Newmont Corporation 2022 Form 10-K Summary
Business context and reporting period
Newmont is a global gold producer with operations and investments across North America, South America, Australia, Africa and Nevada. It also produces copper, silver, lead and zinc. The filing covers the fiscal year ended December 31, 2022, with comparisons to fiscal 2021 and 2020; it is not a quarterly filing.
Reportable segments were North America, South America, Australia, Africa and Nevada. Newmont acquired the remaining interests in Yanacocha during 2022 and owned 100% of the operation at year-end. Management began reassessing senior leadership accountabilities and operating strategies in January 2023, which could change reportable segments.
Key financial and operating metrics
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Sales | $11,915 million | $12,222 million | Down 3% |
| Net income attributable to Newmont stockholders | $(429) million | $1,166 million | Down $1,595 million |
| Continuing-operations net income attributable to stockholders | $(459) million | $1,109 million | Down $1,568 million |
| Diluted continuing-operations EPS | $(0.58) | $1.39 | Down $1.97 |
| Adjusted net income | $1,468 million | $2,371 million | Down 38% |
| Adjusted diluted EPS | $1.85 | $2.96 | Down $1.11 |
| Adjusted EBITDA | $4,550 million | $5,963 million | Down 24% |
| Operating cash flow from continuing operations | $3,198 million | $4,266 million | Down 25% |
| Free cash flow | $1,067 million | $2,613 million | Down 59% |
| Capital expenditures, cash basis | $2,131 million | $1,653 million | Up 29% |
| Gold produced, consolidated | 5.786 million ounces | 5.884 million ounces | Down 2% |
| Gold AISC per ounce | $1,211 | $1,062 | Up 14% |
Sales were approximately 54% attributable to costs applicable to sales, compared with approximately 44% in 2021. Adjusted EBITDA margin was approximately 38% in 2022 versus approximately 49% in 2021; these are derived non-GAAP comparisons.
- Average realized gold price was $1,792 per ounce, versus $1,788 in 2021.
- Gold costs applicable to sales increased to $933 per ounce from $785, primarily due to inflation, higher fuel and energy costs, labor costs, inventory adjustments and lower by-product credits.
- Other-metal production included 84 million pounds of copper, 29.7 million ounces of silver, 149 million pounds of lead and 377 million pounds of zinc.
- Cash and cash equivalents were $2,877 million, supplemented by $829 million of time deposits. Total reported liquidity was $6,706 million, including $3,000 million of undrawn revolving-credit capacity.
- Debt was $5,571 million and lease and other financing obligations were $561 million. Reported net debt was $2,426 million, compared with $1,310 million in 2021.
- Newmont paid $1,746 million of common-stock dividends during 2022 and declared regular dividends of $2.05 per share for the year. The stock-repurchase program expired on December 31, 2022; no shares were repurchased under the program during 2022.
- At year-end, attributable proven and probable gold reserves were 96.1 million ounces, measured and indicated gold resources were 75.3 million ounces, and inferred gold resources were 36.1 million ounces.
Material changes versus the prior comparable period
- Profitability deteriorated sharply despite relatively stable gold prices and production. The principal drivers were $1,320 million of impairment charges, higher operating costs from inflation, lower sales volumes for most metals and higher capital spending.
- 2022 impairment charges included $800 million of goodwill impairment at Porcupine and Cerro Negro and a $511 million long-lived-asset impairment at CC&V. Goodwill declined from $2,771 million to $1,971 million.
- Reclamation and remediation expense declined to $921 million from $1,846 million, but the reclamation and remediation liability increased to $7,104 million from $6,112 million.
- Newmont recorded a $529 million non-cash reclamation expense related to portions of Yanacocha with no expected substantive future economic value and increased the Yanacocha reclamation liability by $511 million.
- CC&V production declined 17%, and its mill was placed into long-term care and maintenance. Peñasquito production declined 17%; its 2022 costs included a $70 million charge related to retroactive 2021 workforce profit sharing.
