Top five contrarian commodity scenarios for 2025
The upcoming year has the potential to be one of the most volatile in recent memory, particularly in commodities, writes Clyde Russell.
Newmont Corp. shares had their biggest decline in more than two years after investors soured on earnings results that suggest the top gold producer is struggling to control mining costs and capitalize on surging bullion prices.
Shares fell as much as 9.1% in New York on Thursday, the biggest intraday decline since July 2022. The stock drop came a day after Newmont posted third-quarter results that missed analysts’ estimates on adjusted earnings, costs and revenue. Newmont fell short of expectations after spending more to dig up the precious metal at its mines in Australia, Canada, Peru and Papua New Guinea.
The Denver-based company is the first major gold producer to post results in an earnings season where investors have been anticipating bumper profits from bullion producers. Gold is among the best-performing metals this year, surging more than 30% since the start of January and setting repeated record highs.
“The street expectations were too high,” said Carey MacRury, a mining analyst at Canaccord Genuity. “It was negative, no doubt, but I don’t think it’s as negative as what the market’s telling us today.”
Despite the missed expectations, Newmont posted its highest quarterly profits in five years — raking in $922 million in net income attributable to shareholders for the quarter.
Gold miners have struggled with higher labor and energy costs over the past few years. Newmont said its capital expenses rose 10% due to expansion projects in Australia and Argentina. But some of the company’s higher expenses came from major assets it picked up through last year’s $15 billion takeover of Newcrest Mining Ltd. Newmont posted 55% higher all-in sustaining costs at its Lihir operation in Papua New Guinea in the third quarter compared to the prior period.
The higher expenses are largely due to specific operational issues at Newmont mines, according to MacRury.
“We don’t see the cost miss as inflation read-through to the broader industry,” he said.
(By Jacob Lorinc)
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