A $715/oz Margin Compression in One Quarter, and a De-Rating That Finally Pays You for It: Upgrading Newmont to Outperform

Results vs. Consensus

Q2 2026 Scorecard

The EPS line is genuinely ambiguous, and we will not pretend otherwise. Provider consensus ranged from $1.99 to $2.12 on a $2.10 print, which makes this a modest beat on the most widely cited compile and a rounding-error miss on another. Treat adjusted EPS as in line. The revenue line is not ambiguous: every provider clustered at $6.35B to $6.38B against $6,118M actual, a shortfall of roughly 4%, and that is what the market traded on.

Year-Over-Year Comparison

Against the year-ago quarter this looks straightforwardly good, and it is worth saying so before dismantling it. A 15% revenue increase on 12.5% lower production is entirely a price effect, but the cost line is the genuine achievement: absolute costs applicable to sales rose 4.3% while the realized gold price rose 32.9%. Royalties and production taxes scale with the gold price, so a business with no cost discipline would have shown far more than 4% absolute cost growth on that move. Some of the production decline is portfolio shape rather than performance, since the year-ago quarter still carried 14koz from assets since divested.

Quarter-Over-Quarter Comparison

Quality of the Quarter

• Revenue: The 16.3% sequential decline decomposes into a 9.9% drop in the realized gold price, a 3% decline in consolidated gold ounces sold (1,195koz from 1,232koz), and a collapse in co-product volumes. Copper fell 43% to 17kt, silver 22% to 7Moz, lead 33% to 18kt and zinc 35% to 40kt, driven by the Cadia seismic event and lower co-product grade at Peñasquito. Silver also repriced from $66.78/oz to $53.49/oz. Copper was the lone offset, realizing $6.82/lb against $5.68 in Q1.
• Margins: The by-product AISC move from $1,029/oz to $1,621/oz looks alarming and overstates the deterioration, exactly as the same metric understated it last quarter. By-product AISC nets co-product revenue against gold cost, so when Peñasquito and Cadia stop producing silver and copper, the credit vanishes and the gold cost line balloons. Peñasquito's by-product AISC moved from -$9,318/oz to -$4,352/oz on that mechanism alone. The co-product figure of $1,938/oz, up 13.4%, is the number to carry.
• EPS: High quality. Adjusted net income of $2,246M sits only $44M above GAAP net income attributable of $2,202M, so there is essentially no add-back cushion. The primary adjustments are a $111M non-cash mark on investments and options and $12M of restructuring and severance. The effective tax rate of 31.7% on pre-tax income of $2,999M is slightly below the 33% guide, but that is arithmetic rather than engineering.
• Free cash flow: This is where we would push back on the "record" framing. Working capital was a net use of $90M, but inside that sits a $461M favorable receivable movement, primarily at Peñasquito and Cadia, where lower sales volumes drew down outstanding balances. Management stated in the release that this "may partially reverse in future periods." Strip it entirely and free cash flow is roughly $1.74B, about 2% above the year-ago quarter's $1,710M. A 33% higher realized gold price produced a 2% increase in underlying free cash flow. That is the cost inflection made visible.

Operating Performance by Asset

Boddington and Lihir carried the quarter

The two assets that absorbed the Cadia hole were Boddington, up 44% sequentially to 160koz with by-product AISC falling $261/oz to $1,326, and Lihir, up 39% to 157koz with AISC falling $64/oz to $1,707. Lihir is the more meaningful signal because it is the asset that has consumed the most management attention since the Newcrest acquisition, and it delivered its best quarter of the coverage window while its unit cost fell.

"We've seen stability through the mining operations. We see an improvement in reliability in our fixed assets. We've seen a reduction in cost and labor across the asset... We have also now got access into 2 high-grade areas that will allow us with the stability in production to see the benefit from high-grade areas through the rest of the processing facilities."
— Natascha Viljoen, President and Chief Executive Officer

Assessment: Lihir turning into a contributor rather than a problem is the single most underappreciated item in the quarter. It also matters structurally: the Nearshore Barrier, whose mobilization ramps in Q3, unlocks more than 5Moz beginning in 2028, and that project is only worth funding if the plant is reliable. Two consecutive quarters of reliability improvement make the barrier spend look like growth capital rather than a rescue.

Cadia is the hole, and it is only partly filled

Cadia produced 34koz against 94koz in Q1, a 64% decline, and its copper output fell from 21kt to 7kt. Because Cadia is Newmont's largest copper by-product source, the loss shows up twice: once in gold ounces and again in the by-product credit that had been suppressing group unit costs. Cadia's own by-product AISC swung from -$139/oz to $1,728/oz, and its co-product AISC nearly doubled to $3,151/oz, including $18M of incremental other expense booked during the downtime.

Assessment: The company held full-year group guidance through a 60koz single-asset quarterly loss, which is the strongest possible evidence for the portfolio-resilience argument. But the recovery is not complete. The two mature operating caves resumed in mid-June; cave establishment at both project caves remains halted pending regulatory approval to restart "later in the year." That is a deferral, not a resolution, and it pushes development capital into H2.

Ahafo South is now the cost problem

Ahafo South produced 100koz, down 22% sequentially on lower grade from planned sequencing, and its by-product AISC rose $640/oz to $2,604, making it the most expensive managed asset in the portfolio. The driver is a combination of that grade rollover and the first full quarter of Ghana's increased royalties. Ahafo North, by contrast, continues to ramp cleanly at $1,485/oz and is guided to a long-run rate of roughly 350koz per year.

