Giant precious metals miner Newmont Goldcorp (NEM) posted adjusted Q4 EPS of $0.50, four cents ahead of analyst expectations, and the price of gold jumped to a seven-year high, observes value investing specialist Jason Clark, contributing editor to The Prudent Speculator.

CEO Tom Palmer commented, “Our world-class assets are in the most balanced and favorable jurisdictions. We have the industry’s largest gold reserves at 100 million ounces, with nearly 90% located in the Americas and Australia. This offers Newmont shareholders exposure to 124 gold reserve ounces per 1,000 shares."

NEM expects to mine 6.4 million ounces of gold in 2020, and between 6.2 million ounces and 6.7 million ounces per year through 2024, along with cost improvements along the way.

Divestitures are expected to net the firm an additional $1.4 billion in Q1 2020 and the annual dividend is expected to increase 79% to $1.00 per share (a target that must be formally approved by the board and the final rate will be officially declared in April).

The mining business must play the long game with its investment, while being uniquely susceptible to short-term commodity prices, but we think that the company’s strong financial position and solid portfolio give us plenty to like.

We appreciate the hedge provided by our modest exposure to gold, especially given volatile geopolitical and economic conditions around the globe. That said, we do acknowledge the complexities and obstacles inherent in the mining industry, so we continue to monitor Newmont’s efforts to streamline operations and control costs as it integrates Goldcorp.

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