newmont mining

NEWMONT MINING $58.32 (New York symbol NEM; Shares outstanding: 484.7 million; Market cap: $28.2 billion; TSINetwork Rating: Average; Dividend yield: 1.0%; www.newmont.com) is one of the world’s largest gold miners. Newmont has major mines in the U.S., Australia and Peru. In the three months ended September 30, 2010, Newmont’s revenue rose 26.7%, to a record $2.6 billion from $2.05 billion a year earlier. Before one-time items, earnings per share rose 36.7%, to $1.08 from $0.79. Cash flow per share rose 29.6%, to $2.41 from $1.86. Higher gold prices offset the the negative impact of a stronger Australian dollar, start-up costs at its Boddington gold mine in Australia, higher royalties, and lower production in South America....

Indigo Exploration, $0.46, symbol IXI on Toronto (Shares outstanding: 19.2 million; Market cap: $8.8 million; www.indigoexploration.com), is focused on exploring its Moule property in the west African nation of Burkina Faso. Basic surface and trench sampling has revealed gold mineralization. The company is now undertaking a 5,000-metre drilling program to follow up on these results. Indigo has cash of $800,000 to fund the program. West Africa has favourable geology for gold mining, and there are several major producing mines in the area, including mines operated by IAMGold, AngloGold Ashanti, Randgold Resources, Gold Fields Limited and Newmont Mining. However, while properties in the same region as existing mines can contain significant gold deposits, the odds of finding a mineable deposit are still very remote....

NEWMONT MINING CORP. $61 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 493.1 million; Market cap: $30.1 billion; Price-to-sales ratio: 3.2; Dividend yield: 1.0%; TSINetwork Rating: Average; www.newmont.com) is one of the world’s largest gold-mining companies. Newmont has major mines in the U.S., Australia and Peru. Gold accounts for about 85% of Newmont’s revenue. The remaining 15% comes from copper, zinc and other metals. Most of Newmont’s copper comes from its 35.4% stake in the large Batu Hijau mining complex in Indonesia. Gold has jumped 35%, from $1,062 an ounce in February 2010 to a new all-time high of $1,433 in December 2010. Newmont 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....

Commodities like gold and copper provide a hedge against inflation. But even if inflation stays low, commodity prices are likely to keep rising as rapid economic growth in Asia and South America spurs new construction and car sales. That will help BHP, Newmont and Alcoa. All three are high-quality, well-established resource stocks that have jumped lately. Still, we see only two as buys right now. BHP BILLITON LTD. ADRs $89 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 2.8 billion; Market cap: $249.2 billion; Price-to-sales ratio: 4.7; Dividend yield: 2.0%; TSINetwork Rating: Average; www.bhpbilliton.com) is the world’s largest mining company, with major operations in Australia, South Africa, Chile and the U.K. It produces iron ore, coal, oil, aluminum, manganese, diamonds and titanium. Regulators in Australia and Canada have recently forced the company to cancel two big deals....

ASA Limited, $33.36, symbol ASA on New York (Shares outstanding: 19.4 million; Market cap: $648.5 million; www.asaltd.com), is a closed-end fund that must keep at least 80% of its assets in shares of companies that mine gold, silver, platinum, diamonds or other precious metals. The company mostly invests in well-established gold stocks with steady cash flows and large reserves. About 85.9% of its assets are in companies with operating mines; exploration and development firms account for 10.4%. ASA’s top holdings are Newcrest Mining, Barrick Gold, Randgold Resources, Compania de Minas Buenaventura, Goldcorp, Agnico Eagle Mines, Impala Platinum Holdings, AngloGold Ashanti, Anglo Platinum and Newmont Mining....

Dynamic Precious Metals Fund is a mutual fund that mainly invests in mining stocks and other resource companies. The $1.05-billion fund focuses on small- to mid-cap stocks. Its MER is 2.75%. The fund holds 95.3% of its portfolio in gold and precious-metals stocks, and 4.5% in metals and minerals stocks. Its top-ten holdings are Osisko Mining, Kinross Gold, Andean Resources, San Gold, Perseus Mining, Allied Nevada Gold, Aurizon Mines, Alamos Gold, Agnico-Eagle Mines and Sabina Gold & Silver. Dynamic Precious Metals Fund holds 72.3% of its portfolio in Canadian stocks, 21.3% in Australia and 6.0% in the U.S....

If you want to buy gold, we recommend staying away from buying gold bullion, coins (unless you collect them as a hobby) or certificates representing an interest in bullion. That’s because commodity investments such as gold bullion do not generate income. Instead, they come with a continuing cash drain for management, insurance, storage and so on. You either pay these costs directly or through a premium built into the price of, say, a futures contract. That’s why we recommend that you invest in gold through gold-mining stocks. Unlike bullion, gold-mining stocks at least have the potential to generate income. Newmont Mining, $63.33, symbol NEM on New York (Shares outstanding: 484.7 million; Market cap: $30.7 billion; www.newmont.com), is a relatively conservative choice if you want to buy a gold stock....

Central Fund of Canada, $17.01, symbol CEF.A on Toronto (Shares outstanding: 238.3 million; Market cap: $4.1 billion) is a closed-end mutual fund that holds gold and silver bullion. It now holds 54.3% of its assets in gold bullion, 43.3% in silver bullion and 2.4% in cash. The fund has an MER of 0.38%. The units yield 0.06%. Central Fund trades at a 7.4% premium to the per-unit value of the assets it holds. We advise against buying closed-end funds at a premium, so we don’t recommend buying units of Central Fund. If you want to buy gold or silver, we recommend staying away from buying gold or silver bullion, coins (unless you collect them as a hobby) or certificates representing an interest in bullion. That’s because commodity investments like gold and silver bullion do not generate income. Instead, they come with a continuing cash drain for management, insurance, storage and so on. You either pay these costs directly or through a premium built into the price of, say, a futures contract....

ADOBE SYSTEMS INC., $26.88, Nasdaq symbol ADBE, reported record-high quarterly revenue and stronger-than-expected earnings this week. However, the software maker warned that its earnings in the current quarter will be hurt by slowing sales of its Creative Suite 5 software package to U.S. schools. The weak Japanese economy is also hurting demand for this product. The warning caused the stock to fall 19%. Creative Suite 5, which accounts for about 55% of Adobe’s revenue, is a package of photo-editing and desktop-publishing programs....

BAFFINLAND IRON MINES, $1.03, symbol BIM on Toronto, is the subject of a hostile, $274.3-million takeover offer from Nunavut Iron Ore Acquisition Inc., which is wholly owned by privately held Iron Ore Holdings, LP. Nunavut is offering $0.80 in cash for each share of Baffinland. The company currently owns about 6% of Baffinland. Other shareholders who hold a combined 9.3% stake in Baffinland have also agreed to tender their shares to the offer. Baffinland is now trading at $1.03, or 28.8% above Nunavut’s bid. This indicates that investors expect a much higher bid from Nunavut or another buyer....