Assessment: The Ghana complex is now a two-speed story: a maturing, high-cost mine and a new low-cost one ramping alongside it. The blended jurisdiction cost is rising, and the royalty change is permanent rather than cyclical. This is a structural margin headwind that will not reverse with the gold price, and it deserves more attention than it received on the call.

Nevada Gold Mines held, at a higher cost

Newmont's 38.5% attributable share of NGM rose 2% to 240koz, with costs applicable to sales up 15% to $1,473/oz and AISC up 13% to $1,805/oz. Production stability from a joint venture currently the subject of a notice of default is worth noting on its own.

Assessment: Operationally fine, financially a drag on group unit costs, and strategically the largest unresolved item in the story. The 13% AISC increase at an asset Newmont does not operate is a reminder that NGM alone is 19% of attributable production, and non-managed assets together are 27%, all outside management's direct operating control.

Co-Product Metals

Assessment: Volumes fell across every co-product line simultaneously, and the one that mattered most for the cost optics, silver, also fell 20% in price. Both effects are guided to partially reverse in Q3, with management specifically calling out higher silver volumes at Peñasquito as a partial offset to the sequential unit-cost increase. Investors modelling group AISC need to model Peñasquito's silver, which is an uncomfortable amount of leverage to place on one asset's co-product grade.

Key Topics & Management Commentary

Overall Management Tone: Measured and operationally specific, notably less promotional than the two record quarters that preceded it, with the confidence placed on process and cost control rather than on results. The reflex to pre-warn continued: rather than let the below-guidance year-to-date cost figure stand, management immediately guided Q3 unit costs higher again. The one area where the posture visibly hardened was the Barrick joint venture, where the language moved from procedural to legal and questions were declared off-limits in advance.

1. The Operating Leverage Runs in Reverse

Management framed the quarter around the leverage working in the company's favour on a year-over-year basis, which is true and is the correct long-horizon frame. The sequential picture is the one that moved the stock.

"Year-over-year, our realized gold price increased by approximately $1,100 per ounce or about 33%, while absolute cost applicable to sales increased just 4%. As a result, a substantial portion of the higher gold price translated into stronger margins and free cash flow."
— Brian Tabolt, Executive Vice President and Chief Financial Officer

Both halves of that statement are verifiable in the filing, and the 4% absolute cost growth against a 33% price increase is genuinely good cost control. But leverage is symmetric. The same structure that turned a $1,100/oz price increase into a 41% increase in adjusted net income year over year turned a $486/oz sequential decline into a 29% decrease.

Assessment: The year-over-year frame is the one management will use for as long as it flatters. Investors should model the sequential one, because the year-ago comparison gets progressively harder from here: Q3 2025 realized $3,539/oz and Q4 2025 realized $4,216/oz, so the year-over-year price tailwind narrows sharply in the back half and inverts if spot holds near current levels.

2. The By-Product AISC Illusion, Now Inverted

We flagged last quarter that the $1,029/oz by-product AISC was flattered by peak silver and copper credits and seasonally light capital, and that the co-product figure of $1,709/oz was the truer read. The same metric has now inverted, printing $1,621/oz and looking far worse than the underlying business.

"Gold all-in sustaining costs were $1,621 per ounce on a byproduct basis, remaining well below our full year guidance of $1,680 per ounce. Unit costs increased sequentially quarter-over-quarter as expected, primarily reflecting lower gold and silver production and sales volumes, a lower byproduct contribution and the full quarter impact of higher Ghana royalties and higher diesel prices."
— Brian Tabolt, Executive Vice President and Chief Financial Officer

The mechanics are worth stating plainly. By-product AISC subtracts co-product revenue from gold costs before dividing by gold ounces. When Cadia's copper falls 67% and Peñasquito's silver falls 22% at a 20% lower price, the subtraction shrinks and the quotient jumps, without any operating cost having changed. The co-product measure, which allocates cost across metals instead, rose a comparatively mild 13.4%.

Assessment: Newmont reports both, which is to its credit, but it leads with the by-product figure in both directions. The metric is close to useless for tracking underlying cost trend in a portfolio this polymetallic. Use co-product AISC of $1,938/oz, and note that it has now risen for three consecutive quarters from $1,566 in Q3 2025.

3. Record Free Cash Flow, and the $461M Inside It

Second-quarter free cash flow of $2,205M is a genuine record for a second quarter and was delivered alongside $1,081M of cash tax payments. Cash from operations before working capital was $3,014M.

"Working capital was a modest use of cash during the quarter, primarily reflecting reclamation spending at Yanacocha, normal course inventory and stockpile builds and the timing of cash tax payments. This was partly offset by favorable receivable movements at Peñasquito and Cadia, where strong collections and lower sales volumes reduced outstanding balances. As we move into the second half of the year, working capital variability may continue, including the potential unwinding of a portion of the receivable benefit recorded in the quarter."
— Brian Tabolt, Executive Vice President and Chief Financial Officer

The receivable release was $461M against reclamation spending of $249M, inventory and stockpile builds of $131M, an accrued tax movement of $116M and other accrued liabilities of $166M, netting to the $90M working-capital use. Note the source of the receivable benefit: it came in part from lower sales volumes, which is to say the same weakness that hurt revenue helped cash.

Assessment: Management disclosed this clearly and pre-warned the reversal, which is the behaviour we want. But the disclosure does not change the arithmetic. Underlying free cash flow of roughly $1.74B was 2% above the year-ago quarter on a 33% higher gold price, and the H2 capital ramp lands on top of a partial receivable unwind. Q3 free cash flow should be modelled well below Q2.

4. Cadia: the Operating Caves Are Back, the New Caves Are Not

The April 14 seismic event cost roughly 60koz of quarterly production and 14kt of copper. Recovery is real but partial, and the distinction between mature and developing caves is the operative one.

"We've got 2 operating caves. The 2 operating caves are fully back in production in mid-June. Then we have all of the project development work around the 2 new caves, of which PC2-3 is furthest developed... All the development work is continuing at the moment. We've got approval for that. It's just the cave establishment that has been halted that we need to restart."
— Natascha Viljoen, President and Chief Executive Officer

Management expects PC2-3's final drawbells by the end of this year, and is working with the regulator to restart cave establishment at both project caves. Development capital deferred from H1 is a named driver of the 63% second-half weighting.

Assessment: Holding full-year guidance through this is a real accomplishment and validates the resilience pillar. The residual risk is regulatory timing on cave establishment, which is outside the company's control and which management would not date. Cadia's medium-term ounces matter less than the market assumes, a point the CEO made explicitly when asked about the path back to 6Moz, but its copper matters a great deal to reported unit costs.

5. The CFO Seat Is Filled, and the Bench Came From Inside

After more than a year of interim leadership, Brian Tabolt was appointed Executive Vice President and Chief Financial Officer, alongside Mark Rodgers as Chief Operating Officer, Dave Thornton as Chief Technical Officer and David Fry as EVP of Project Development. All four were internal promotions. Peter Wexler, who served as interim CFO through the framework redesign and two record quarters, was thanked and returns to his prior remit.

"These appointments reflect the confidence we have in the people who know our business best. Together with existing team members, Peter Wexler, Peter Toth and Debbie Leyva, they have helped shape the company we are today and share accountability for delivering the plans that define our future."
— Natascha Viljoen, President and Chief Executive Officer

Assessment: This closes the governance box we have kept open since initiation. The internal sourcing is the notable feature: a company that had a fatality, an earthquake and a partner dispute inside eighteen months chose to promote from within across finance, operations, technical and projects simultaneously. That is either a statement of genuine bench depth or a missed opportunity for outside challenge. Given the operating record of the past three quarters we read it as the former, but a first-time CFO arriving as the commodity rolls over is a real, if modest, execution risk.

6. Nevada Gold Mines: the Language Hardens

The February 2026 notice of default served on Barrick remains unresolved. What changed this quarter is the framing. Management pre-empted the topic in prepared remarks, disclosed more about the substance of the disagreement than in either prior quarter, and then declined all questions.

"We have actively engaged with Barrick over the last few months to find mutually acceptable solutions to our diverging legal, technical and commercial views on the various aspects of the joint venture's management and past performance, the proposed IPO and the potential resulting complexities and contribution process for all excluded properties... we find ourselves nearing the end of this extensive direct engagement period with several key issues still unresolved... protecting and if required, enforcing our legal rights enshrined in the JV agreement."
— Natascha Viljoen, President and Chief Executive Officer

Three items are new relative to April: an explicit reference to a proposed IPO and the contribution process for excluded properties, an acknowledgment that the direct engagement period is nearing its end, and the conditional reference to enforcing legal rights. When asked directly whether there was still no deadline attached to the notice of default, the answer was a single word: yes, still the case.

Assessment: This has moved from a procedural dispute to something that reads like the last stage before formal escalation. That cuts both ways. An unquantified, open-ended overhang caps a multiple; a dispute heading to resolution, even a contested one, at least has a terminal date. Newmont's 38.5% NGM interest contributed 240koz this quarter, roughly 19% of attributable production, so the stakes are material. Fourmile is the asset underneath much of this, and management confirmed for the first time that Newmont's interest in the existing processing infrastructure should offset any capital contribution.

7. Oil at $100 Against a $70 Guidance Assumption

Newmont's 2026 guidance was set in February on a Brent assumption of $70 per barrel. Brent averaged approximately $100 in the second quarter, and management expects that to persist into Q3.

"Obviously, today, with the oil price jumping up to $100 a barrel, we are watching and monitoring cost pressures across the business... There is a bit of a lag in terms of when the price of oil hits our diesel... for every $10 per barrel change in the price of oil, you'll see on a full year basis about a $60 million impact."
— Brian Tabolt, Executive Vice President and Chief Financial Officer

On the company's own disclosed sensitivity, oil at $100 versus the $70 assumption is roughly $180M of annualized cost, before the second-order effects on freight, explosives, cyanide, grinding media and contractor labour that management named but declined to quantify.

Assessment: This is the cost pressure the market is under-modelling, and it is running against guidance that has not been reset. Management has absorbed it so far through productivity, and the evidence for that is concrete rather than rhetorical: nearly 50 mining production units parked across the portfolio without affecting production, a 15% increase in underground productive time per shift at Cerro Negro, reduced contractor utilisation. But absorbing $180M is different from absorbing $180M plus indirect escalation, and the guide still assumes $70.

