Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

A New Day for Newmont: Gold Producer Makes Game-Changing Announcements

By

Newmont Mining has gotten no respect for anything it's done, but now it's a gold stock that will have production growth, a bit of yield, and still be very reasonably priced.

PrintPRINT
Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial).

Yesterday, Newmont Mining (NEM) held its analyst day and made a couple of important announcements, one being that it expected production to grow from 5 million to 7 million ounces over the course of the next five years or so, and the other that it would boost its dividend 20 cents for every $100 increase in the price of gold. At today's gold price that means it will pay a divided of about a dollar, which is a yield of approximately 1.7%. But for those folks who are willing to own the stock over time, a $2,000 gold price would create about a 3.5% running yield on a purchase you made today.

I think this is something of a game-changer for Newmont. The company has gotten no respect for anything it has done and the valuation has been reasonable, if not cheap. Now you have a gold stock that will have production growth, a bit of yield, and is still very reasonably priced. In my opinion, the market has been overpaying for growth because folks don't believe the price of gold in the future will be higher. Thus, a company like Newmont, which has had no growth, has been penalized.

A New Day for Newmont

Somewhere down the road, the market will get it into its head that the gold price will not only be where it is today, but somewhat higher, and a company like Newmont could get a large re-rating. However, now that it also has production growth, it should see a re-rating as a consequence of that news. We will have to wait and see if the market agrees with my analysis, but I believe this is an important development as far as Newmont is concerned.


Lasting through April 15, 100% of the donations made to The Ruby Peck Foundation for Children's Education will be channeled to the children of Japan as they attempt to find their footing following this natural disaster; and to kick off this drive, we'll pledge $5000 to get it started. Please do what you can, as it will add up, and thanks.
< Previous
  • 1
Next >
Position in NEM.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE