London, UK, 10 February 2021

Newmont Corporation (NEM/NGT): Initiation - The sustainable leader

Even with investment in new growth projects, we expect Newmont's pre-financing cash flows to increase by 47.4%, from US$2.6bn to US$3.9bn (or US$4.83/share) by FY25 and to continue to increase thereafter as past investment is brought to account and net debt potentially extinguished. At the same time, shareholders will also benefit from a market-leading dividend as well as a share buyback programme of approximately the same order of magnitude.

Based on nine measures across three methodologies, our blended average valuation of Newmont's shares is US$76.34/share. Stated alternatively, we calculate that Newmont's current share price of US$59.30/share discounts a real cost of equity of 7.7%, which is approximately double that implied by prevailing market conditions. This puts it on a premium rating relative to its peers, but may be justified by the company's size, track record and that fact that almost all of its operations are in top tier jurisdictions. However, Newmont remains cheap relative to its own historical valuation measures, which, on average, imply a share price over US$100/share.

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