8. Absolute Cost Discipline Is Beating Its Own Guide, Quietly

Underneath the unit-cost noise, the corporate cost lines are running materially below plan and nobody mentioned it. General and administrative expense was $153M in the first half against a full-year guide of $375M. Exploration plus advanced projects was $212M against a $525M guide. Annualise the first half and both lines land roughly 18% to 19% below their full-year guidance.

Assessment: This is the continuation of the absolute-cost programme that drove our upgrade in October 2025, and it is the most durable part of the investment case because it is independent of the gold price. It also gives management genuine room to hold full-year cost guidance even if the unit-cost line stays under pressure. That management did not claim credit for it on the call is either admirable restraint or a hint that some of the underspend is timing rather than saving.

9. Red Chris Clears Permitting, and the Capital Number Goes Up

The block cave project received an amended Environmental Assessment Certificate through a consent-based process with the Tahltan Nation and an amended Mines Act permit from British Columbia. Management is targeting feasibility completion and a Board decision toward the end of this year, potentially slipping into early Q1 2027. The Canadian federal government has committed $500M in support, the form of which remains undefined pending an MOU with the Major Project Office.

"You are right that we have seen the... we expect the capital to be higher than what the original numbers were under Newcrest. And it has been predominantly driven by the inflationary cost we've seen around project development across the sector... My view on these projects, it is a material project that we are considering approving. So if we have to delay a month or 3 to make sure that we get everything right and that we've closed out on all of our items, that is something we will do."
— Natascha Viljoen, President and Chief Executive Officer

Assessment: Consent-based permitting with the Tahltan Nation is the hardest part of a BC block cave and it is done. What is not done is the number. "Higher than the original" with a September 2025 fall of ground in the project's history and no figure attached is the kind of disclosure gap that becomes a negative surprise. Management's stated willingness to delay for rigour is the right instinct, and it is also the second consecutive quarter in which the FID timeline has drifted right.

10. The Buyback Is Finally Working at a Sensible Price

Newmont repurchased $1,567M of stock in the second quarter and $1.7B since the April earnings call, including over $600M in July, leaving $4.3B of the $6B April authorization. Since February 2024 the share count is down more than 100 million shares, roughly 9%. The quarterly dividend held at $0.26, payable September 28 to holders of record September 3.

"Based on the repurchases completed to date, the formula under our framework would support a quarterly dividend of $0.27 per share at the next annual review, $0.01 above the current quarterly dividend or $0.04 on an annualized basis, while maintaining the same targeted annual cash commitment. This would equate to an 8% increase of the dividend since we introduced the new framework only a few months ago."
— Brian Tabolt, Executive Vice President and Chief Financial Officer

Cash returned in the quarter was $1,844M against $2,205M of free cash flow, or 84%. Net cash closed at $3,411M, roughly $400M above the top of the $1B plus or minus $2B target range, which the CFO indicated could be worked back down by returning more than free cash flow in the second half.

Assessment: Our single reservation about this programme in April was that repurchasing near an all-time high retires fewer shares per dollar. That reservation is now void. The $4.3B remaining is being deployed roughly 24% below where the shares closed the session after the authorization was announced, and represents about 4.4% of the current market capitalisation. The fixed-dollar dividend mechanically converts every retired share into per-share dividend growth. This is the strongest single argument for the upgrade.

11. Multi-Year Guidance Slips Again

The dated path back to roughly 6Moz was promised for the end of 2026. It is now a February 2027 item, folded into a broader review of how guidance is given.

"We are aiming to review the way that we give guidance in February next year. The detail of that is under development. In the meantime, we'll continue to give you some insights and broader insights into the business that will help you. So in the next quarter, we will, for instance, give you a deeper insight in our thinking about exploration."
— Natascha Viljoen, President and Chief Executive Officer

The qualitative pathway was given: Ahafo North to full run rate, Cerro Negro, Tanami, Boddington high-grade, Lihir Nearshore Barrier, with reduced dependence on the Cadia caves. No dates, no ounces.

Assessment: Three quarters of coverage, three deferrals of the same disclosure. The qualitative answer is more informative than it looks, because it reframes Cadia's new caves as an option rather than a requirement for the growth profile. But a company running a near-total-payout model has to give holders a production trajectory, and "we are reviewing the way that we give guidance" is not one.

Guidance & Outlook

Full-year 2026 guidance, set on February 19 and unchanged, with first-half actuals and the arithmetic that implies for the back half:

Management's own Q3 framing: total attributable production broadly in line with Q2, sustaining capital up approximately $150M sequentially with a similar increase in development capital, and unit costs moderately higher as a result, partially offset by higher co-product volumes at Peñasquito. Q4 remains the strongest quarter of the year as Lihir completes planned maintenance in Q3 and Ahafo North reaches full run rate.

Implied quarter-over-quarter ramp: With Q3 production flat and Q4 carrying the balance, the fourth quarter must deliver roughly 1,373koz, up 6% on Q2 and the highest quarterly figure since Q4 2025. Achievable on the named drivers of Boddington, Tanami, Lihir, Cerro Negro and Brucejack, but it concentrates the full-year guide into a single quarter.

Street at: Consensus sits at $8.90 of full-year adjusted EPS against $5.01 delivered in the first half, implying roughly $1.95 per quarter in the back half versus $2.10 in Q2. That embeds a lower gold price and higher costs, so consensus is not obviously stale on earnings. It does, however, sit against a guidance framework built on a $4,500/oz gold assumption while spot has traded nearer $4,100.

