Leading International Investment Research, Edison Investment Research

Edison Investment Research

Leading International Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

Equity Bottom-Up

Newmont’s financial results for Q221 materially exceeded our expectations for the third quarter in succession, driven by a 3.8% (or US$111m) positive variance in revenues (of which 2.4% could be attributed to the gold price) and a 2.8% (US$61m) further positive variance in the form of lower costs. Of the 12 mines over which Newmont exerts management control, four outperformed (financially) relative to our prior expectations, two performed in line and six underperformed, although not, on occasion, without commendable management efforts to mitigate negative outcomes in the face of unscheduled challenges (eg the need to put Tanami into care and maintenance for two weeks, at short notice, after a case of COVID-19 was detected there). In the wake of its results, coupled with increases to our estimates for Q3 and Q420, we have upgraded our forecasts for adjusted net EPS for Newmont for FY21 by 18.4%.

Newmont’s financial results for Q221 materially exceeded our expectations for the third quarter in succession, driven by a 3.8% (or US$111m) positive variance in revenues (of which 2.4% could be attributed to the gold price) and a 2.8% (US$61m) further positive variance in the form of lower costs. Of the 12 mines over which Newmont exerts management control, four outperformed (financially) relative to our prior expectations, two performed in line and six underperformed, although not, on occasion, without commendable management efforts to mitigate negative outcomes in the face of unscheduled challenges (eg the need to put Tanami into care and maintenance for two weeks, at short notice, after a case of COVID-19 was detected there). In the wake of its results, coupled with increases to our estimates for Q3 and Q420, we have upgraded our forecasts for adjusted net EPS for Newmont for FY21 by 18.4%.


Newmont Corporation - Material outperformance begets material upgrade

Notwithstanding continued low-level coronavirus induced disruptions, Newmont’s financial results were materially better than Edison’s forecasts for Q121 largely as a consequence of an effective tax rate that was substantially lower than both our forecast and also Newmont’s guidance for the full year. Significantly, the company maintained its quarterly dividend, indicating management’s confidence in both its improving production profile as well as the gold price. This note updates our forecasts for FY21 in the light of Q1 results, as well as prevailing metals prices and assumptions regarding the treatment of tax.

Notwithstanding continued low-level coronavirus induced disruptions, Newmont’s financial results were materially better than Edison’s forecasts for Q121 largely as a consequence of an effective tax rate that was substantially lower than both our forecast and also Newmont’s guidance for the full year. Significantly, the company maintained its quarterly dividend, indicating management’s confidence in both its improving production profile as well as the gold price. This note updates our forecasts for FY21 in the light of Q1 results, as well as prevailing metals prices and assumptions regarding the treatment of tax.

Newmont Corporation - Fast out of the blocks

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Jitters over today’s Georgia Senate runoff elections led to mild weakness on the first trading day of the year. As we explain below, this appears to be just a blip on the radar and our bullish outlook remains intact. We continue to view any weakness as a buying opportunity. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Materials: Casinos &amp; Gaming, Large-Cap, Copper, Gold, Western Hemisphere, Large-Cap, and Silver, Platinum.

Jitters over today’s Georgia Senate runoff elections led to mild weakness on the first trading day of the year. As we explain below, this appears to be just a blip on the radar and our bullish outlook remains intact. We continue to view any weakness as a buying opportunity. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Materials: Casinos &amp; Gaming, Large-Cap, Copper, Gold, Western Hemisphere, Large-Cap, and Silver, Platinum.

U.S. Equity Strategy: Bullish Outlook Intact

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<a href="https://www.smartkarma.com/entities/northern-star-resources-ltd" target="_blank" data-smartkarma-citation="entities:4243:1" rel="noopener">Northern Star Resources (NST AU)</a> and <a href="https://www.smartkarma.com/entities/saracen-mineral-holdings-limited" target="_blank" data-smartkarma-citation="entities:2415:1" rel="noopener">Saracen Mineral Holdings (SAR AU)</a> have <a href="https://www.asx.com.au/asxpdf/20201006/pdf/44ncx7hy38vkm3.pdf" target="_blank" rel="noopener">agree</a>d to a merger-of-equals via a Scheme of Arrangement under which NST will acquire 100% of SAR.
SAR shareholders will receive 0.3763 new NST shares for each SAR share. SAR will also pay a fully franked dividend of A$0.038/share, conditional on the Scheme becoming effective.
Subsequent to a successful Scheme, NST shareholders will hold 64% of the combined entity (with roughly a A$16bn market cap), and SAR shareholders 36%. 
Pre-tax synergies are estimated to be worth A$1.5bn-A$2bn over the next 10 years. 
Standard Scheme conditions apply: SAR shareholders approving the Scheme (75%); independent expert concluding the Scheme is in the best interest of SAR shareholders; and no MACs, for either NST and SAR.
The tentative implementation date is February 2021.
As always, more below the fold.

