Shares in the world’s largest gold miner Newmont Mining (NEM) lost their shine today on reports that it could be laying off thousands of workers.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Reducing Costs
According to a report in Bloomberg, the miner has not specified the number of jobs it intends to cut, but it has set a target of reducing costs by $300 per ounce leading to thousands of lay offs.
The ounce reference presumably refers to a production figure rather than the weight of its employees.
It is understood that Newmont is making the move in order to be “closer in line with its lowest-cost peers.” In the quarter ended June 30, Newmont reported all-in-sustaining costs, an industry metric reflecting total expenses, of $1,593 per ounce for gold, up 2% from a year earlier.
This is how its share price has compared with peers over the last few months – see below.
Last year, the miner announced plans to divest non-core assets, trim its workforce and cut debt following its multi-billion-dollar acquisition of Australian firm Newcrest.
Employees Informed
As of December 31, 2024, Newmont had 22,200 employees and about 20,400 people were working as contractors.
Bloomberg reported that Newmont had already started informing some staff about redundancies, with executives and division managers holding calls over job cuts and other cost-cutting plans, including potentially curbing long-term incentives.
The move comes despite Newmont Mining achieving an unprecedented milestone in its second quarter with a record quarterly free cash flow of $1.7 billion. This achievement was largely driven by strong production and financial results, showcasing the company’s ability to generate significant cash from its core operations.
Newmont like other mining stocks has been helped this year by a surge in gold prices – see below.
This has been driven by investors flocking to gold as a safe haven in a period of geopolitical and economic volatility. These drivers are likely to continue in the near term.
Is NEM a Good Stock to Buy Now?
On TipRanks, NEM has a Moderate Buy consensus based on 9 Buy and 5 Hold ratings. Its highest price target is $87. NEM stock’s consensus price target is $73.46, implying a 1.42% upside.
