NEM has been outperforming the ASX gold miners over recent months, and we saw why overnight: It’s delivering operationally. The world’s largest gold producer was trading up more than 2% this morning after delivering a solid quarterly update, including a $US3bn share-buyback and 25c dividend. The company said it produced 1.48 million ounces of gold in the quarter, down from 1.61 million a year earlier. However, its average gold price rose 41% to US$3,320.
- Quarterly sales of $US5.37bn beat estimates of $4.93bn.
- 2Q EPS of $US1.43, up 98.6% YoY, beat $US1.12 estimate.
They also delivered a beat on the cost front, an impressive turnaround for a company that had struggled with rising expenses, mirroring issues across the industry. Interestingly, performance at two of its Australian mines and the Lihir mine in Papua New Guinea were front and centre. Perhaps the ASX names will follow suit moving forward.
- We like NEM for medium/long-term exposure to a rising gold price.
