Newmont Mining Corp (NEM) struggled on Monday following a 3.46% selloff. Investors in the company have gained over 110% on the year due primarily to rebounding commodities. The company’s stock is lower in recent days as gold prices slump, but this doesn’t negate the company’s strong year.
The company has used its money wisely after the announcement that the company paid off a loan due in 2019.
Newmont paid off the remaining $275 million balance to reduce debt and interest expenses. A move to pay off the company’s debt reinforces that company’s approach to provide greater shareholder value and optimize its balance sheet.
The company maintains $6 billion in strong liquidity.
Newmont is a mining company with a focus on gold and copper. The company’s stock is riding high on several “buy” ratings, with Citigroup placing a “buy” rating on the company in early August. The operating performance of the company has also been touted following the guidance of the company’s new CEO.
The Federal Reserve’s vagueness on interest rate hikes further strengthened Newmont’s business this year. A stronger greenback increases the value of gold for foreign investors.
George Goldberg, CEO of Newmont Mining, announced that after years of repaying debts, cutting costs and mine acquisitions and sales, the company is looking ahead to its dividends. Goldberg believes the company will reach internal debt targets in 2 years.
Goldberg suggests the company may increase its dividend payout in the third-quarter of the year.
The company has reduced its debt by 50% in the past three years.
Gold prices are up 25% in 2016, and Newmont budgeted for gold prices to be $1,100. Gold prices are over $1,300 a troy ounce as of Thursday, September 1st.
The company has held off on buying competitors, as gold prices have inflated the costs of many potential acquisitions. Newmont Mining has used the rise of gold prices to position the company for future growth and lower debt.
