newmont mining

NEWMONT MINING CORP. $55 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 496.2 million; Market cap: $27.3 billion; Price-to-sales ratio: 2.6; Dividend yield: 2.5%; TSINetwork Rating: Average; www.newmont.com) is the world’s second-largest gold miner by production, behind Barrick Gold Corp. (New York symbol ABX). The company has major mines in the U.S., Australia and Peru. It gets about 90% of its revenue from gold. The remaining 10% comes from copper, zinc and other metals. Newmont sells its gold at the market rate instead of through hedging contracts that lock in prices. This policy has helped it take full advantage of rising gold: its average realized gold price jumped 124.1%, from $697 an ounce in 2007 to $1,562 in 2011. Lack of hedges unleashed earnings...

NEWMONT MINING CORP. $55 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 496.2 million; Market cap: $27.3 billion; Price-to-sales ratio: 2.6; Dividend yield: 2.5%; TSINetwork Rating: Average; www.newmont.com) is the world’s second-largest gold miner by production, behind Barrick Gold Corp. (New York symbol ABX). The company has major mines in the U.S., Australia and Peru. It gets about 90% of its revenue from gold. The remaining 10% comes from copper, zinc and other metals.

Newmont sells its gold at the market rate instead of through hedging contracts that lock in prices. This policy has helped it take full advantage of rising gold: its average realized gold price jumped 124.1%, from $697 an ounce in 2007 to $1,562 in 2011.

Lack of hedges unleashed earnings

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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 $1,700.80. Silver rose to an all-time high in April 2011, when it reached $49.76 U.S. an ounce. It has since pulled back to today’s price of $32.63. Gold and silver could well regain their highs and move up even further over the longer term, although they will likely remain volatile. Higher prices would arise from investor fears that inflation or global political and economic instability will hurt key currencies, such as the euro or the U.S. dollar. If you want to hold a number of gold or silver stocks, these two exchange traded funds offer top-quality global miners and low fees....

ENCANA $20.75 (Toronto symbol ECA; Shares outstanding: 735.4 million; Market cap: $15.3 billion; TSINetwork Rating: Average; Dividend yield: 3.9%; www.encana.com) has come under fire over media reports that the company colluded with U.S.-based Chesapeake Energy Corp. (New York symbol CHK) with regard to various land deals in Michigan in 2009 and 2010. The companies are alleged to have agreed to avoid bidding against each other in order to keep prices of this land low. Now, recent discoveries of shale gas in Michigan have spurred strong demand for these properties for exploration purposes. (Chesapeake Energy is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investing.) Encana is now investigating these allegations, which are also likely to spur a number of class-action lawsuits. However, anti-competitive lawsuits are often difficult to prove....

GOOGLE INC., $580.07, Nasdaq symbol GOOG, will soon launch the Nexus 7, a new tablet computer that features a 7-inch touch-screen display and the latest version of the company’s Android operating system for mobile devices. The new tablet will cost $199. That should help Google complete with similar-sized tablets, including Amazon.com’s popular Kindle Fire. (Amazon.com is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investing.) Google will also launch the Nexus Q, a ball-shaped device that lets users stream music and video from the Internet to a TV set or stereo system. This device will cost $299....

DIAGEO PLC ADRs, $93.40, New York symbol DEO, is the world’s largest premium alcoholic beverage company. Its major brands include Guinness stout, Smirnoff vodka, Johnnie Walker scotch whisky, Captain Morgan rum and Bailey’s Irish Cream. This week, Diageo agreed to buy the rights to Ypioca, a popular brand of cachaca in Brazil. Cachaca is a liquor that is made from sugar-cane juice. Diageo is paying roughly 300 million British pounds for this business (1 British pound = $1.60 Canadian). To put that in context, the company earned 953 million pounds, or 1.53 pounds per ADR, in the six months ended December 31, 2011. (Each American Depositary Receipt represents four Diageo common shares.)...

ISHARES S&P/TSX GLOBAL GOLD INDEX FUND $19.17 (Toronto symbol XGD; buy or sell through brokers; ca.ishares.com) aims to mirror the performance of the S&P/TSX Global Gold Index.

This index is made up of 64 gold stocks from Canada and around the world. The fund’s MER is 0.55%. iShares S&P/TSX Global Gold Index Fund began trading on March 23, 2001.

The fund’s top 10 holdings are Barrick Gold at 17.0%; Goldcorp., 13.0%; Newmont Mining, 9.9%; AngloGold Ashanti (ADR), 5.5%; Yamana Gold, 4.6%; Kinross, 4.3%; Eldorado Gold, 4.2%; Gold Fields (ADR), 3.9%; Compania de Minas Buenaventura SA, 3.8%; and Randgold Resources, 3.4%.

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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 $1,654.00. Silver reached an all-time high in April 2012, when it reached $49.76 U.S. an ounce. It has since pulled back to today’s price of $30.32. Gold and silver could well regain their highs and move up even further over the longer term, although they will likely remain volatile. Higher prices would arise from investor fears that inflation or global political and economic instability will weaken key currencies, such as the euro or the U.S. dollar. If you want to hold a number of gold or silver stocks, these two exchange traded funds offer top-quality global miners and low fees....

NEWMONT MINING $48.42 (New York symbol NEM; Shares outstanding: 490.2 million; Market cap: $23.7 billion; TSINetwork Rating: Average; Dividend yield: 2.9%; www.newmont.com) stopped construction of its 51.35%-owned Conga gold/copper mine in Peru in November 2011. The move was in response to protests by local farmers who fear the mine will contaminate water supplies.

Newmont has a long record of responsible mining in Peru. However, an independent group is now reviewing the $4.8-billion mine’s environmental impact. Meanwhile, Newmont has cut 6,000 jobs at Conga. That will lower its losses until it can restart the project. It also puts pressure on Peru to resolve the dispute.

Newmont is a buy.

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NEWMONT MINING $48.42 (New York symbol NEM; Shares outstanding: 490.2 million; Market cap: $23.7 billion; TSINetwork Rating: Average; Dividend yield: 2.9%; www.newmont.com) stopped construction of its 51.35%-owned Conga gold/copper mine in Peru in November 2011. The move was in response to protests by local farmers who fear the mine will contaminate water supplies. Newmont has a long record of responsible mining in Peru. However, an independent group is now reviewing the $4.8-billion mine’s environmental impact. Meanwhile, Newmont has cut 6,000 jobs at Conga. That will lower its losses until it can restart the project. It also puts pressure on Peru to resolve the dispute. Newmont is a buy.