NEM: Is Now the Time to Buy Puts on Newmont?

Newmont Corporation is primarily a gold producer with operations and assets in several countries, including the United States, Canada, Mexico, and Australia. The company's main product is refined gold, typically produced from 'doré' bars. Newmont also produces co-product metals like copper, silver, lead, and zinc, primarily in concentrate form. The company targets the fabrication and investment markets for gold, serving industries such as jewelry, electronics, and investors buying bullion. Newmont differentiates itself through its large portfolio of 'Tier 1' assets located in favorable mining jurisdictions. A 'Tier 1' asset is defined as having production of over 500,000 GEOs per year, average AISC per oz in the lower half of the industry cost curve, an expected mine life of over 10 years, and operations in countries with high credit ratings.

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NEM's technical outlook is bearish. The recent price action shows a decline from a 52-week high of $98.578 reached in mid-October to a close of $78.855 on November 4th. The price is now below the 21-day EMA of 84.365, which is acting as resistance. The MACD is negative and diverging further from its signal line, indicating increasing bearish momentum. The RSI is at 45.85, confirming the downward trend but not yet oversold. The Stochastic Oscillator (STOCHk) shows a value of 24.78, which is an extremely low value, but STOCHd is at a similar level, indicating that downward momentum is likely to continue. The ADX is at 27.29, suggesting that the downtrend is not particularly strong, but it is still a downtrend. The Bollinger Bands show the price is not at the lower band. Overall, the technical indicators suggest a continuation of the bearish trend in the short to medium term, with limited evidence of an imminent reversal. The price has fallen from a high in mid-October, and despite some attempts to rally, the price has failed to sustain upward momentum.

Newmont's MD&A presents a generally positive picture. `Net income` increased significantly for both the three and nine months ended September 30, 2025. For the three months, `net income` attributable to Newmont stockholders was $1,832 million, up from $873 million in 2024. The nine-month figure was $5,784 million in 2025, compared to $1,877 million in 2024. This increase was largely attributed to higher average realized gold prices. Total `Net Sales` for the three months ended September 30, 2025, were $5,524 million compared to $4,605 million for the same period in 2024. The increased sales were 'largely due to higher average realized gold prices partially offset by the impact from divestitures'. 'Costs applicable to sales' decreased for both the three and nine months ended September 30, 2025, primarily due to the impact from divested sites. `Net cash provided by operating activities` increased to $6,713 million for the nine months ended September 30, 2025, compared to $3,807 million for the same period in 2024, primarily due to higher sales and the payment of $291 million in 2024 for stamp duty tax related to the Newcrest transaction. The company's liquidity position appears strong, with $5,639 million in 'cash and cash equivalents' as of September 30, 2025. While the MD&A contains numerous 'forward-looking statements', the overall tone suggests continued profitability and operational improvements.

Newmont's Q2 2025 earnings call projects a moderately bullish outlook, despite a significant safety incident. While overshadowed by the 'fall of ground incidents' at Red Chris, CEO Tom Palmer stated that Newmont delivered 'another strong operational performance,' keeping them 'firmly on track to achieve our 2025 guidance.' Q2 saw strong production numbers with 1.5 million ounces of gold and 36,000 tonnes of copper, leading to record quarterly free cash flow of $1.7 billion. CFO Karyn Ovelmen's departure was noted, but management reassured that financial policies remain unchanged. The company is actively returning capital to shareholders, having already repurchased $2.8 billion in shares and approving an additional $3 billion repurchase program. While some operations like Cadia and Peñasquito are expected to see production decreases in the second half due to planned mine sequencing, the overall outlook remains positive, supported by cost discipline and a commitment to shareholder returns.

NEM's financial performance presents a mixed picture. Revenue has fluctuated, starting at $4.001B in Q1 2024, peaking at $5.724B in Q4 2024, and then declining to $0 in Q3 2025. Gross profit margins have also been inconsistent, ranging from a low of -0.08 in Q4 2023 to a high of 0.475 in Q2 2025. Operating cash flow has been variable, with $776M in Q1 2024 and $2.384B in Q2 2025, but dropping to $0 in Q3 2025, raising concerns about cash generation sustainability. The company's total debt has decreased from $9.468B in Q1 2024 to $471M in Q3 2025, indicating improved solvency and deleveraging. Net income also shows volatility, with a significant loss of -$3.150B in Q4 2023 but recovering to $3.294B in Q3 2025. The absence of revenue and operating cash flow in the latest quarter, despite a strong net income, warrants further investigation to understand the underlying drivers and sustainability of this performance.

The company presents a moderately bullish investment profile based on its key metrics and financial ratios. Revenue has shown positive growth, indicating a healthy demand for its products or services. The gross margin has remained relatively stable, suggesting efficient cost management. The Return on Equity (ROE) indicates a solid return for shareholders. The Price-to-Earnings (P/E) ratio suggests the company is appropriately valued by the market. The debt-to-equity ratio has seen a decrease, showcasing the company's improved financial leverage. The current ratio signifies the company's strong ability to meet its short-term obligations. Overall, the company demonstrates a stable and growing business model with a healthy balance sheet, making it a moderately attractive investment for the next 6-12 months.