gold prices

Eldorado Gold, $12.91, symbol ELD on Toronto (Shares outstanding: 709.6 million; Market cap: $9.2 billion; www.eldoradogold.com), has four producing gold mines: Kisladag, in Turkey, and Tanjianshan, Jinfeng and White Mountain, in China. The company is also developing additional properties in Turkey and China, as well as Greece. In the three months ended December 31, 2011, Eldorado’s revenue rose 42.4%, to $303.3 million from $213.0 million a year earlier. (All figures except share price and market cap in U.S. dollars). Earnings per share doubled, to $0.16 from $0.08. Cash flow per share rose 50%, to $0.24 from $0.16. Higher production and rising gold prices were the main reasons for the gains. Eldorado holds cash of $396.4 million, or $0.72 a share, and has almost no debt. The shares yield 1.4%....

Gold Canyon Resources, $1.47, symbol GCU on Toronto (Shares outstanding: 118.0 million; Market cap: $173.5 million; www.goldcanyon.ca), explores for base and precious metals. The company holds a 100% interest in three properties in Ontario’s Red Lake Mining District: Springpole (gold), Horseshoe Island (gold, platinum and palladium) and Favourable Lake (silver, gold and base metals). Gold Canyon also owns the Cordero gallium project in Nevada, and 33% of a rare-earth project in Malawi....

VITERRA $14.65 (Toronto symbol VT; TSINetwork Rating: Average) (1-866-569-4411; www.viterra.ca; Shares outstanding: 371.7 million; Market cap: $5.4 billion; Dividend yield: 1.0%) is up almost 31% since the company said it has received expressions of interest from unnamed parties interested in taking it over. The stock was our Pick of the Month in the last issue (March 2012) of Stock Pickers Digest. At the time, it was trading at $10.09. That’s a 45.2% gain in one month. Our view is that the company is well positioned to benefit from an expected rise in Canadian and Australian crop yields in 2012, as well as the end of the Canadian Wheat Board’s monopoly on western Canadian wheat and barley sales. In addition, its Australian operations’ sales to Asia continue to rise....

IAMGOLD $13.22 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 375.9 million; Market cap: $5.0 billion; Dividend yield: 1.5%) reports that its revenue rose 9.2% in the three months ended December 31, 2011, to $481.6 million from $440.9 million a year earlier, largely due to higher gold prices. Earnings per share rose 9.1%, to $0.36 from $0.33.

IAMGold now holds over $1.1 billion U.S. in cash and gold bullion. That gives it lots of options to spur its share price. For example, it could raise exploration spending, make an acquisition or buy back shares.

IAMGold is still a buy.

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STANTEC INC., $29.83, symbol STN on Toronto, sells a range of consulting, project delivery, design/build and technology services. The company’s clients operate in a variety of industries, including transportation, construction and oil and gas. Stantec has over 11,000 employees in 170 locations throughout North America. It also has four international offices. In the three months ended December 31, 2011, the company’s revenue rose 12.6%, to $432.0 million from $383.7 million a year earlier. Acquisitions were part of the reason for the gains. Stantec is also working on a number of new projects. Before one-time items, earnings rose 4.3%, to $24.3 million, or $0.53 a share, from $23.3 million, or $0.51....

NEWMONT MINING $59.43 (New York symbol NEM; Shares outstanding: 488.2 million; Market cap: $29.0 billion; TSINetwork Rating: Average; Dividend yield: 2.4%; www.newmont.com) operates gold mines in the U.S., Canada, Mexico, Australia, New Zealand, Peru, Indonesia and Ghana. The company’s worldwide diversification, plus its strong cash flow and balance sheet, make it our favourite gold stock for safety-conscious investors. In 2011, Newmont had record cash flow of $3.6 billion, or $7.27 a share, up 12.9% from $3.2 billion, or $6.46 a share, in 2010. The company holds cash of $1.8 billion, or $3.61 a share. Its long-term debt of $3.6 billion is a low 11.7% of market cap....

