newmont mining

UNIVERSAL CANADIAN GROWTH FUND $17.65 (CWA Rating: Conservative) (Mackenzie Financial Corp., 150 Bloor St. West, Toronto, Ontario, M5S 3B5. Web site: www.mackenziefinancial.com. Tel: 1-800-387-0780; Load fund: available from brokers) holds companies that its managers believe have strong management and sound business prospects. The fund holds fewer than 40 stocks. Universal Canadian’s top holdings include Thomson Reuters, Rogers Communications, Becton Dickinson, ShawCor, John Wiley & Sons, Dun & Bradstreet, Shoppers Drug Mart, Martinrea International, Waters Corp. and Enerflex Systems. The $823.1-million fund’s breakdown by economic sector is as follows: consumer discretionary (26%), energy (16.4%), industrials (12.1%), health care (8.8%), consumer staples (6.2%), telecommunications services (5.8%), information technology (5.2%), and metals and minerals (1.3%)....

NEWMONT MINING CORP. $39 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 490 million; Market cap: $19.1 billion; Price-to-sales ratio: 3.4; WSSF Rating: Average) earned $213 million, or $0.43 a share, in the three months ended June 30, 2009. That’s down 3.6% from the $221 million, or $0.50 a share, it earned the previous year. The latest figures exclude one-time costs related to Newmont’s purchase of the remaining one-third interest in Australia’s Boddington gold mine. Revenue rose 6.6%, to $1.6 billion from $1.5 billion. Gold sales (86% of revenue), rose 4%, as Newmont’s realized gold price climbed 1.7%. Copper sales (14% of revenue) rose 25% as higher production offset a 39% drop in prices. Newmont’s revenue should continue to rise in the second half of 2009, as Boddington reaches full production. (The mine officially opened on July 23.) The company is also doing a good job of lowering its production costs. Newmont is a buy.

ASA Limited, $61.09, symbol ASA on New York (Shares outstanding: 7.2 million; Market cap: $439.9 million), 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 82% of its assets are now gold stocks; other natural-resource stocks account for 14%. ASA owns the following stocks: Anglo American plc, Lonmin plc, Impala Platinum Holdings, Anglo Platinum, Newcrest Mining, Barrick Gold, Goldcorp, Kinross Gold, NovaGold Resources, Randgold Resources, Compania de Minas Buenaventura, AngloGold Ashanti, Gold Fields Limited, Harmony Gold Mining, Newmont Mining and SPDR Gold Trust....

NEWMONT MINING $42.18 (New York symbol NEM; Shares outstanding: 479.0 million; Market cap: $20.2 billion; SI Rating: Average) has completed the purchase of the 33.3% of the new Boddington gold mine, in western Australia, that it does not already own from AngloGold Ashanti. Newmont paid $1.1 billion. Newmont took advantage of rising gold prices earlier this year to sell $517.5 million in bonds and 34.5 million common shares for a total of $1.7 billion. The company will use the funds to pay for the Boddington acquisition, as well as to expand production at its other mines. Boddington will begin operating later this year, and will increase Newmont’s annual production by at least 10%. It should also immediately add to the Newmont’s earnings. Boddington’s reserves should last 20 years, so owning all of it enhances Newmont’s long-term prospects....

The U.S. newsletter publishing business is crowded and erratic, so publishers continually try to come up new gimmicks to lure subscribers. Some publishers have recently taken up the idea of a “secret gold currency” as a direct-mail offer. This is supposed to be a form of gold, but, as the marketing material states: “it has nothing to do with owning gold bullion, gold mining stocks, gold mutual funds, gold options or futures, or any other type of gold investment you’ve likely considered before.” The “secret gold currency” appears to consist of bullion coins that are valued by collectors for more than their bullion content. Modern gold coins issued by countries such as the U.S. (American Gold Eagle), South Africa (Gold Krugerrand) or the U.K. (Gold Sovereign) generally trade at a small premium to the spot price of gold — usually 4.5% or so. It appears the “secret” coins are older. Such coins sometimes trade at higher premiums to their gold content, depending on their rarity and condition....

