Newmont Mining Corp
| Metric | Q2 2012 | Q3 2012 | Q4 2012 | Q1 2013 |
|---|---|---|---|---|
| Net Operating Cash Flow | $347 | $574 | $842 | $433 |
| Capital Expenditures | -$882 | -$816 | -$816 | -$510 |
| Net Investing Cash Flow | -$859 | -$737 | -$813 | -$507 |
| Cash Available For Financing Activities | -$512 | -$163 | $29 | -$74 |
| Cash Dividends Paid – Total | -$174 | -$174 | -$174 | -$211 |
| Issuance/(Reduction) of Debt, Net | -$37 | -$15 | $161 | $80 |
| Dividend Cover From Cash Available For Financing Activities | 0.0 | 0.0 | 0.2 | 0.0 |
| Free Cash Flow | -$709 | -$416 | -$148 | -$288 |
Figures in $US Millions. Financing activities include dividend payouts, changes in capital stock and the movement of debt.
It appears that Newmont Mining Corp (NYSE:NEM) cannot afford its 4.3% dividend yield either.
Only in one quarter, Q4 2012, out of the last three has the company had cash available to return to shareholders, after removing the cost of investing activities from operating cash flow. In the other three quarters the company had no money available after CAPEX spending and dividends have been paid through borrowing and cash balances.
Based on the fact that the company has not had positive free cash flow at all during the past four quarters Newmont’s dividend looks unsafe.
Verdict: unsafe
Yamana Gold
| Metric | Q2 2012 | Q3 2012 | Q4 2012 | Q1 2013 |
|---|---|---|---|---|
| Net Operating Cash Flow | $123 | $351 | $360 | $169 |
| Capital Expenditures | -$267 | -$638 | -$361 | -$241 |
| Net Investing Cash Flow | -$253 | -$609 | -$367 | -$278 |
| Cash Available For Financing Activities | -$130 | -$258 | -$7 | -$109 |
| Cash Dividends Paid – Total | -$42 | -$40 | -$48 | -$49 |
| Issuance/(Reduction) of Debt, Net | $3 | ($5) | ($2) | $0 |
| Dividend Cover From Cash Available For Financing Activities | 0.0 | 0.0 | 0.0 | 0.0 |
| Free Cash Flow | -$186 | -$326 | -$48 | -$121 |
Figures in $US Millions. Financing activities include dividend payouts, changes in capital stock and the movement of debt.
Last on the list is Yamana Gold Inc. (USA) (NYSE:AUY) and once again the company cannot afford its dividend based on its cash flows. Cash available for financing activities has been negative for the last four quarters and the company has continued to issue dividends despite the fact that they are not covered in any way.
Overall it is easy to draw a conclusion for Yamana’s dividend, it is unsafe as the company is spending all of its incoming cash flows on CAPEX. Indeed, in some periods the company has been spending double its operating cash flow on investing activities.
Verdict: unsafe
Conclusion
Gold miners have started returning cash to shareholders, but their high CAPEX and operating costs are impacting their ability to keep paying current dividends without dipping into cash reserves or increasing borrowing.
Overall, gold miners may have started offering a decent dividend yield, but I do not believe these yields are safe.
Fool contributor Rupert Hargreaves has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article Gold Dividends Unsafe originally appeared on Fool.com and is written by Rupert Hargreaves.
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