Newmont share price races higher on $1.3b windfall

This gold miner is catching the eye on Tuesday. But why?

The Newmont Corporation (ASX: NEM) share price is having a good session on Tuesday.

In morning trade, the gold miner's shares are up 2% to $65.20.

A man clenches his fists in excitement as gold coins fall from the sky.

Image source: Getty Images

Why is the Newmont share price pushing higher?

Investors have been buying the company's shares for a couple of reasons.

One has been a rebound in the gold price overnight which is lifting most ASX gold stocks today. The other is news of a major divestment.

In respect to the latter, Newmont has announced an agreement to sell its Musselwhite operation in Ontario, Canada, to Orla Mining for up to US$850 million (A$1.3 billion) in total consideration.

Under the terms of the agreement, Newmont will receive cash consideration of US$810 million upon closing and up to US$40 million in contingent payments.

Management advised that the transaction is expected to close in the first quarter of 2025, subject to certain conditions being satisfied.

It also highlights that upon closing this and previously announced transactions, Newmont will have easily surpassed its target of delivering more than US$2 billion in gross proceeds from non-core divestitures.

Total gross proceeds from transactions announced in 2024 to date are expected to be up to US$2.9 billion. This includes US$2.3 billion from non-core divestitures and US$527 million from the sale of other investments.

Newmont's President and Chief Executive Officer, Tom Palmer, said:

We are pleased to be selling our Musselwhite operation to Orla and have full confidence that they will continue to operate responsibly, while maintaining strong partnerships with the mine's workforce and local and Indigenous communities. Today's announcement signifies Newmont's continued progress toward building our go-forward portfolio and delivering on the transaction commitments we made at the beginning of the year.

The announced divestitures are expected deliver up to $2.9 billion in gross proceeds to support Newmont's capital allocation priorities, which include strengthening our balance sheet and returning capital to shareholders.

What will it do with the money?

Newmont advised that it continues to leverage free cash flow from its operations and proceeds from divestitures to enhance long term value for shareholders by repurchasing shares on a ratable basis.

In line with this strategy, the company has an aggregate US$3 billion share repurchase program authorised for execution through to October 2026.

Since October 24, 2024, Newmont has repurchased 7.2 million shares, totalling US$336 million. Whereas since the program's inception, it has repurchased 22.4 million shares, amounting to US$1.1 billion. It notes that this ongoing progress reflects Newmont's commitment to delivering meaningful returns and lasting value to shareholders.

The Newmont share price is up 15% since this time last year.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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