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Mining industry

Goldman Sachs Upgrades Newmont Mining Corp. to Buy Amid Rising Gold Prices

Strategic Insights

— 2 min read

Goldman Sachs has upgraded Newmont Mining Corp. to Buy, citing the company's strong fundamentals and attractive valuation. Newmont has seen its stock surge 131.95% year-to-date, with a recent milestone achieved at its Ahafo North Project in Ghana. The investment bank notes that Newmont is trading at approximately 0.90 times net asset value, implying gold pricing of about $3,000 per ounce, below the peer average. Meanwhile, gold prices have reached a record high of $3,831.44, contributing to a boost in gold stocks.

Key Takeaways:

  • Goldman Sachs has upgraded Newmont Mining Corp. to Buy from Neutral, with a price target of $104.30.
  • Newmont has achieved a perfect Piotroski Score of 9 and seen its stock surge 131.95% year-to-date.
  • The mining giant is trading at approximately 0.90 times net asset value, implying gold pricing of about $3,000 per ounce, below the peer average.
  • Newmont is expected to maintain dividend payments for 56 consecutive years, with a current dividend yield of 0.92%.
  • The company's near-term free cash flow yields are approximately 10%, expected to improve to around 13% as projects are completed.
  • Goldman Sachs values Newmont's approximately 32% effective stake in Fruta del Norte via Lundin Gold at about $2.8 billion, based on a 100% valuation of approximately $8.9 billion.
  • The investment bank notes the market implied value of Newmont's stake is approximately $5.4 billion, suggesting potential upside to their valuation of the mining company.
  • Newmont has completed the sale of its entire stake in Orla Mining Ltd. for $439 million and achieved a significant milestone with the first gold pour at its Ahafo North Project in Ghana.

Statistics:

  • Newmont's stock has surged 131.95% year-to-date.
  • The mining giant is trading at approximately 0.90 times net asset value, implying gold pricing of about $3,000 per ounce.
  • Gold prices have reached a record high of $3,831.44.
  • Newmont's near-term free cash flow yields are approximately 10%, expected to improve to around 13% as projects are completed.
  • The company's dividend yield is currently 0.92%.
  • Newmont values its approximately 32% effective stake in Fruta del Norte via Lundin Gold at about $2.8 billion.
  • The market implied value of Newmont's stake is approximately $5.4 billion.

Sources:

  • Goldman Sachs, "Newmont Mining Corp. Upgrade to Buy"
  • InvestingPro, "Newmont Mining Corp. Piotroski Score"
  • Newmont Corporation, "Ahafo North Project"
  • Newmont Corporation, "Sale of Orla Mining Ltd."
  • Federal Reserve, "Decision to cut interest rates"

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