We feel virtually all investors should have some gold exposure like Newmont, if only because inflation remains a risk for the long term. High-quality gold producers provide your most practical choice. The best gold mining stocks also pay you dividends which will rise along with rising gold prices and increases in their gold production.
Our top gold pick for investors is this one. Most of the company’s mines are in politically stable countries such as the U.S. and Australia, which cuts your risk.
The firm has now agreed to buy rival producer Newcrest, which would expand its production of other metals like copper. It would also reduce its reliance on gold. While big acquisitions make us wary, the company has a strong history of absorbing new operations and cutting their operating costs.
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NEWMONT CORP., (New York symbol NEM; www.newmont.com) began operating in 1921, and it is now the world’s largest gold mining company with major operations in the U.S., Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia and Ghana.
As of December 31, 2022, its proven and probable gold reserves totalled 96.1 million ounces. The company also produces other metals including copper, silver and zinc.
In 2022, gold accounted for 87% of Newmont’s revenue, followed by silver (5%), zinc (4%), copper (3%) and lead (1%).
The company gets about 90% of its production from politically stable countries, which cuts its risk.
Mining Stocks: Newmont’s acquisitions make plenty of sense and look safe
In 2022, North America supplied 31% of Newmont’s revenue, followed by Australia (22%), Africa (15%) and South America (14%). The remaining 18% came from its Nevada mines, which now operate as part of a joint venture with rival gold producer Barrick Gold Corp. (Toronto symbol ABX).
Newmont often uses acquisitions to add reserves and fuel its growth. For example, in August 2015, it paid AngloGold Ashanti (New York symbol AU) $821 million for the Cripple Creek & Victor gold mine in Colorado. It now supplies about 4% of Newmont’s gold production.
The company later acquired rival Goldcorp Inc. in April 2019. It paid $9.4 billion in shares plus $17 million in cash. Goldcorp operated mines in Canada, Mexico and South America.
Most recently, Newmont has agreed to acquire Austrailia-based Newcrest Mining. That firm operates gold mines in Australia, Canada and Papua New Guinea.
As a result, Newcrest shareholders will receive 0.40 of a Newmont common share. As well, Newcrest will pay its shareholders a special dividend of up to $1.10 a share. Based on current share prices, the new offer is worth $16.6 billion.
Big acquisitions like this add risk, especially with little overlap between the two firms. However, Newcrest’s mining techniques will help cut the cost of Newmont’s new developments.
The shares yield a solid 4.1% and the stock trades at a reasonable 18.2 times forecast earnings.
Recommendation in Wall Street Stock Forecaster: Newmont Corp. is a buy.