Newmont Demands Barrick Improve North American Gold Operations
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 days ago
0mins
Source: seekingalpha
- Declining Asset Value: Newmont (NEM) highlighted that the operational and management performance of Nevada Gold Mines has deteriorated over the past six years, necessitating improvements from Barrick (B) to restore asset value.
- IPO Plans at Risk: Newmont stated that any transaction involving its joint ventures must adhere to protective clauses in their agreements, including transfer restrictions, which could impede Barrick's plans to sell North American gold assets through an IPO by year-end.
- Complex Joint Venture Structure: In the Nevada joint venture, Barrick holds a 61.5% stake while Newmont owns 38.5%, granting Newmont a blocking right in the asset spinoff to safeguard its interests.
- Uncertain Future Outlook: Although Barrick plans to retain significant control over North American gold assets, the specifics of the spinoff remain undecided, potentially affecting investor expectations regarding future earnings.
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Analyst Views on NEM
Wall Street analysts forecast NEM stock price to fall
14 Analyst Rating
11 Buy
3 Hold
0 Sell
Strong Buy
Current: 118.120
Low
89.00
Averages
110.85
High
125.00
Current: 118.120
Low
89.00
Averages
110.85
High
125.00
About NEM
Newmont Corporation is a gold company and a producer of copper, zinc, lead, and silver with operations and/or assets in the Africa, Australia, Latin America & Caribbean, North America, and Papua New Guinea regions. The Company's operations include Brucejack, Red Chris, Penasquito, Merian, Cerro Negro, Yanacocha, Boddington, Tanami, Cadia, Lihir, Ahafo, and NGM. The Brucejack operation includes four mining leases and six core mineral claims which cover 8,169 acres (3,306 hectares) and 337 mineral claims covering 298,795 acres (120,918 hectares). The Red Chris operation includes five mining leases which cover 12,703 acres and 199 mineral claims, encompassing an area of 164,903 acres (66,734 hectares). Penasquito includes 20 mining concessions for operations comprising 113,231 acres (45,823 hectares) and 60 mining concessions for exploration of 107,456 acres (43,486 hectares). The Merian operation includes one right of exploitation encompassing an area of 41,687 acres (16,870 hectares).
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Stock Pullback and Recovery: After four consecutive days of gains, Newmont Corporation's stock fell 5% yesterday but rebounded by 5% in morning trading today, indicating market sensitivity to gold and silver price fluctuations and reflecting investor confidence in the company's future profitability.
- Gold Price Trends: Gold prices hit an all-time high of $5,419.80 per ounce on January 28, dropped to nearly $4,500, but surpassed $5,000 again last week, currently at $5,001, directly driving Newmont's stock recovery and highlighting its strong correlation with gold prices.
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- Earnings Expectations and Investment Value: Analysts predict Newmont will report Q4 earnings of $2.02 per share, with a full-year profit of $6.42, resulting in a price-to-earnings ratio of approximately 19.3 based on the current stock price of $124, alongside an expected annual growth rate of 32% over the next five years, making Newmont's stock an attractive investment option.
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- Top Quant Ratings: IAMGOLD Corporation (IAG) leads with a near-perfect quant rating of 4.99, reflecting its superior performance on critical metrics such as valuation, growth, and profitability, likely attracting more investor interest.
- Sector Performance Divergence: Gold mining companies like Coeur Mining (CDE) and Newmont (NEM) also received high quant ratings of 4.96 and 4.93, respectively, showcasing strong growth potential in the materials sector, which may drive stock prices higher.
- Profit Growth Trend: Recent earnings reports indicate that 54 out of 81 companies achieved profit growth, further validating optimistic expectations for the materials sector, especially in the context of economic recovery.
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See More
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- Market Reaction Expectations: Investors are optimistic about the upcoming personal consumption expenditure data, although the cooler-than-expected CPI could impact the Fed's interest rate outlook, with markets currently pricing in only two quarter-point cuts for the year.
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- Chinese Market Influence: Analysts highlight that retail and institutional investors in China are significantly impacting gold price volatility, with a notable increase in trading activity in gold futures and ETFs, suggesting a speculative nature in the market.
- Increased Leverage Usage: Despite regulators raising margin requirements, trading volumes in gold futures continue to rise, with the Shanghai Futures Exchange averaging nearly 540 tons per day, indicating strong demand for gold that may lead to further price fluctuations.
- Strategic Investment Shift: As gold's share of Chinese household assets is expected to rise from 1% to 5%, the trend of investors seeking higher returns and safe-haven assets may lead to a speculative bubble in the gold market, potentially impacting global gold market stability.
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