Newmont's Record Free Cash Flow Sets the Pace: But Will It Last?

Newmont Corporation NEM achieved a record first-quarter free cash flow of $1.2 billion, marking a significant turnaround from a negative $74 million in the same period a year ago. This substantial improvement came on the back of Newmont's enhanced operational efficiency and the strength of its Tier 1 portfolio. Strong free cash flow positions the company to strengthen its balance sheet and pursue strategic growth investments.

While the first-quarter performance set a high bar, sustainability remains a concern heading into the second quarter. Newmont has flagged several headwinds likely to impact second-quarter free cash flow. These include the impact of non-core asset divestitures, which reduce cash-generating capacity, and a spike in tax payments due to increased profitability in earlier quarters and taxes from divestments. Also, higher capital spending at Ahafo North and Cadia, alongside increased expenditures tied to the construction of water treatment facilities at Yanacocha, are expected to contribute to the decline. 

The anticipated dip, however, appears to be a byproduct of long-term growth initiatives and portfolio optimization rather than deteriorating fundamentals. Newmont’s solid balance sheet allows it to fund its growth projects, meet debt obligations and drive shareholder value, notwithstanding the near-term cash flow pressure.

Among its major peers, Barrick Mining Corporation B reported a free cash flow of $375 million for the first quarter, a nearly 12-fold year-over-year rise. The surge reflects Barrick’s higher operating cash flows driven by an uptick in realized gold and copper prices. Barrick reduced net debt by 5% during the quarter, leveraging healthy free cash flow generation. 

Agnico Eagle Mines Limited AEM also generated solid first-quarter free cash flows of $594 million, up around 50% year over year, backed by the strength in gold prices and operational results. This growth reflects Agnico Eagle's consistent operational execution and cost management. Agnico Eagle remains focused on paying down debt using excess cash flow, with net debt reducing by $212 million sequentially to just $5 million at the end of the first quarter.  

The Zacks Rundown for NEM

Shares of Newmont have shot up 48.5% year to date against the Zacks Mining – Gold industry’s rise of 53.9%, largely driven by the gold price rally.

From a valuation standpoint, NEM is currently trading at a forward 12-month earnings multiple of 12.59, a roughly 10% discount to the industry average of 13.97X. It carries a Value Score of B.

The Zacks Consensus Estimate for NEM’s 2025 and 2026 earnings implies a year-over-year rise of 20.1% and 11.7%, respectively. The EPS estimates for 2025 and 2026 have been trending higher over the past 60 days.

NEM stock currently carries a Zacks Rank #1 (Strong Buy). 

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This article originally published on Zacks Investment Research (zacks.com).

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