NEWMONT MINING CORP. $19 - New York symbol NEM

NEWMONT MINING CORP. $19 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 529.1 million; Market cap: $10.1 billion; Price-to-sales ratio: 1.2; Dividend yield: 0.6%; TSINetwork Rating: Average; www.newmont.com) is one of the world’s largest gold and copper producers, with major mines in the U.S., Peru, Suriname, Australia, Ghana and Indonesia. In August 2015, Newmont paid $821 million for the Cripple Creek & Victor mine in Colorado. This project will produce 350,000 to 400,000 ounces of gold a year once the company completes the mine’s current expansion in 2016. The Cripple Creek acquisition helped increase Newmont’s gold production by 16.1% in the three months ended September 30, 2015, to 1.34 million ounces from 1.15 million ounces a year earlier. Copper output surged 269.2% on higher ore grades at the Batu Hijau mine in Indonesia. The production increase helped offset lower gold and copper prices and resulted in a 16.4% increase in the company’s overall revenue, to $2.0 billion from $1.75 billion. Even so, earnings dropped 49.4%, to $126 million, or $0.23 a share, from $249 million, or $0.50. That’s mainly because the year-earlier quarter included a $47- million tax benefit, compared to a $151-million expense in 2015. Newmont’s long-term debt of $6.1 billion is a high 60% of its market cap. However, it also holds cash of $3.0 billion. As it opens new mines, the company expects its gold production to rise from between 4.7 million and 5.1 million ounces in 2015 to 5.2 million to 5.7 million ounces in 2017. After that, its annual output will likely fall to between 4.5 million and 5.0 million ounces from 2018 to 2020. In addition, the company expects its operating costs to decline from around $910 an ounce in 2015 to $900 in 2017 as these new mines begin regular operations. That will help Newmont cope with weaker gold prices. The company’s earnings will probably creep up from $1.10 a share in 2015 to $1.15 in 2016. The stock trades at 16.5 times the 2016 forecast. The $0.10- a-share dividend yields 0.5%. Newmont is a hold.