This Stock Plunged -14.7% on Earnings While Sitting on a Legit Gold Mind... WTH?

Just when you think Newmont, the world’s largest gold miner, is about to ride the wave of record-breaking gold prices, they go ahead and fumble the bag. Hard. Like, really hard. 

(Source: Giphy) 

Despite gold sitting pretty near its all-time high, Newmont managed to turn a potential win into a 14.7% nosedive in after-hours trading (their worst drop since 2008… *cringe*). How? By missing profit estimates, thanks to ballooning costs. That’s right, friends, even with gold prices cranking up to a jaw-dropping $2,518 per ounce, Newmont still found a way to screw the pooch. You hate to see it.

(Source: MSN) 

Let’s start with the good news - because it’s slim picking. Newmont’s Q3 net income surged nearly 6x, hitting $922 million, and revenues shot up a beefy 84% year-over-year to $4.61 billion. Now obviously you’d think that would have Wall Street pumping fists, but nope, the devils in the details. 

You see, while Newmont was out here stacking bars of God's money, their all-in sustaining costs—basically what it takes to keep the lights on and the gold flowing—spiked to $1,611 per ounce. That’s a big jump from last year’s $1,426 per ounce and well above what analysts were banking on. 

(Source: GuruFocus) 

Aaaaaand that, my friends, is where it all went sideways. Turns out running massive mines in places like Papua New Guinea and Argentina isn’t cheap, especially when you’re dealing with labor shortages, rising diesel prices, and the occasional costly maintenance shutdown. The result? Newmont’s adjusted earnings landed at $0.81 per share—missing the mark by a humble $0.05. But on Wall Street, that’s enough to send your stock tumbling like a miner down a shaft. 

(Source: Giphy) 

So, who’s to blame for this fiasco? 

Well, Newmont’s CEO, Tom Palmer, pointed the finger squarely at labor costs. According to Palmer, the company’s workforce demands have ballooned beyond what they expected at the start of the year. “Maintenance shutdowns, flying people in and out of remote camps, you name it—we’re paying out the nose,” Palmer told analysts. And while Newmont has been busy reopening operations at places like Cerro Negro (Argentina) and boosting output in Canada, Ghana, and Peru, those sweet, sweet production gains were eaten alive by rising expenses. 

(Source: Reuters) 

But, but, but… here’s the girthy part, Newmont isn’t the only one feeling the heat. The company’s top rival, Barrick Gold, also dropped the ball, with production coming in light. But hey, at least Newmont’s got plans. The company is still on track to hit its 2024 guidance of 1.8 million ounces at an all-in sustaining cost of $1,475 per ounce in Q4. And they’ve got a $2 billion share buyback program in the works, which should, in theory, calm some of the investor panic. 

(Source: Proactive) 

Meaning, even though the stock plunged a brutal 14.7%, again, their worst single-day drop since 2008 - Newmont’s still up 19.02% YTD. Not too shabby considering they just belly-flopped into the earnings pool. But still, analysts are split when it comes to the future: some are ringing alarm bells about the rising costs, while others are saying the market overreacted. After all, Newmont’s still raking in record profits, and with gold prices rising higher than my hopes of a winning season for my piss poor Sooners, there’s plenty of room for a rebound.

In the end, Newmont clearly needs to get its costs under control—fast. With gold prices staying strong and production humming along, there’s still hope they can turn this stumble into a comeback. But for now, investors are left holding the bag, wondering how a gold miner could fumble so spectacularly while sitting on a literal gold mine… *sigh*

As always, do what you will with this information and stay safe and stay frosty, friends! Until next time…

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Stocks.News does not hold positions in companies mentioned in the article.