Analysis indicates Newmont (NEM) faces a dual challenge of rising gold prices and increasing costs, with costs potentially diluting profits from higher gold prices.
Newmont achieved an average gold price of $4,414 per ounce in the second quarter, but attributable gold production decreased year-over-year. Nevertheless, the company boasts $2.2 billion in free cash flow and $4.3 billion remaining on its share repurchase authorization, providing flexibility to return capital to shareholders during periods of high gold prices. However, second-quarter gold by-product cash costs (CAS) increased 93% quarter-over-quarter to $1,043/ounce, and all-in sustaining costs (AISC) rose 58% to $1,621/ounce, primarily due to higher royalties in Ghana, increased diesel costs, and operational pressures at the Cadia mine. Newmont anticipates a quarter-over-quarter increase of approximately $150 million in sustaining capital expenditures for the third quarter. The company estimates that every $100/ounce increase in gold prices impacts pre-tax revenue and costs by approximately $505 million; every $10/barrel change in Brent crude oil prices impacts pre-tax costs by approximately $60 million. As of the end of Q1 2026, the number of hedge funds holding positions in Newmont increased to 82.
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