Northern Star Resources (NST AU) and Saracen Mineral Holdings (SAR AU) have agreed to a merger-of-equals via a Scheme of Arrangement under which NST will acquire 100% of SAR.
SAR shareholders will receive 0.3763 new NST shares for each SAR share. SAR will also pay a fully franked dividend of A$0.038/share, conditional on the Scheme becoming effective.
Subsequent to a successful Scheme, NST shareholders will hold 64% of the combined entity (with roughly a A$16bn market cap), and SAR shareholders 36%. 
Pre-tax synergies are estimated to be worth A$1.5bn-A$2bn over the next 10 years. 
Standard Scheme conditions apply: SAR shareholders approving the Scheme (75%); independent expert concluding the Scheme is in the best interest of SAR shareholders; and no MACs, for either NST and SAR.
The tentative implementation date is February 2021.
As always, more below the fold. 

Notwithstanding COVID-19, Newmont’s underlying Q220 results were nothing if not solid. Unsurprisingly, gold production was down 220koz or 14.9% cf Q120; however, the realised gold price was 8.4% higher, such that sales were down just 8.4% and largely balanced by an 8.9% reduction in costs and expenses (despite an additional US$125m in COVID-19 related care and maintenance costs). Results in Q2 did not have the benefit of a net US$404m in (effectively) exceptional gains in Q1. In addition, the tax rate swung from a net benefit to a 29.8% charge on pre-tax profits. Nevertheless, on an underlying basis, adjusted net income declined just 19.9% q-o-q to US$261m, or US$0.32/share. Including lease obligations, net debt improved from US$3.03bn to US$2.87bn after US$388m in free cash flow generation in the three-month period.

Notwithstanding COVID-19, Newmont’s underlying Q220 results were nothing if not solid. Unsurprisingly, gold production was down 220koz or 14.9% cf Q120; however, the realised gold price was 8.4% higher, such that sales were down just 8.4% and largely balanced by an 8.9% reduction in costs and expenses (despite an additional US$125m in COVID-19 related care and maintenance costs). Results in Q2 did not have the benefit of a net US$404m in (effectively) exceptional gains in Q1. In addition, the tax rate swung from a net benefit to a 29.8% charge on pre-tax profits. Nevertheless, on an underlying basis, adjusted net income declined just 19.9% q-o-q to US$261m, or US$0.32/share. Including lease obligations, net debt improved from US$3.03bn to US$2.87bn after US$388m in free cash flow generation in the three-month period.

United States

Newmont Mining Corporation acquires, explores, and develops mineral properties. The Company produces gold from operations in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico. Newmont also mines and processes copper in Indonesia.

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Newmont Mining (NEM US)

Newmont Corporation - Material outperformance begets material upgrade

Newmont’s financial results for Q221 materially exceeded our expectations for the third quarter in succession, driven by a 3.8% (or US$111m)...

Edison Investment Research

Newmont Corporation - Fast out of the blocks

Notwithstanding continued low-level coronavirus induced disruptions, Newmont’s financial results were materially better than Edison’s forecasts for...

Edison Investment Research

U.S. Equity Strategy: Bullish Outlook Intact

mild weakness on the first trading day of the year appears to be just a blip on the radar and our bullish outlook remains intact. We continue to...

Vermilion Research

Northern Star/Saracen: Merger Of Equals

Northern Star Resources (NST AU) and $sara

David Blennerhassett

Newmont Corporation - Q220 results

Notwithstanding COVID-19, Newmont’s underlying Q220 results were nothing if not solid. Unsurprisingly, gold production was down 220koz or 14.9% cf...

Edison Investment Research

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