COMPTON PETROLEUM $0.80 (Toronto symbol CMT; SI Rating: Speculative) (403-237-9400; www.comptonpetroleum.com; Shares outstanding: 125.6 million; Market cap: $100.5 million) explores for oil and natural gas in western Canada. Its $829.3-million debt is over eight times its $100.5-million market cap. However, most of its debt is not due until 2013, so it shouldn’t face liquidity problems until then. Compton will cut its capital spending and production until natural gas prices improve. Even so, it expects to generate cash flow of $65 million, or $0.50 a share, this year. The company still has lots of reserves and drilling prospects, so it will be in a good position to boost its output and pay down its debt when gas prices rebound. Compton Petroleum is still a hold....

FORD MOTOR CO., $3.25, New York symbol F, reported that its U.S. sales dropped 40.9% last month, to 131,465 vehicles from 222,337 in March 2008. However, sales were up 30% from the previous month. Ford has launched a new insurance plan that will cover a buyer’s monthly car payments for up to a year if they lose their job. This plan will probably hurt Ford’s earnings. However, Korean carmaker Hyundai uses a similar incentive to bolster its sales. Other carmakers, including General Motors, plan to follow suit. Unlike GM and Chrysler, Ford has not asked for government assistance. Ford could increase its market share if these competitors go bankrupt or cut production further. However, the bankruptcy of GM and Chrysler would probably force several parts suppliers to go out of business. A parts shortage would hurt Ford’s ability to keep operating....

Gold moved up from $300 an ounce in the early part of this decade to over $1,000 in 2008. It fell to $700 in November 2008 as the stock market bottomed out. Like the stock market, gold has regained some of its losses and now trades at around $900. We feel gold could eventually surpass its recent highs with a corresponding impact on many gold stocks. That’s mainly because investors fear that low interest rates and government stimulus spending will spur inflation. Gold prices, and gold investing, should continue to gain as the credit crisis makes it harder for gold companies to fund new projects and expand production. Regardless of what happens with gold investing in general, speculative and promotional gold stocks will make significant gains from time to time on hopes of a gold discovery. You can say something like that about any sort of speculative or promotional stocks, but most investors who dabble in them still wind up losing money. That’s because it is much easier to launch penny gold stocks than to find a gold mine....

AEROPOSTALE INC., $25.23, symbol ARO on New York, reported higher sales and profits this week. Notwithstanding the weak economy, the teen-clothing retailer took market share from its rivals, mainly on the strength of its lower prices. During the quarter, Aeropostale posted positive same-store sales, while rivals The Gap and American Eagle saw their same-store sales drop. In the three months ended January 31, 2009, Aeropostale’s revenue rose 16.7%, to $690 million from $591.3 million a year earlier. Same-store sales rose 6%, and online sales jumped 88%, to $41.4 million from $22 million, as more Christmas shoppers chose to make their purchases through the Internet. Aeropostale also added 86 new stores, which brings it to a total of 914. It operates 28 stores in Canada. Aeropostale’s wide variety of clothing, low prices and aggressive promotions continue to drive up the company’s sales. Its earnings rose 5.4%, to $68.2 million, or $1.02 a share, from $64.7 million, or $0.96 a share. Higher holiday sales were offset by markdowns, which lowered profits....

UNIVERSAL CANADIAN GROWTH FUND $16.35 (CWA Rating: Conservative) (Mackenzie Financial Corp., 150 Bloor St. West, Toronto, Ontario, M5S 3B5. Web site: www.mackenziefinancial.com. Tel: 1-800-387-0780; Load fund: available from brokers) holds companies with strong management and sound business prospects. The fund holds fewer than 40 stocks at all times. Universal Canadian’s top holdings include Thomson Reuters, Rogers Communications, Edwards Lifesciences, ShawCor, John Wiley & Sons, Dun & Bradstreet, Enerflex Systems, EnCana Corporation and Research in Motion. The fund’s breakdown by economic sector is as follows: 17.7% in Consumer Discretionary, 16.5% in Information Technology, 13.5% in Energy, 7.1% in Health Care, 6.3% in Telecommunications Services and 5.1% in Metals & Minerals....