The board of directors of Newmont Mining Corp. (NMM) has authorized the payment of 14 cents dividend per ordinary share for the first three months of fiscal 2018.
The company will pay the dividend to its shareholders on June 21. To benefit from the free cash flow distribution, investors must be listed on the company’s record no later than June 7.
The 14 cents quarterly dividend represents a 180% increase from the comparable of fiscal 2017 when Newmont Mining distributed 5 cents per common share to shareholders.
The U.S. miner reports that the distribution of the future free cash flow will depend “on the company's financial results, cash requirements, future prospects and other factors deemed relevant by the board.”
On Thursday, April 26, before the opening bell, Newmont Mining will announce earnings for the first quarter of fiscal 2018 that ended March 31.
For the quarter, consensus is for an adjusted earnings per share of $33 cents per diluted share, which represents a 32% upside from the prior-year quarter. A total of 14 analysts were surveyed. The estimates range between a low of 28 cents and a high of 42 cents per diluted share.
Revenues are forecast to come in at 11.1% year-over-year growth to $1.84 billion. That is a mean of six estimates ranging from $1.81 billion to $1.92 billion.
The stock in the U.S.-based biggest producer of gold in the world gained 8% so far this year and has outperformed the Van Eck Vectors Gold Miners ETF (GDX) by 13%.
Newmont Mining is trading at $41.05 per share on the New York Stock Exchange and the current share price is far above the 200, 100 and 50 SMA lines.
Other indicators on Newmont Mining:
· The 52- week range is 31.42 to $42.04 per share
· The RSI (14-days) is 58.69 of a 30 to 70 range, according to GuruFocus
· The price-book value is 2.05 times while the industry has a mean of 2.06 times
· The EV-to-Ebitda ratio is 9.17 times versus an industry median of 9.90 times
· The Ebitda margin is 35.11% versus an industry median of approximately 25%.
In 2017 Newmont Mining beat the industry median by 10% with an Ebitda margin of 35% when gold averaged $1,257.12 per troy ounce on the Lond Bullion Market. The difference with its industry will increase after first quarter 2018 results since the bullion traded higher at $1,329.28 per ounce.
That is because Newmont Mining operations have characteristics that make its assets-base hardly replicable by any other gold mining company:
- Nearly 75% of the company’s total production of the yellow metal comes from reserves that are in North America and Australia, countries that have jurisdictions that are friendly to mining activities.
- A highly-skilled and competent management that makes spot-on decisions about operations, explorations, projects, revisions and acquisitions. Management has not let production harm gold reserves. Instead, reserves have remained stable at 68.5 million attributable ounces. From mineral reserves, the company expects to milk 4.9 million to 5.4 million ounces of gold in 2018 and 2019. Also, production is expected to stay stable at 4.6 million to 5.1 million ounces per year for the next five years. Production levels have allowed Newmont Mining to share a top position with Barrick Gold Corp. (ABX) as the largest producers of gold in the world.
- The company provides shareholder returns and a portfolio of activities, which includes mineral projects.
- The existence of a large base of fixed costs allows each increase in the yellow metal's price to be immediately reflected in the company’s bottom line.
The U.S. miner will likely beat consensus on first-quarter of 2018 earnings and sales, determining a stock appreciation.
As seen before, the stock is not trading cheaply. Therefore, I would wait for some form of retreat in the share price before buying shares.
Newmont is one of the best options in the industry for gaining exposure to the metal.
(Disclosure: I have no positions in any security mentioned in this article.)
