Newmont Corp.

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 will eventually surpass its recent highs. We also feel that the best way to profit from rising gold is through Newmont Mining. Its high-quality mines should last decades, and its costs are coming down. As well, most of its production is in politically stable areas, such as North America and Australia. NEWMONT MINING CORP. $39 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 454.3 million; Market cap: $17.7 billion; Price to- sales ratio: 3.4; WSSF Rating: Average) is one of the world’s largest gold mining companies, with major operating gold mines in the United States, Canada, Australia, Peru, Bolivia and Ghana. 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 45% stake in the large Batu Hijau mining complex in Indonesia....

NEWMONT MINING CORP., $39.78, New York symbol NEM, has agreed to buy the 33.3% of the new Boddington gold mine, in western Australia, that it does not already own from AngloGold Ashanti Ltd. Newmont will pay $1.1 billion, consisting of cash, stock and future royalties. The purchase price is roughly 30% more than Newmont’s likely 2008 earnings of $840 million, or $1.85 a share. Newmont plans to issue up to 34.5 million new common shares, at $37 each, to pay for this...

Franco-Nevada Corp., $20.16, symbol FNV on Toronto, (Shares outstanding: 100.3 million; Market cap: $2 billion) holds a portfolio of about 285 royalties and other investments in gold and other precious metals, natural gas, oil and base metals. Most of its investments (95%) are located in politically stable North America and Australia, and are operated by large companies such as Barrick Gold, Goldcorp, Xstrata Nickel and EnCana. Franco-Nevada generates cash flow from royalties on mines such as Goldstrike (gold), Stillwater (platinum group metals: platinum, palladium and rhodium), and its interests in more than 100 oil and natural gas properties in western Canada. The company also has growing cash flow from its interests in mines such as Bald Mountain, Marigold, Robinson, and Falcondo. New mines such as Cerro San Pedro and Mesquite are increasing production. Most recently, Franco Nevada paid $103.5 million to acquire a 7.3% royalty interest from Gold Quarry Royalty Property in Nevada. (All figures except share price and market cap in U.S. dollars.)...

ALGONQUIN POWER INCOME FUND $2.88 (Toronto symbol APF.UN; Shares outstanding: 77.4 million; Market cap: $222.8 million; SI Rating: Extra Risk) dropped sharply in price recently after the fund cut its monthly distribution by 73.9%, to $0.02 from $0.0766. The units now yield 8.3%. Prior to the cut, the fund paid out around 100% of its cash flow in distributions. That payout ratio now drops to an estimated 30% for 2009. We advised against buying Algonquin last month on the possibility of a distribution cut. But while the fund’s expansion into alternative fuels such as landfill gas and wind power continues to add risk, it now looks more attractive....

THE BOEING CO. $52.42, New York symbol BA, has agreed to a new contract with its striking machinists union. The strike began in early September, and probably cost Boeing $100 million a day in lost revenue. The company hopes this new agreement will help it secure a new contract with its engineers and technical workers, whose current contract expires on December 1, 2008. Meanwhile, Boeing’s third-quarter earnings fell 34.3%, to $0.94 a share from $1.43 a year earlier. The decline was mostly due to the strike. Revenue fell just 7.4%, to $15.3 billion from $16.5 billion, as strong growth at its military products division helped offset lower sales of commercial planes. Boeing’s order backlog now stands at a record $349.4 billion, which is equal to over five times its annual revenue. The slowing economy could prompt some airlines to delay or cancel their orders. However, about 90% of the backlog for commercial jets comes from overseas airlines, many of which receive financial subsidies from their governments. Demand for new fuel-efficient planes, such as the 787 Dreamliner, also remains strong....

Today’s rebound in the market is reassuring, but I expect stocks to remain highly volatile for a month or more. After that, we could see a six-month rebound in prices. The U.S. bailout of major financial institutions raises inflation risk over the next few years, but it heads off panic. Nobody can predict market bottoms, but I suspect we are much closer to the bottom than the top. BANK OF AMERICA CORP. $37.48, New York symbol BAC, has agreed to acquire troubled brokerage firm Merrill Lynch & Co., Inc. (New York symbol MER). Based on current prices, Bank of America will pay about $49 billion in stock. That’s equal to 29% of its market cap of $170.9 billion. The addition of Merrill will greatly expand Bank of America’s retail brokerage and wealth management operations. Including Merrill’s 16,000 brokers, the merged company will be the world’s largest brokerage firm, with 20,000 brokers and $2.5 trillion in assets under management. Bank of America will probably keep the Merrill Lynch brand, and operate it as a separate division....

NEWMONT MINING $41.39 (New York symbol NEM; SI Rating: Average) aims to start operations at its 66.7%-owned Boddington gold mine in Australia in early 2009. The $2 billion mine is now 77% complete. With forecast annual production of one million ounces of gold and 30,000 tonnes of copper for at least 15 years, Boddington should expand Newmont’s annual production by around 10%. The company is also evaluating the feasibility of recovering molybdenum (a mineral used to strengthen steel) from the Boddington mine. For aggressive investors who want to hedge against — or bet on — a renewed rise in gold prices, Newmont Mining is a buy.

MOLSON COORS BREWING CO. $49.91, New York symbol TAP, fell 10% this week, as rising costs for raw materials and energy more than offset rising sales. In the three months ended June 29, 2008, earnings before unusual items fell 2.0%, to $172.6 million from $176.1 million a year earlier. Per-share earnings fell 4.1%, to $0.93 from $0.97, on more shares outstanding. Sales rose 5.9%, to $1.8 billion from $1.7 billion. Sales gains in the United States and the UK offset a small drop in Canada. The company’s latest cost-cutting plan will help it cope with higher grain and other costs. So far, it has cut its annual expenses by $138 million. It should reach its goal of $250 million in annual savings by the end of 2009. The company’s new joint venture with SABMiller plc will also enhance its long-term profitability. Molson Coors is still a buy....

NEWMONT MINING $50.99 (New York symbol NEM; SI Rating: Average), is one of the world’s largest gold producers, with major operations in the United States, Canada, Peru, Australia, Indonesia and Ghana. Newmont produced 5.3 million ounces of gold in 2007. It will probably produce the same amount of gold in 2008 as it continues to work out problems at certain mines. Higher costs for parts and labour will also push operating costs up this year. However, a new on-site power plant should cut costs at its operations in Nevada. The 2009 start-up of its new Boddington gold mine in western Australia should also expand Newmont’s long-term profits, making it attractive for gold investing. Newmont’s 2008 earnings should increase to $2.18 a share, for a p/e of 23.9. It also trades at 13.5 times its projected cash flow of $3.85 a share. That’s high, but golds always trade at a premium to the market. The $0.40 dividend yields 0.8%....

EUROPEAN GOLDFIELDS $5.06 (Toronto symbol EGU; SI Rating: Speculative) (44 (20) 7408 9534; www.egoldfields.com; Shares outstanding: 179.3 million; Market cap: $907.0 million) owns properties in Greece and Romania. The company is headquartered in the UK. European Goldfields holds a 65% interest in Hellas Gold. Hellas owns three gold and base metal deposits in Northern Greece. The deposits are the Stratoni zinc/ lead/silver property, the Olympias gold/zinc/lead/silver project and the Skouries copper/gold property. Production started at Stratoni in September 2005. Permits to develop the Skouries and Olympias projects are moving steadily forward....