Guidance style: Consistently conservative and consistently pre-warning. Newmont has now flagged a cost step-up one quarter ahead in three consecutive calls, and has held full-year production guidance through a fatality investigation, bushfires, extreme weather and a seismic event. The credibility of the guide is not the question. The question is whether the assumptions underneath it, $4,500 gold and $70 oil, still describe the world.

Analyst Q&A Highlights

The path back to 6 million ounces, and whether it depends on the Cadia caves

The first substantive strategic question of the call went to the growth profile, and specifically to how much of it is hostage to the two Cadia project caves whose establishment is currently halted. The answer was more useful than the deferred multi-year guidance that followed it.

Q: "You've highlighted this year as a trough year on production, but can you maybe step us through the pathway back to 6 million ounces? And how dependent is that on the Cadia cave ramp-up in 2029? Or maybe are there other levers you can pull to get there without Cadia and perhaps even earlier than 2029?"
— Hugo Nicolaci, Goldman Sachs

A: "So we are... firstly, the development of the Cadia caves, we're less reliant on in terms of the long-term production... Then we have all of the other elements that we continuously talk to. Ahafo North will be ramping up to full production. Cerro Negro, Tanami, we will have Boddington in high-grade areas, Lihir Nearshore Barrier and in high-grade areas. So less reliant in this medium term on the caves coming on."
— Natascha Viljoen, President and Chief Executive Officer

Assessment: A meaningful de-risking of the growth story that got no attention. If the medium-term path to 6Moz does not require the Cadia caves, then the regulatory delay on cave establishment is a near-term cost and copper issue rather than a growth issue. It also, less comfortably, implies the caves are a 2029-and-beyond asset whose capital is being spent now against ounces that arrive after most holders' horizons.

Whether productivity gains can keep absorbing energy inflation

The opening question of the Q&A went straight to the cost line, pressing on whether the productivity programme can continue to offset an oil price running $30 above the guidance assumption plus the freight and consumable escalation that follows it.

Q: "I just want to ask about the cost pressures potentially building up in the operations. Just given what's happening with oil prices now elevated again, diesel costs in Australia potentially now translating... to higher freight costs. I just wanted to get a sense of how you're thinking about costs in the second half of this year and whether you still expect productivity improvements to offset the cost pressures?"
— Fahad Tariq, Jefferies

A: "We would expect that to continue in the third quarter based on the current price environment. There is a bit of a lag in terms of when the price of oil hits our diesel... As it relates to other costs in terms of indirects, we continue to monitor that, notably the impacts in terms of explosives, cyanide, grinding media and then inevitably the tail in terms of labor contractor spend... But in terms of the escalation, we're still just in a monitoring stage in terms of that cost pressure."
— Brian Tabolt, Executive Vice President and Chief Financial Officer

Assessment: "Monitoring" is not "mitigating," and the honesty is welcome but the answer is thin. The direct diesel sensitivity is disclosed and manageable at roughly $180M annualized. The indirect tail through consumables and contractor labour is acknowledged as real, named line by line, and left entirely unquantified for the second consecutive quarter. That is the largest single gap between what is guided and what is knowable.

Why the regulator allowed the operating caves to restart but not the new ones

A follow-up sought the technical distinction behind an approval decision that looked inconsistent from the outside, and produced the clearest explanation of the Cadia situation on the call.

Q: "I guess I just wanted to clarify then why does the regulator feel that it's necessary... that it was okay to restart the operating caves, but the one cave that you're just establishing right now needed to that extra bit of work? Like what's the difference between those 2?"
— Anita Soni, CIBC World Markets

A: "The difference is in the seismic activity that exists around existing cave operations. So PC1 and PC2, because it's mature caves has gone back to background seismicity and there's no risk around seismicity. The nature of cave development, however... is that you do see seismic activity during the establishment of the caves. That is why we do have controls in place like our trigger action response plans, reentry plans, support systems underground."
— Natascha Viljoen, President and Chief Executive Officer

Assessment: Technically credible and reassuring on the mature caves, which are the ones producing today. It also confirms that cave establishment carries inherent seismic risk that a regulator is now watching closely, which raises the probability of further schedule friction on PC1-2 and PC2-3. The restart date remains regulatory rather than operational, and management would not commit to one.

Whether capital returns can exceed free cash flow in the second half

With net cash roughly $400M above the top of the stated target range, a line of questioning probed whether the excess would be returned rather than held, and management's answer was more forward-leaning than its usual framework language.

Q: "You previously indicated a $1 billion to $3 billion net cash range. You're $400 million above that now. Should we, therefore, factor in that you will be getting back to $3 billion in the subsequent quarters, so capital returns can exceed free cash flow in the second half of the year?"
— Daniel Major, UBS

A: "Yes, we are slightly above the high end of our target for net cash. You're right, we're about $400 million over... as it relates to share buybacks and thinking through the excess cash component of our capital allocation framework, we do provide that flexibility for exactly that reason. So yes, there is a potential that we would leverage the utilization of that to get us back within the targeted net cash balance."
— Brian Tabolt, Executive Vice President and Chief Financial Officer

Assessment: The most direct capital-return commitment of the call, and it matters more at $92 than it would have at $121. A second half in which buybacks exceed free cash flow, funded by an over-target net cash position, is a real and disclosed support under the shares at a price roughly a quarter below where they traded when the current authorization was announced.