NEWMONT MINING CORP. $60 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 493.1 million; Market cap: $29.6 billion; Price-to-sales ratio: 2.8; Dividend yield: 2.3%; TSINetwork Rating: Average; www.newmont.com) expects its overall copper production will fall to around 160 million pounds in 2012 from 206 million pounds in 2011. That’s because the operators of its 44.56%-owned Batu Hijau open-pit copper mine in Indonesia need time to clear out waste material so they can reach lower depths with higher grades of copper. As well, Newmont expects its copper production costs to jump to between $1.80 and $2.20 per ounce in 2012 from $1.26 in 2011. The company also expects to produce 5.0 million to 5.2 million ounces of gold in 2012, which is comparable to the 5.2 million ounces it produced in 2011. However, due to rising power and labour costs at its Australian mines, its gold-production costs will jump to between $625 and $675 an ounce from $592 in 2011. Newmont’s long-term outlook remains bright. Concerns over European sovereign debt should continue to spur gold prices. Copper prices should also rebound in 2012, as global consumption will probably exceed production....

NEWMONT MINING CORP. $61 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 494.8 million; Market cap: $30.2 billion; Price-to-sales ratio: 3.3; Dividend yield: 2.3%; TSINetwork Rating: Average; www.newmont.com) is one of the world’s largest gold-mining companies. It has major mines in the U.S., Australia and Peru. Newmont gets about 90% of its revenue from gold. It gets the remaining 10% from copper, zinc and other metals. Most of Newmont’s copper comes from its 27.56% stake in the large Batu Hijau mining complex in Indonesia. Combined with financing arrangements the company has with other Batu Hijau shareholders, Newmont’s economic interest in this mine is effectively 44.56%. The company prefers to sell its gold at the market price instead of through long-term hedging contracts that lock in prices. This policy has helped it take full advantage of rising gold prices: Newmont’s average realized gold price jumped 105.7%, from $594 an ounce in 2006 to $1,222 in 2010....

IAMGOLD $16.38 (Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold.com; Shares outstanding: 376.8 million; Market cap: $6.2 billion; Dividend yield: 1.2%) sold its Mupane mine in Botswana for $34.2 million in September 2011 (all figures except share price and market cap in U.S. dollars). Earlier in 2011, IAMGold sold its 18.9% stake in the Tarkwa and Damang gold mines in Ghana to South African mining giant Gold Fields Ltd. for $667 million in cash. The sales left IAMGold with 38% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 90% of its new Essakane gold mine in Burkina Faso; 100% of the Doyon mine in Quebec; and 100% of the Rosebel mine in Suriname, South America. In addition, IAMGold also has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories. It also owns the Niobec niobium mine in Quebec. Niobium is a rare metal that when used as an additive makes steel stronger, more heat resistant and easier to weld....

NEWMONT MINING CORP. $60 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 493.1 million; Market cap: $29.6 billion; Price-to-sales ratio: 2.8; Dividend yield: 2.3%; TSINetwork Rating: Average; www.newmont.com) expects its overall copper production will fall to around 160 million pounds in 2012 from 206 million pounds in 2011. That’s because the operators of its 44.56%-owned Batu Hijau open-pit copper mine in Indonesia need time to clear out waste material so they can reach lower depths with higher grades of copper. As well, Newmont expects its copper production costs to jump to between $1.80 and $2.20 per ounce in 2012 from $1.26 in 2011.

The company also expects to produce 5.0 million to 5.2 million ounces of gold in 2012, which is comparable to the 5.2 million ounces it produced in 2011. However, due to rising power and labour costs at its Australian mines, its gold-production costs will jump to between $625 and $675 an ounce from $592 in 2011.

Newmont’s long-term outlook remains bright. Concerns over European sovereign debt should continue to spur gold prices. Copper prices should also rebound in 2012, as global consumption will probably exceed production.

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