035. I attempted to analyze their annual report to calculate the percentage of capital expenditures allocated to maintenance. I couldn't find it, but as a rule of thumb, you can expect that 70% of the capital expenditures will be allocated to maintenance purposes. This means that we will use 2.125 in our calculations. The tax provision was 4.596. We have 1.089 outstanding shares. Hence, the calculation will be as follows: (10.334 – 2.125 + 4.596) / 1.089 x 10 = $117,58 in Ten Cap price.

The final calculation is referred to as the Payback Time price. It is a calculation based on the free cash flow per share. With Newmont's free cash flow per share at $8,70 and a growth rate of 8%, if you want to recoup your investment in 8 years, the Payback Time price is $99,94.

Conclusion

I believe that Newmont is a great mining company with strong management. It has built its moat through its scale, asset quality, financial strength, and geographic diversification. Due to the nature of the industry in which it operates, both ROIC and free cash flow have been volatile through the years, and this is likely to continue. However, I expect the baseline for both ROIC and free cash flow to be higher going forward as the company continues to optimize its portfolio and focus on its highest quality assets. A decline in commodity prices is a risk for Newmont because its earnings, free cash flow, and valuation are highly dependent on gold and other metal prices, which are outside the company’s control. Since mining is a business with high fixed costs, lower commodity prices can put significant pressure on margins and profitability while also reducing the attractiveness of future mine expansions and long term growth projects. The uncertainty in estimates is another risk because the company must make large investment decisions based on assumptions about ore grades, recovery rates, costs, and reserve sizes that may differ from actual mining conditions. If the actual deposit contains less metal than expected or costs are higher than planned, profitability, mine life, and the value of the asset can be materially affected. Laws and regulations also represent a risk because Newmont’s mines are fixed, long lived assets that depend on permits, land access, and compliance with increasingly strict environmental and safety standards. Any delays in approvals, tighter regulation, or non compliance can increase costs, disrupt production, or even force parts of the business to slow down or shut down. On the other hand, having the best portfolio in the industry is a compelling reason to invest in Newmont because its asset base consists of large scale, low cost, long life mines in stable jurisdictions, which supports stronger margins, more resilient free cash flow, and better long term visibility. By focusing on Tier 1 assets and divesting weaker operations, Newmont has built one of the highest quality and most durable portfolios in the mining industry. Projects and exploration is another reason to invest because they support long term production growth, reserve replacement, and mine life extensions without relying heavily on costly acquisitions. With major projects such as Ahafo North, Tanami, Cadia, and Lihir, combined with successful exploration around existing mines, Newmont has a strong pipeline that can drive future production, margins, and free cash flow. An alternative way to invest in gold is also a reason to invest in Newmont because it offers leveraged exposure to rising gold prices through an operating business, meaning profits and cash flow can grow faster than the gold price itself. Unlike physical gold or most gold ETFs, Newmont also provides income through dividends and share repurchases, while offering additional upside from mine expansions, reserve growth, and long term production visibility. I believe that Newmont is the best company in its sector. However, it should be noted that the calculations made in this analysis are based on a very strong year, so the intrinsic value may appear somewhat higher than it truly is through a full cycle. Nonetheless, I personally do not want exposure to a cyclical industry like mining, and therefore I will not be buying shares at this time.

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