Whether the notice of default still carries no deadline

Despite an explicit request at the top of the call not to ask, a questioner tested the one factual point that could be answered without breaching the sensitivity, and got a one-word answer.

Q: "You previously referenced that there was no time line around the legal enforcement of notice of default in terms of a specific deadline. Is that still the case?"
— Daniel Major, UBS

A: "Yes. Yes, it's still the case."
— Natascha Viljoen, President and Chief Executive Officer

Assessment: Three quarters, three confirmations that there is no deadline. Set against prepared remarks stating that the direct engagement period is nearing its end with key issues unresolved, the combination reads as a dispute approaching a decision point that management is not yet willing to date. For a holder, the practical consequence is unchanged: a material, unquantified overhang on roughly 19% of attributable production.

Sovereign risk in Ghana and what the engagement is producing

A question on newly added Ghanaian risk language drew the most concrete political disclosure of the call, at an asset whose unit cost just became the highest in the managed portfolio.

Q: "I noticed there was some new commentary on Ghanaian risks in the release. I'm just wondering if the company has had any engagement with the government on some of this topic and if the company is sort of thinking about how we can manage some of these risks and what it could mean for, I guess, Ahafo."
— Joshua Wolfson, RBC Capital Markets

A: "I've personally had the opportunity to engage with the President as recently as last week. Me and my team saw the Minister of Lands and Natural Resources... We have entered into agreement through the Minister of Lands to create a working group for Newmont between us and the Minister of Lands to develop what would be a forward-looking agreement to allow us that stability that we need for future potential investments."
— Natascha Viljoen, President and Chief Executive Officer

Assessment: Presidential-level engagement and a formal working group is about as good a process answer as a miner can give, and the long Ahafo relationship is genuine leverage. But the royalty increase already landed and shows up as a $640/oz sequential AISC increase at Ahafo South. Process protects future investment; it does not reverse the change that has already repriced the existing asset. Ghana now carries two of the twelve managed operations and the highest-cost one among them.

What Red Chris does to the capital budget

A line of questioning sought to establish whether the roughly $3.35B annual capital envelope survives a Red Chris approval, which is the practical question for anyone modelling free cash flow beyond this year.

Q: "Newmont has suggested the year, or the 2026 sustaining and development CapEx for the business should be kind of similar going forward. So about $2 billion of sustaining and $1.4 billion of development. Does that hold when you add the Red Chris CapEx, assuming you'll proceed with that project?"
— Lawson Winder, Bank of America Securities

A: "The $1.4 billion was for 2026... when we're in a position to provide an update on the Red Chris full funds decision later this year or into early Q1 '27, the impact of Red Chris would be a consideration on top of that $1.4 billion. But again, that's 2026 only. We'll provide an update on '27 in February."
— Brian Tabolt, Executive Vice President and Chief Financial Officer

Assessment: Red Chris is incremental to the $1.4B development budget, not accommodated within it. The CEO's partial offset, that PC2-3 and Tanami Expansion 2 complete and drop out, is real but was not sized. Combined with capital "higher than what the original numbers were," this is the clearest signal yet that 2027 development capital rises. That is the principal argument against the upgrade, and it lands in February.

Whether the twelve-asset portfolio is now settled

A question on portfolio shape asked whether further divestment is coming after the 2025 disposal programme, and whether the undeveloped assets that never get airtime are quietly non-core.

Q: "I'm kind of wondering how you see this portfolio evolving. Do you think you have the correct number of mines or critical mines that you have in place? Or should I look at the portfolio and think that potentially there could still be some divestments? And then when I look at your... you talked about your growth, Wafi-Golpu didn't come up, we have some stuff and Chile didn't come up, Yanacocha has been shelved. How should I be thinking about those? Are those also noncore and potentially for sale?"
— Tanya Jakusconek, Scotiabank

A: "If I look at our 12 operations, with the work that we've done over the... probably the last 18 months, we have found capital-efficient ways of keeping those... every one of those assets in the portfolio, they can compete for capital. They do comply to our definition of what a world-class asset look like... We do, however, continually evaluate that. We don't stop."
— Natascha Viljoen, President and Chief Executive Officer

Assessment: The divestment programme is over and the twelve managed assets are the portfolio. That is a meaningful shift from the 2025 posture and it removes a source of asset-sale proceeds that flattered prior-year cash flow. It also means the cost base is now what it is: no more high-cost mines to sell into a better market, and the brownfield pipeline at Lihir, Cerro Negro, Ahafo and Brucejack carries the growth.

What They're NOT Saying

1. The implied second-half unit cost: Year-to-date by-product AISC of $1,321/oz against a $1,680/oz full-year guide arithmetically requires roughly $2,025/oz in the back half. Management guided Q3 "moderately higher" and never framed the second half as a whole. The single most consequential forward number in the release is one an investor has to derive.
2. What the business earns at spot gold, let alone at the reserve price: Four consecutive quarters of narrating record results at record prices, and still no framework for free cash flow at the $2,000/oz reserve assumption, or even at the roughly $4,100/oz spot that prevailed through July against a $4,500/oz guidance assumption. Co-product AISC is now $1,938/oz. The distance between that and the reserve price is the whole risk, and it is never drawn.
3. The Red Chris capital number: Confirmed higher than the Newcrest-era estimate, incremental to the $1.4B development budget, with a decision that has now slipped from "H2 2026" toward "later this year or into early Q1 '27," and no figure at any point. A material capital commitment is being approached with the magnitude undisclosed.
4. The form of the $500M Canadian government support: Grant, loan, equity or tax treatment all have materially different consequences for project economics and for who bears the downside. Management is "still working... on the MOU" and could not say which.
5. The dated path back to 6 million ounces: Promised for end-2026 at the Q3 2025 call, deferred at Q1, and now folded into a February 2027 review of the guidance framework itself. Three quarters, three deferrals, and the qualitative answer only arrived because an analyst asked for it.
6. Indirect cost escalation: Explosives, cyanide, grinding media, freight and contractor labour were named as pressure points and left unquantified for the second consecutive quarter, while the disclosed diesel sensitivity covers only the direct effect.

