Fitch Ratings has assigned an 'A-' rating to the following Newmont Corporation notes issued in exchange for Newcrest Finance PTY Limited 's senior unsecured notes.
$624,639,000 notes bearing interest at 3.250% due 2030;
$459,939,000 notes bearing interest at 5.75% due 2041;
$486,128,000 notes bearing interest at 4.200% due 2050.
The ratings reflect Newmont's leading size, scale and operational diversification, relatively low jurisdictional risk, strong liquidity and modest leverage.
Key Rating Drivers
Leading Size/Scale: Newmont's unrivalled size, scale and operating diversification result in a business profile in the 'A' category. The company's closest peers, Barrick Gold Corporation (NR) and Agnico Eagle Mines Limited (BBB+/Stable), have lower annual production, fewer operations and fewer mines with more than 300,000 ounces of gold production per year.
Newcrest Adds Scale/Optionality: Fitch believes the acquisition of Newcrest Mining Limited allows Newmont to apply best practices across a wider portfolio and enhance regional scale in the low risk jurisdictions of Canada (AA+/Stable) and Australia (AAA/Stable).
The transaction allows Newmont longer-term benefits from optimizing the project pipeline and its portfolio by potentially divesting operations that are of lower value to Newmont and investing the proceeds in higher value assets. Fitch believes Newcrest adds roughly two million ounces of annual gold sales, or 36% of 2023 gold sales volumes, and substantially increases Newmont's copper exposure.
Average Cost Profile: Fitch expects Newmont to maintain an average overall cost profile in the second quartile of the global cost curve, noting the curve is relatively flat. Fitch believes the addition of Newcrest Mining Limited's assets, while having higher average all-in sustaining costs than Newmont (according to CRU Group) for 2022 and 2023, would result in a relatively average cost position.
Gold Price Sensitivity: EBITDA is forecast at $4.1 billion in 2023 and is expected to be over $5.5 billion at our $1,500/oz. midcycle gold price assumption when including Newcrest's operations. Fitch estimates that the combined company will earn roughly $750 million less in EBITDA for every $100/oz. decrease in gold prices. Fitch's gold price assumptions are $1,900/oz. in 2023, $1,800/oz. in 2024, $1,600/oz. in 2025 and $1,500/oz. in 2026. Fitch's mid-cycle assumption is $1,500/oz., which compares to the average over the past three years of $1,785/oz. and YTD average of about $1,942/oz.
Elevated Capital and Exploration Spending: Fitch expects Newmont's standalone capex to be $2.5 billion in 2023 and $2.4 billion 2024. This is comparable to 2022 levels but elevated from 2019-2021 levels, which averaged about $1.5 billion per year. We believe there is flexibility in the timing of spending after current projects are completed and generally see $1.5 billion in annual capex and about $200 million in annual exploration expenses as sufficient to maintain current production and reserve life. We estimate Newcrest would add about $1.4 billion in capex per year.
Newmont's Ahafo North project will expand its current footprint in Ghana (RD) with 300,000 ounces of incremental gold production annually. The Tanami Expansion 2 project in Australia will yield 175,000 ounces annually. Both are slated for completion in 2025. The Cerro Negro extension project in Argentina (CC) will yield 100,000 ounces per year and is ramping up. Fitch expects all three projects to improve the company's cost position by the end of 2026.
Conservative Financial Profile: Newmont's financial flexibility and financial structure are consistent with the 'A-' category. Newmont aims to self-fund development projects and make strategic partnerships focused on profitable growth, while reducing debt and returning cash to shareholders.
Newmont's base dividend is $1.00/share at $1,400/oz. for gold (price used to calculate reserves) and a variable component based on incremental FCF before dividends is evaluated in increments of $300/oz. assessed annually and approved quarterly. Newmont has a net debt/EBITDA target of less than 1.0x (0.7x as of Sept. 30, 2023).
Derivation Summary
Newmont is the largest gold producer by volume, with 2022 consolidated gold production of 5.8 million ounces from 12 managed operations and its 38.5% interest in the Nevada Gold Mines JV (with Barrick). Newmont also has a 40% interest in the Pueblo Viejo mine (with Barrick), accounted for as an equity investment, that had 2022 production of 718,000 ounces (100% basis). Fitch expects consolidated volumes to average over 7.6 million ounces per year with the addition of the Newcrest operations compared with 5.3 million ounces in 2023. This compares with our assumptions for Agnico Eagle Mines Limited (BBB+/Stable) of 3.3 million ounces and Kinross Gold Corporation (BBB/Stable) of about 2.0 million ounces.
Newmont revised its 2023 all-in sustaining costs per ounce up to $1,400 from its original guidance in the range of $1,150-$1,250 on the volume impacts from the four-month Penasquito strike and lower production at Nevada Gold Mines, Pueblo Viejo and Ahafo. This figure compares with Agnico Eagle's all-in sustaining costs per ounce guidance of $1,140-$1,190, Kinross' all-in sustaining costs of sales per gold equivalent ounce guidance is $1,320 (+/- 5%) and AngloGold Ashanti Limited's (BBB-/Negative) all-in sustaining costs per ounce guidance of $1,405-$1,450. Newmont's EBITDA net leverage was about 0.7x compared with Agnico Eagle at 0.7x and Kinross at 1.1x, as of Sept. 30, 2023.
Key Assumptions
The Newcrest acquisition closed Nov. 6, 2023.
Gold prices at $1,900/oz. in 2023; $1,800/oz. in 2024; $1,600/oz. in 2025; and $1,500/oz. thereafter.
2023 production at revised guidance on a consolidated basis.
Pre-tax synergies of $250 million in 2025 and 2026.
Capex at $2.5 billion in 2023 and $3.8 billion 2024 dropping to $3.4 billion in 2025 and $3.1 billion in 2026.
Dividends consistent with framework and Fitch price assumptions.
No share repurchases.
No change in debt after Newcrest unsecured notes were assumed and exchanged.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
An upgrade is unlikely given high concentration in a single commodity.
Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
EBITDA leverage sustained above 1.5x or EBITDA net leverage sustained above 1.0x;
All-in sustaining cost position increases above the low third quartile;
Material shift in production toward higher risk countries;
Deviation from moderate financial policies through price and investment cycles, including sustained negative FCF linked to more ambitious dividend or share buyback programs;
Inability to maintain average mine life above 10 years.
Liquidity and Debt Structure
Robust Liquidity: As of Sept. 30, 2023, the company had cash on hand of $3.2 billion and full availability under the $3.0 billion revolving credit facility due March 2026. Financial flexibility benefits from positive FCF before dividends, lack of near-term maturities and broad capital market access. The revolver has a net debt/capitalization maximum covenant of 62.5% (complied at 18% as of Sept. 30, 2023).
Issuer Profile
Denver, Colorado-based Newmont Corporation is the world's largest gold producer, with 2022 consolidated gold production of roughly 5.8 million ounces and attributable proven and probable gold reserves of 96.1 million ounces. It has operations in North America, South America, Australia, and Ghana.
Date of Relevant Committee
03 November 2023
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
NEWMONT CORPORATION 
