S&P Global Ratings on Monday moved Newmont Corp.'s outlook to positive from stable and left the company's long-term issuer credit rating at BBB+. The agency attributed the revision to a combination of portfolio improvements tied to the 2023 Newcrest acquisition and later divestitures, higher gold prices that have boosted margins, ongoing reductions in debt and the miner's shift toward a more conservative capital allocation framework.
S&P signaled that it expects Newmont to keep adjusted net debt to EBITDA below 0.5x over the next several years even if gold prices decline from recent peaks. That expectation is underpinned by Newmont's stated net cash objective and what S&P describes as robust free operating cash flow generation.
According to S&P, Newmont has historically sustained a strong credit profile through low leverage. The agency noted that leverage averaged about 1.3x over the last decade, a period that includes the company's equity-funded acquisition of Newcrest in 2023. Earlier this year Newmont introduced a capital allocation framework that targets a net cash position of $1 billion, plus or minus $2 billion, and contemplates annual common shareholder dividends of approximately $1.1 billion.
S&P's base assumptions for near-term commodity prices anticipate that average annual gold will fall to $3,300 per ounce by 2028 from what it calls a likely all-time high of $4,500-$4,600 per ounce in 2026. Even under that price path, S&P expects Newmont's adjusted debt to EBITDA to remain in the 0.3x-0.4x range.
The rating agency also modeled Newmont's capacity to sustain shareholder distributions and buybacks while holding leverage below 0.5x. S&P estimates Newmont could fund about $1.1 billion in dividends and $2.5 billion in share repurchases and still maintain adjusted net debt to EBITDA under the 0.5x threshold, even if free operating cash flow falls roughly in half to about $4 billion as a result of lower earnings and higher development capital expenditures during the projected period.
Corporate actions tied to the Newcrest deal and subsequent portfolio pruning feature prominently in S&P's assessment. In the two years after closing the Newcrest acquisition in 2023, Newmont disposed of six noncore mines - three in Canada, one in the United States, one in Ghana and one in Australia. Those divestitures reduced attributable gold production by approximately 17% but delivered after-tax cash proceeds of roughly $4.6 billion, the bulk of which Newmont received last year. S&P estimates that the divestitures lowered unit costs by about 3%.
On the joint-venture front, Newmont and Barrick Mining Corp. reached an agreement to fold Barrick's Fourmile project and Newmont's Fiberline and Mike deposits into the Nevada Gold Mines joint venture, which is owned 61.5% by Barrick and 38.5% by Newmont. As part of that arrangement, Newmont will make a cash payment to Barrick of $1.95 billion. S&P noted that the transaction would settle outstanding disputes between the two companies related to the joint venture and would include Newmont's consent for Barrick's planned initial public offering of its North American gold assets over the next few months.
The confluence of portfolio reshaping, proceeds from asset sales, a clearer capital allocation policy and projected free cash flow underlie S&P's more constructive near-term view on Newmont's credit trajectory. The rating agency's outlook adjustment signals that it believes the company has positioned itself to maintain low leverage through a potential normalization in gold prices while still returning capital to shareholders.