Market Reaction

• Pre-print setup: NEM closed at $94.72 on July 23, having rallied roughly 6% over the three prior sessions from $89.20. The stock entered the print down 5.1% year to date against an S&P 500 up 8.2%, down 3.2% over the trailing 30 days, and up 54.2% over the trailing twelve months. The 52-week closing range was $61.42 to $131.95, placing the stock 28% below its high.
• After-hours: Shares fell roughly 1.3% to approximately $93.45 following the release and the 5:30 p.m. ET call.
• Reaction session (July 24): Opened at $93.74, traded $92.50 to $95.34, and closed at $93.19, down 1.6% or $1.53. Volume of 9.3M shares against an 8.8M thirty-day average, 1.1x, which is a notably unexcited response to a major print.
• Versus the complex: The gold-miner ETF closed up 0.28% and gold closed up 0.10% on the same session. NEM underperformed its own sector by roughly 190 basis points, so this was an idiosyncratic reaction rather than a commodity move.
• Since: $93.47 on July 27 and $91.52 on July 28. The stock has not recovered the print-day decline.

The market traded the revenue miss and the cost line, not the record free cash flow. That is the right instinct even if we disagree with the conclusion. A 4% revenue shortfall on a print where production came in ahead of plan can only be a price and mix effect, and the mix effect, collapsing co-product volumes, is precisely what made the unit-cost line look so ugly. Investors who anchored on Q1's $1,029/oz by-product AISC saw a 58% increase and sold; investors who understood that the metric is a by-product credit artifact saw a 13% co-product increase and had a harder decision.

The more telling detail is the underperformance versus the sector on a day when gold and the miner complex were both marginally higher. The market discriminated against Newmont specifically. Two candidates: the sequential cost step-up is worse at Newmont than at peers because its by-product exposure is unusually concentrated at two assets, and the Barrick language hardened on the same call. Neither is a reason to sell a business generating $2.2B of quarterly free cash flow with $3.4B of net cash, but both explain the 190 basis points.

Set against the setup, the reaction is remarkably contained. The stock came in 28% off its high, having already absorbed a gold correction from an intraday spot peak near $5,595 in January to roughly $4,100 in July, and having already given back the entire 8.7% post-Q1 pop and then some. A 1.6% decline on a genuine revenue miss and a 58% headline cost increase is the market signalling that the bad news was substantially in the price.

Street Perspective

Debate: Is the de-rating an entry point or the first act of a longer gold unwind?

Bull view: The equity has fallen further and faster than the earnings power. Gold is down roughly 27% from its January peak while NEM is down 31% from its 52-week closing high and 24% from its post-Q1 close, on a business that has since resolved its CFO vacancy, held guidance through a seismic event, and grown its net cash position. At roughly 10x consensus 2026 earnings with net cash and a near-total-payout framework, the market is capitalising a trough quarter as though it were a run rate.

Bear view: Gold at roughly $4,100 remains more than twice the company's own $2,000 reserve assumption, so this is not a reset to normal, it is a reset to still-extraordinary. Co-product AISC of $1,938/oz means the margin compresses non-linearly on the way down, and the second half brings a further $250 to $400 per ounce of unit-cost step-up, a partial receivable reversal and a 59% higher capital spend. Buying a leveraged producer one quarter into a commodity downcycle is early, not cheap.

Our take: The bears have the better description of the next two quarters and the bulls have the better description of the next twelve months. We are taking the twelve-month view, which is what the rating measures. The decisive factor is not the gold forecast, which we decline to make, but the combination of a de-rated price, $4.3B of buyback capacity deploying 24% below the authorization price, and a governance overhang that closed. If gold merely holds, the shares are mispriced. That is the same "gold holds, not rises" structure that supported our October 2025 upgrade.

Debate: Is the record free cash flow real, or a working-capital artifact?

Bull view: $2.2B of free cash flow after $1.1B of cash taxes and a 60koz production loss at the largest copper asset is an extraordinary result, and the working-capital effect is a timing item inside a quarter that also carried $249M of reclamation spending and $131M of inventory build. Cash from operations before working capital was $3.0B, and that figure carries no receivable benefit at all.

Bear view: $461M of the headline came from receivables drawing down partly because sales volumes fell, which means the same weakness that caused the revenue miss flattered the cash line. Management pre-warned the reversal. Underlying free cash flow of roughly $1.74B was 2% above the year-ago quarter against a 33% higher realized gold price, which is a damning number for a business sold on operating leverage.

