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Newmont Closes KGCM Stake Sale, Cuts 2020 Production View

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Newmont Goldcorp Corporation (NEM - Free Report) has successfully completed the divestment of its 50% interest in Kalgoorlie Consolidated Gold Mines (KCGM) to Northern Star Resources Limited for cash proceeds of $800 million.

Newmont had previously announced the agreements to sell Red Lake in Canada for $375 million and its stake in Continental Gold for $260 million. Through the latest move, the company has achieved its divestiture target of between $1 billion and $1.5 billion. Newmont expects to receive more than $1.4 billion in cash proceeds in first-quarter 2020. The divestment of KCGM streamlines Newmont’s portfolio. It now has 12 top-tier assets, which are located in four continents having favorable gold mining jurisdictions.

The company has also issued an updated 2020 guidance and long-term view. For 2020, Newmont expects attributable gold production to be 6.4 million ounces, down from earlier forecast of 6.7 million ounces. In the long term, gold production is projected in the range of 6.2-6.7 million ounces through 2024.

Gold costs applicable to sales (CAS) projection for 2020 is unchanged at $750 per ounce. Gold CAS per ounce for 2021 and 2022 are expected between $650 and $750 and in the band of $600-$700 for 2023 and 2024.

All-in sustaining costs (AISC) per ounce expectation for gold for 2020 are unchanged at $975 and between $850 and $950 for 2021 and 2022. Gold AISC per ounce is projected between $800 and $900 for 2023 and 2024.

The company has lowered attributable sustaining capital guidance for 2020 to $950 million and in the range of $0.9-$1.1 billion in the long-term through 2024.

Newmont’s shares have gained 25.8% in the past year compared with 52.5% surge of the industry.

Zacks Rank & Key Picks

Newmont currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Impala Platinum Holdings Limited IMPUY, Pan American Silver Corp PAAS and Sibanye Gold Limited SBGL, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Impala Platinum Holdings has projected earnings growth rate of 255.2% for fiscal 2020. The company’s shares have skyrocketed 286.6% over a year.

Pan American Silver has an estimated earnings growth rate of 38.1% for 2020. Its shares have returned 57% in the past year.    

Sibanye Gold has an expected earnings growth rate of 587.5% for 2020. The company’s shares have surged 232.2% in the past year.

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