Newmont Corp.

Tinka Resources, $0.86, symbol TK on Toronto (Shares outstanding: 74.9 million; Market cap: $63.1 million; www.tinkaresources.com), is developing its 100%-owned Colquipucro project in central Peru. Colquipucro is 25 kilometres from major Peruvian-based mining company Minas de Buenaventura SA’s (symbol BVN on New York) Uchucchacua silver mine. The Colquipucro deposit was mined during colonial Spanish times and periodically between 1825 and 1950. The property was further explored and mined by Compania Minera Colquipucro SA between 1950 and 1954, when it was optioned to Cerro de Pasco Corp., which conducted further exploration and assessment work. In 1960, Minas de Buenaventura SA took over the property and conducted intermittent production and exploration until 1968, when the mine closed. Minas de Buenaventura carried out further exploration work between 1976 and 2005....

INTERNATIONAL BUSINESS MACHINES CORP., $190.00, New York symbol IBM, reported lower-than-expected earnings and revenue for the latest quarter. That’s why the stock fell 8% on Friday. In the three months ended March 31, 2013, the company earned $3.03 billion. That’s down 1.1% from $3.07 billion a year earlier. IBM spent $2.6 billion on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share rose 3.4%, to $2.70 from $2.61. Without unusual items, such as costs to integrate recently purchased companies, IBM’s earnings per share would have risen 7.9%, to $3.00 from $2.78. The gain was mainly the result of the company’s ongoing efforts to cut costs and improve productivity. Still, the latest earnings missed the consensus estimate of $3.05 a share....

NEWMONT MINING CORP. $34 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 496.8 million; Market cap: $16.9 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.0%; TSINetwork Rating: Average; www.newmont.com) produced 1.2 million ounces of gold in the first quarter of 2013, down 10.9% from a year earlier. That’s because colder-than-normal winter weather hurt production at its mine in Nevada. However, it still expects to produce 4.8 million to 5.1 million ounces in 2013.

Newmont remains our top gold stock. Its reserves should last decades, and most of its production is in politically stable areas. However, gold prices have fallen in the last six months and could remain under pressure, particularly if European governments sell their gold reserves to deal with their financial problems.

Newmont is now a hold....

These two leading mining stocks reported lower earnings for 2012. But they’re both working on important projects that they expect to boost their earnings in 2013 and beyond. Here’s our report from the latest edition of Wall Street Stock Forecaster. NEWMONT MINING (New York symbol NEM; www.newmont.com) gets 90% of its revenue from gold mines in the U.S., Australia and Peru. Copper, zinc and other metals supply the remaining 10%....

These two leading mining companies reported lower earnings for 2012. But they’re both working on important projects that should boost their earnings in 2013 and beyond.

NEWMONT MINING CORP. $40 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 496.7 million; Market cap: $19.9 billion; Price-to-sales ratio: 2.0; Dividend yield: 4.3%; TSINetwork Rating: Average; www.newmont.com) gets 90% of its revenue from gold mines in the U.S., Australia and Peru....

NEWMONT MINING CORP. $40 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 496.7 million; Market cap: $19.9 billion; Price-to-sales ratio: 2.0; Dividend yield: 4.3%; TSINetwork Rating: Average; www.newmont.com) gets 90% of its revenue from gold mines in the U.S., Australia and Peru. Copper, zinc and other metals supply the remaining 10%.

In 2012, Newmont sold its gold for an average of $1,662 an ounce, up 6.4% from $1,562 in 2011. But production fell 4.9%, to 5.6 million ounces from 5.9 million. That’s because it had to cut production at its 31.5%-owned Batu Hijau gold/copper project in Indonesia as the mine prepares to open a new phase in 2014.

As a result of the lower production, Newmont’s revenue fell 4.7% to $9.9 billion from $10.4 billion. Rising operating costs and higher royalty payments have also pushed up Newmont’s cost per ounce by 14.6%, to $677 from $591. That cut its 2012 earnings by 14.7%, to $1.85 billion, or $3.73 a share. In 2011, it earned $2.2 billion, or $4.39 a share.
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ISHARES S&P/TSX GLOBAL GOLD INDEXFUND $19.04 (Toronto symbol XGD; buy or sell throughbrokers; ca.ishares.com) aims to mirror the performanceof the S&P/TSX Global Gold Index.

This index is made up of 56 gold stocks fromCanada and around the world. The fund’s MER is0.60%. iShares S&P/TSX Global Gold Index Fundbegan trading on March 23, 2001.

The fund’s top 10 holdings are Barrick Gold at15.1%; Goldcorp, 13.1%; Newmont Mining, 9.8%;Yamana Gold, 5.7%; AngloGold Ashanti (ADR),5.2%; Kinross, 4.8%; Eldorado Gold, 4.1%;Randgold Resources, 4.1%; Agnico-Eagle Mines,3.4%; and Gold Fields (ADR), 3.8%.
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In September 2011, gold hit an all-time high of$1,900.30 U.S. an ounce. It now trades at around$1,686.50. Silver rose to an all-time high in April2011, when it reached $49.76 U.S. an ounce. It hassince pulled back to today’s price of $31.00.

Gold and silver could well regain their highs andmove up even further over the longer term, althoughthey will likely remain volatile....

NEWMONT MINING $47.31 (New York symbol NEM; Shares outstanding: 491.2 million; Market cap: $23.2 billion; TSINetwork Rating: Average; Dividend yield: 3.0%; 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 the three months ended September 30, 2012, Newmont’s cash flow fell 20.4%, to $849 million, or $1.72 a share, from $1.1 billion, or $2.12 a share, a year earlier. Lower gold prices and higher costs were the main reason for the decline. The company holds cash of $1.5 billion, or $3.07 a share.

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Pat McKeough responds to many personal questions about specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. This week, one Inner Circle member asked about one of the Canadian copper stocks operating in South America. This firm is developing a large copper, gold and silver project. But it’s in Peru, so Pat takes a close look at the additional political risk that faces mining stocks in that country....