Our take: The bears are right on the quarter and the bulls are right on the franchise. The 2% underlying growth figure is the honest read of this specific quarter and we have put it in our takeaways for that reason. But it compares a quarter with collapsed co-product volumes to one without, and co-product volumes are guided to recover. The durable point is neither: it is that $3.0B of pre-working-capital operating cash flow at a falling gold price is a robust number, and the market is paying roughly 5.6x enterprise value to trailing EBITDA for it.

Debate: Does the cost inflection break the cost-discipline story?

Bull view: Absolute costs applicable to sales rose 4.3% year over year against a 33% higher gold price, which is remarkable given that royalties scale with price. General and administrative and exploration lines are both annualising 18% to 19% below their full-year guides. Nearly 50 mining units are parked with no production impact. The unit-cost increase is volume and by-product mechanics, not cost inflation.

Bear view: Absolute cost control does not help if ounces fall faster, and unit cost is what the market pays for. Co-product AISC has risen for three consecutive quarters. Oil is $30 above the guidance assumption with the indirect tail unquantified, Ghana's royalty is permanent, and the implied back-half AISC is roughly $2,025/oz. The discipline is real and it is being overwhelmed.

Our take: Both are describing the same portfolio correctly. The distinction that resolves it is between costs management controls and costs it does not. The controllable base is being managed better than guided, which is why full-year guidance is holding. The uncontrollable pressures, royalties, diesel and grade sequencing, are what is driving unit costs. That mix is far preferable to the reverse, and it is the reason we treat the cost inflection as cyclical rather than structural. The exception is Ghana, where the royalty change is permanent and deserves to be modelled as such.

Debate: Does the Barrick escalation create value or destroy it?

Bull view: An operator willing to serve a notice of default and then talk publicly about enforcing its JV rights is protecting a 38.5% interest in a tier-one asset base that has been managed by a partner whose own governance has been contested. Confirmation that Newmont's interest in the existing processing infrastructure offsets any Fourmile capital contribution is real, previously unpriced value.

Bear view: Three quarters in with no deadline, no quantification and a refusal to take questions is an open-ended legal risk on roughly 19% of attributable production. Escalation toward formal proceedings means legal cost, management distraction, and a partner relationship that has to survive whatever the outcome.

Our take: Marginally value-creating, and we are more comfortable with the harder language than with April's open-ended process. A dispute that is "nearing the end" of direct engagement at least has a shape. The Fourmile offset disclosure is a genuine positive that received almost no attention. We would not underwrite a specific outcome, and we do not include one in our rating; the upgrade rests on price and capital return, with any Barrick resolution as unpriced optionality.

Model Update Needed

Valuation framework

At the July 28 close of $91.52 on 1,067M diluted shares, the market capitalisation is roughly $97.7B and, against $3.4B of net cash, enterprise value is roughly $94.2B. On trailing twelve-month adjusted EBITDA of $16,765M that is 5.6x EV/EBITDA. Trailing four-quarter free cash flow of $9,733M is a 10.0% free cash flow yield, and consensus 2026 adjusted EPS of $8.90 puts the shares at 10.3x.

Those trailing figures embed a $4,900/oz quarter, so the relevant test is what the business earns at spot. Holding Q2's cost structure and applying the company's disclosed $505M-per-$100/oz revenue and cost sensitivity, net of the roughly $6/oz royalty relief per $100/oz, a realized price of $4,100 rather than $4,414 reduces annualized pre-tax income by approximately $1.49B, or roughly $0.93 per share after tax. That takes the run-rate from $8.40 of annualized Q2 earnings to roughly $7.50, about 12.2x. On the same basis, underlying free cash flow excluding the receivable benefit annualizes to roughly $6.0B, a 6.1% yield, essentially all of which the framework directs back to shareholders.

The bear case is worth pricing too. At $3,500/oz gold the same arithmetic takes run-rate earnings to roughly $5.68, or 16.1x, and the equity would deserve to fall further. That is the genuine risk in this call and we are not dismissing it. What we are saying is that a 6% free cash flow yield fully returned, on a net-cash balance sheet, at a price 31% below the 52-week closing high, with the buyback now working at a sensible level, is a favourable twelve-month risk/reward against the S&P 500 unless gold falls materially further.

Valuation impact: We see fair value meaningfully above the current price on a $4,100 to $4,400 gold band, and roughly at the current price if gold settles near $3,500. The asymmetry has inverted since April, when we saw fair value in line with a $121 share price and the risk skewed down. It now skews up.

Thesis Scorecard Post-Earnings

We score the quarter against the standing six-pillar thesis carried since initiation, not a fresh set.

Overall: The thesis has rotated rather than strengthened or weakened outright. Every reason we held at Hold in April was about price and governance, and both have moved decisively in our favour. Every reason to hesitate now is about cost and the commodity, and both have moved against. On balance the pillars that changed are the ones that determine the rating: we do not underwrite the gold price, but we do underwrite what we pay for a franchise, and what we pay has fallen 24% while the franchise got measurably better governed and no worse run.

Action: Upgrade to Outperform from Hold, conviction 6 out of 10. This is a valuation and capital-return call, explicitly not a call that gold rises. The upgrade trigger set out in April, a gold-price reset that de-rates the shares, has fired, and the second condition we named, a better entry, is satisfied. We would move back to Hold if gold broke decisively below $3,500/oz with the shares still capitalising a $4,400 realized price, or if the second-half unit-cost step-up overshot the roughly $2,025/oz the guide implies. We would add on a Barrick resolution, which we treat as unpriced optionality rather than as part of the case.