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In 2024, Gold Emerges as a Top Performer, Providing a Strong Tailwind for Newmont

With the gold sector likely to be a potential winner in 2024 (read here), today we look at the world’s largest gold producer Newmont Corporation (NYSE: NEM | TSX: NGT | ASX: NEM) (“Newmont”). Gold is currently trading at US$2,025/Oz (just below its all-time high of US$2,135) with many forecasters tipping it to rise in 2024, especially if we see a rush to safe haven assets due to global instability or a weaker U.S. dollar.

Newmont Corporation owns several tier one gold mines globally

Newmont Corporation is an American company with the world’s leading gold production of 5.956 million ounces of gold produced in 2022. AISC was US$1,211 per ounce.

Newmont’s 2023 guidance is 5.3 million ounces at an AISC of US$1,400 per ounce. The lower 2023 production guidance is attributed to the “strike at Peñasquito, and lower production volumes from non-managed joint ventures (Nevada Gold Mines and Pueblo Viejo) and Ahafo.” The 2023 production downgrade news came in late October 2023 and helps explain the recent stock price fall.

Newmont’s portfolio of mines includes more than half of the world’s tier one gold mines

Source: Newmont company presentation

Newmont’s top four producing mines are all producing over 1 million gold equivalent ounces (“GEO”) pa and include:

  • Peñasquito Mine (100% owned) – A large polymetallic mine (gold-silver-lead-zinc) in Mexico.
  • Carlin Complex (38.5% owned) – Multiple open-pit and underground operations as part of the Nevada Gold Mines LLC JV (38.5% Newmont: 61.5% Barrick) in Nevada, USA.
  • Cadia Mine operations (100% owned) – A series of large underground and open-cut gold and copper mines located in the Cadia Valley, NSW, Australia.
  • Boddington Mine (100% owned) – A large copper-gold mine located near Boddington in Western Australia. Newmont has introduced a fleet of autonomous vehicles at Boddington, thereby further reducing operating costs.

Newmont’s Boddington Mine in WA is a global tier one asset producing >1Moz of gold equivalent pa in 2022

Source: Newmont company presentation

Newmont’s Mines are mostly located in stable mining jurisdictions

Newmont’s gold and copper production comes mostly from the Americas and Australia, with ~80% of Newmont’s mines located in stable mining jurisdictions.

Newmont’s 2/3 gold production is from Tier one assets with 80% of production from stable mining jurisdictions spread across the Americas, Australia, PNG and Africa

Source: Newmont company presentation

Newmont’s core business strategies include:

  • Deliver superior operational execution
  • Sustain a global portfolio of long-life assets
  • Lead the gold sector in profitability and responsibility

Closing remarks

A potentially stronger gold price in 2024 would be a tailwind for the gold producers. None are bigger than Newmont.

Interestingly, Newmont’s name came from joining the two U.S. locations of ‘New York’ and ‘Montana’. Quite fitting given that Newmont went on to be a huge success built on several large acquisitions (notably the Newcrest Mining acquisition in November 2023).

Newmont has numerous tier one gold mining assets spread mostly across the North and South Americas and Australia with 2023 production results, financials and 2024 guidance set to be announced on February 22, 2024. Current consensus is for 2023 EPS of US$1.28 and for 2024 it is US$2.30. The Newcrest acquisition helps the numbers.

Newmont Corporation trades on a market cap of US$40.75 billion, a 2024 PE of 15.2, and a 2024 dividend yield of 4.34%. Now might be a good time to take a second look at Newmont, especially with their stock price very near a 5 year low.




Kodiak Copper proves that what shareholders want is leadership, copper — and gold

On September 14 it was announced that Teck Resources has agreed to make a strategic investment of a 9.9% interest in Kodiak Copper (TSXV: KDK) (‘Kodiak’), at C$1.95 per share raising C$10.5m.

Add in drill results on September 3rd that included 282 m of 0.70% copper and 0.49 g/t gold (1.16% CuEq) at Kodiak’s advanced MPD copper-gold porphyry project in British Columbia, shareholders have responded positively. In fact, Kodiak Copper’s stock price has risen from C$0.50 on August 24th to C$2.80 as of September 28th for a 460% increase in the last month.

Source

Today I take a deeper look at Kodiak’s MPD porphyry project. As most resource investors know copper porphyry projects can be enormous in size and contain valuable by-products (gold, silver, molybdenum) which can make them economical even at lower grades than other projects.

MPD Copper-Gold Porphyry Project

The MPD Project is located in the prolific Quesnel Trough in southern British Columbia, Canada. Kodiak amalgamated 3 projects into one – Man, Prime, Dillard – hence the name MPD. The region is mining friendly with good access to infrastructure.

The MPD Project has road access and is close to infrastructure

Source

Previous drilling by Newmont Corporation and Rio Tinto was focused on depths up to 200 meters below the surface. Kodiak’s strategy is to use modern mining methods and to drill deeper. So far it is paying off. In November 2019, Kodiak (then known as Dunnedin Ventures) started its first drill campaign at MPD and discovered the Gate Zone, including several promising drill results that followed. The key was they were drilling deeper than before. The January 2020 announcement included the following:

  • “The new discovery underlies a large copper-in-soil anomaly with over one kilometre of strike at the ‘Prime’ area of the project. Over 100 historical drill holes containing copper and gold mineralization define a large, likely multi-centre porphyry system across 10 square kilometres of the MPD project.
  • The Gate Zone includes intervals of higher grade copper-gold within a broad lower grade interval, with mineralization present from near surface to a vertical depth of 800 metres, and remains open at depth.
  • Higher grade intervals include: 74.9 metres of 0.54% CuEq (0.43% copper and 0.11 g/t gold) from 297.0 metres to 371.9 metres. 102.0 metres of 0.68% CuEq (0.53% copper and 0.16 g/t gold) from 404.9 metres to 507.0 metres.
  • Broad moderate grade intervals include: 763.6 metres of 0.28% CuEq (0.21% copper and 0.07 g/t gold) from 52.3 metres to 816.0 metres (entire bedrock drill hole length). 340.7 metres of 0.42% CuEq (0.33% copper and 0.09 g/t gold) from 219.0 metres to 559.7 metres.”

Combining this with the September 2020 result of 282 m of 0.70% copper and 0.49 g/t gold (1.16% CuEq), with further assays results pending, and further drilling in 2020; you can start to see why investors (including mining giant Teck Resources) are getting excited.

Kodiak Copper’s MPD project historic drill results, strong discovery potential at depths below 200m

Source

Closing remarks

Kodiak Copper was founded by Chris Taylor who is well-known for his gold discovery success with Great Bear Resources, Kodiak is lead by President, CEO and Director Claudia Tornquist, the former General Manager at Rio Tinto. Kodiak is also part of the Discovery Group led by one of the most successful mining entrepreneurs in Canada John Robins and added to this, we now have Teck Resources (market cap US$7.4b) taking a 9.9% interest.

More assay results (drill hole MPD-20-005) are due out soon and then there will be further drill results in Q4, 2020. With a current market cap of C$102m means, Kodiak now has plenty of cash and plans to drill their US located Mohave porphyry project next.