Newmont Mining Attractively Valued In Citi's View

Citi’s Alexander Hacking believes Newmont Mining Corp NEM has the highest potential among its peers to return capital to shareholders, through dividends and/or buybacks.

Hacking initiated coverage of the company with a Buy rating and price target of $51.

Strong Performance

“Newmont has posted a very strong operating performance under its new CEO. The portfolio is simplified (especially post Batu Hijau) and higher quality,” the analyst mentioned.

Hacking explained that the new management team, under the leadership of CEO Gary Goldberg, has done a good job on executing on the company’s strategic priorities.

In addition, Newmont Mining’s portfolio has been simplified, its debt reduced and free cash flow has improved. The company’s projects are also progressing on track, with Long Canyon and Merian on time and on or under budget.

“The recent sale of Batu Hijau was done at an attractive price, reduces near-term capex and de-risks the equity, in our view,” Hacking stated.

Attractive Valuation

The analyst believes the stock valuation is relatively attractive, with Newmont Mining’s AISC continuing above the industry average and expected to rise in the coming years.

“The future development of Yanacocha remains a question mark with the most attractive options currently blocked by community opposition,” according to the Citi report.

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