- Production increased at Boddington, Ahafo and Akyem, partially offsetting declines at North America, South America and Nevada operations.
- Newmont completed the acquisition of the remaining Yanacocha interests for total cash consideration of $348 million, including the Sumitomo interest, and sold its La Zanja interest. It also sold its 18.75% interest in MARA, recognizing a $61 million gain.
- Capital expenditures rose to $2,131 million, including $1,131 million of development projects and $1,059 million of sustaining capital on an accrual basis.
Guidance, outlook, commentary, risks and unusual items
- No consolidated 2023 production, cost or cash-flow guidance is provided in the supplied filing text. Investors should consult subsequent company disclosures for current guidance.
- Ahafo North and Tanami Expansion 2 are the principal near-term development projects. Each is expected to begin commercial production in late 2025, with the first full year of production expected in 2026. Estimated capital costs are $950 million to $1,050 million for Ahafo North and $1,200 million to $1,300 million for Tanami Expansion 2.
- Ahafo North is expected to add approximately 275,000 to 325,000 ounces of gold annually during its first five full years. Tanami Expansion 2 is expected to add approximately 150,000 to 200,000 ounces annually and reduce operating costs by approximately 10% during its first five years.
- The full-funds investment decision for the Yanacocha Sulfides project was delayed because of inflation, supply-chain constraints, higher commodity and capital costs, labor-market pressures and capital-allocation considerations. Management is assessing alternatives, including transitioning Yanacocha into full closure. Yanacocha had approximately $1,030 million of long-lived assets at year-end, including approximately $621 million related to Yanacocha Sulfides.
- Yanacocha requested an extension of the deadline for compliance with modified Peruvian water-quality standards from January 2024 to 2027. If the extension is not approved, fines and penalties may result. Ongoing water-treatment, tailings and closure studies could materially change reclamation obligations.
- Newmont is implementing the Global Industry Standard on Tailings Management. Priority facilities are targeted for conformance by August 2023 and all other facilities by the second half of 2025. Compliance may increase sustaining and closure costs.
- The company is exposed to gold, copper, silver, lead and zinc prices and generally does not hedge metal sales. A $100 per ounce decline in the long-term gold-price assumption could result in an impairment of stockpiles of up to approximately $70 million and could materially affect long-lived-asset valuations.
- Additional key risks include energy and labor inflation, foreign-exchange volatility, water availability, climate and severe-weather events, tailings or geotechnical failures, permitting and community opposition, political and tax changes, labor disputes, cybersecurity incidents and the ability to maintain access to capital.
- Outstanding surety bonds, letters of credit and bank guarantees totaled $1,872 million. Contractual obligations totaled $20,621 million, including $8,720 million of undiscounted reclamation and remediation liabilities and $8,975 million of debt obligations including estimated interest.
- Material legal and tax contingencies include disputes involving the Holt royalty obligation, Ghanaian mining-lease ratification, Australian capital-gains tax, Argentine transfer pricing and Peruvian water-quality compliance. The filing states that outcomes for certain matters cannot reasonably be predicted.
Most important facts for an investor to verify
- Whether 2023 production and AISC guidance confirms stabilization after the 2022 cost inflation and production declines.
- Updated timing, capital requirements, funding and economic feasibility for Ahafo North, Tanami Expansion 2 and Yanacocha Sulfides.
- Further changes to Yanacocha reclamation, water-treatment and closure estimates, including the requested 2027 compliance extension.
- Progress toward tailings-management compliance and the resulting sustaining-capital and closure-cost effects.
- Gold-price, cost-inflation and reserve assumptions underlying impairment tests and the 96.1 million-ounce reserve estimate.
- Debt maturities, dividend capacity and liquidity after capital spending, reclamation funding, joint-venture commitments and potential tax or legal payments.
- Resolution of the Australian tax review, Argentine transfer-pricing matter, Ghanaian legal proceedings and Holt royalty litigation.
- Subsequent changes to management, reportable segments and operating strategy announced after the January 2023 reassessment.