[Overseas Stocks Spotlight] "Newmont Worth Considering for Benefits from Rising Gold Prices"

[Asia Economy Reporter Eunmo Koo] Newmont (Newmont·NEM US) is the world's largest gold mining company and is analyzed as a company that could benefit from rising gold prices.

Newmont is the world's number one gold mining company by production volume. When its competitor Barrick Gold merged with Randgold in 2018 to expand its scale, Newmont also merged with Goldcorp in April 2019. As of 2019, Newmont's production volume was 6 million ounces (187 tons), accounting for 5.4% of global gold mine production. Barrick Gold, ranked second, produced 5.47 million ounces (170 tons), accounting for 4.9%, following Newmont.

Researcher Jaekwang Lee of Mirae Asset Daewoo evaluated in a report on the 27th that Newmont could benefit from rising gold prices. Newmont currently owns world-class mines in North America, South America, Australia, and Africa. The production volume is divided as 42% North America, 24% Australia, 18% Africa, and 17% South America. With mine lives exceeding 10 years, the current operating mines alone can produce more than 6 million ounces annually for the next 10 years.

Lee said, "Rising gold prices lead to increased profits for Newmont. Assuming a base gold price of $1,200 per ounce, if the gold price rises by $100, Newmont's future cash flow increases by $400 million," adding, "The current gold price is around $1,700, and assuming this price level continues for five years, $15 billion of future cash flow will be newly created over five years."

With a dividend payout ratio around 40%, quarterly dividends are an added benefit. Newmont pays dividends quarterly, and over the past two years, the payout ratio was about 40%, with 41.8% in 2018 and 42.7% in 2019. Lee explained, "The first quarter dividend per share (DPS) this year was $0.25, a 79% increase compared to the previous year, and the payout ratio was 62.5%, due to profit increases from rising gold prices and the Goldcorp merger."