I have plans to initiate a position in regard to stocks mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from subscribers to Premium Membership). I have no business relationship with any company whose stock is mentioned in this article.
Adding this stock to The Value investor Report had to happen sooner or later since I’ve been mentioning this stock quite a lot lately and really the price is just too attractive to not take a position.
Here’s what I’m talking about:
7 Year Chart Of Newmont Mining (NYSE: NEM)
Yes it is trading at multi-year lows and does not look as thought it will stay there for much longer considering the consolidation that has been happening in the mining sector over the last 18 months.
Newmont has a market cap of $13.1 billion and is trading at a price to book value of 1.29 with a negligible amount of intangibles.
Here are the latest quick stats for this giant gold and copper miner:
- Current ratio: 1.8
- Total debt to equity: 0.66 (it’s highest rate over the last 10 years)
- Dividend yield: 2.4%
The most recent quarter saw Newmont’s current ratio grow from 1.78 to 2.38.
The majority of quick stats are negative as you’d expect from a company going through a period of consolidation both in terms of share price and fundamentals.
Here’s what President and CEO Gary Goldberg said on 30 July regarding a £1 billion investment into a goldmine in Suriname:
This decision marks an important milestone in our portfolio optimisation process – we have divested nearly $800 million in non-core assets to help fund the next generation of cost projects in our portfolio
The mine is expected to produce an average of 300,000 to 400,000 ounces of gold annually, would begin production in late 2016 subject to the necessary approvals from the government of Suriname.
Newmont recently raised its total attributable gold production outlook to between 4.7 million ounces and 5 million ounces from its earlier view of 4.6 million ounces to 4.9 million ounces for the year and when you coincide this with it’s emphasis on lower cost projects and divestment of non-core assets means that Newmont is a leaner outfit ready to profit from expected higher commodity prices.
All this is happening at multi-years lows which reduces the risks and uncertainty that is inherent in a consolidating company.
Long today at $26.52.