Newmont third-quarter results: By-products drive better-than-expected cost reductions as output growth in 2027 comes with higher spending

What drove the third-quarter beat: more gold production or better costs?

Newmont’s adjusted EBITDA for the third quarter of 2026 was approximately 3.95 billion dollars, exceeding Goldman Sachs’ forecast by 13% and market consensus by 4%, and rising 19% year on year. Its margin increased from approximately 61% in the second quarter to 62%. Attributable gold production over the same period was approximately 1.3 million ounces, broadly in line with expectations; the earnings surprise came mainly from costs.
Silver and zinc production and realized by-product prices were higher than expected, and operating expenses were lower, boosting by-product revenue and reducing unit gold costs. Cash costs and all-in sustaining costs (AISC), after by-product credits, were approximately 832 and 1,454 dollars per ounce respectively, around 10%–20% below expectations. Part of the improvement also reflected the timing of sustaining expenditure.

The company lowered its 2026 gold AISC guidance after by-product credits from 1,680 to 1,520 dollars per ounce, although this remains slightly above the approximately 1,500 dollars expected by Goldman Sachs and market consensus. Higher sustaining expenditure and lower by-product production in the fourth quarter are expected to push costs back up. Full-year capital expenditure guidance was unchanged.
Costs are still expected to rise in 2027: the company expects inflation to exceed 3%, diesel costs to increase, and lower by-product output at Penasquito to reduce cost credits. Goldman Sachs models a 3%–5% increase in unit costs, corresponding to approximately 1,565–1,600 dollars per ounce; its own forecasts and market consensus had already incorporated an increase of 8%–10%.

The company maintained its 2026 guidance for attributable gold production from Tier One assets at approximately 5.26 million ounces and views this year as the trough. It expects low- to mid-single-digit growth to resume in 2027, consistent with the approximately 4% expected by Goldman Sachs and market consensus. The production growth outlook did not create a new divergence from expectations.
The increase will come mainly from the ramp-up of the Tanami expansion, with commercial production expected to be brought forward to the end of the first half of 2027. Boddington and Lihir will benefit from continued improvements in ore grades through 2028. A smaller production decline at Yanacocha and growth at non-operated assets also provide support.

Sustaining capital expenditure in 2027 is expected to be approximately 1.95 billion dollars, similar to 2026. Development spending is expected to rise by approximately 500 million dollars to 1.9 billion dollars, mainly for the Lihir nearshore barrier and Red Chris, bringing total capital expenditure to approximately 3.85 billion dollars, slightly above Goldman Sachs’ forecast.
Initial capital expenditure for the expanded Red Chris project is 4.2 billion–4.8 billion dollars, calculated on a 100% ownership basis in real dollars and net of a 500 million Canadian dollar grant, above Goldman Sachs’ forecast. A final investment decision is expected in early 2027, with commercial production starting in 2033; a production gap may occur during construction. Newmont plans to fund its 70% share with internal cash flow.
Cash at the end of the third quarter was approximately 8.8 billion dollars, while free cash flow for the quarter was approximately 1.9 billion dollars, down 13% from the previous quarter. Buybacks depend on funding requirements for growth and mergers and acquisitions, and the company also requires a cash balance of at least approximately 5 billion dollars. Capital expenditure continues to constrain the relationship between a substantial cash balance and a sustainable level of buybacks.

Goldman Sachs maintained its buy rating and a 12-month price target of 119 dollars for the US-listed shares, approximately 4.3% above the 22 October 2026 closing price of 114.11 dollars. The target price gives equal weight to net asset value and an EV/EBITDA valuation, with the latter using a target multiple of 7.5 times.