Tag Archives: Newmont Mining

Business, Finance, Occupation & Industry

Can Yamana Survive Gold's Plunge?

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By Dan Caplinger, The Motley Fool

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On Tuesday, Yamana Gold will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Gold mining stocks have performed badly even when gold prices were relatively stable. But in light of the recent plunge in the price of gold, Yamana and its peers face some new challenges. Let’s take an early look at what’s been happening with Yamana Gold over the past quarter and what we’re likely to see in its quarterly report.

Stats on Yamana Gold

Analyst EPS Estimate

$0.18

Change From Year-Ago EPS

(28%)

Revenue Estimate

$564.6 million

Change From Year-Ago Revenue

0.9%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Can Yamana Gold possibly keep growing?
In light of gold’s plunge, analysts have reined in their estimates for Yamana going forward. Even on the just-ended quarter, they’ve cut their earnings-per-share consensus by more than a dime, but the $0.40 per share downward adjustment for the full 2013 year reflects huge concerns over the future of gold mining. Those concerns have cut more than 30% off Yamana’s stock price since late January.

Yamana has done a better job than many of its peers in fighting many of the challenging trends that the industry has faced recently, especially rising mine operation and construction costs. In last quarter’s report, Yamana managed to sustain profit margins near the company’s historical levels and is aiming to keep its all-in cash costs at the lowest level of any producer.

One way Yamana has kept its competitive cost advantage is through extensive sales of base-metal byproducts like copper and zinc, as both it and fellow low-cost rival Goldcorp benefit from utilizing those secondary metals to offset the cost of their gold production. Peers Gold Fields and AngloGold Ashanti , on the other hand, face much higher costs in part because of their exposure to South Africa and its unstable labor market.

Yet one thing is certain: When gold prices drop, profits will drop with them. Yamana may be the best positioned to handle price declines and still remain profitable, but investors need to prepare for earnings decreases if gold doesn’t bounce back quickly. Already, Newmont Mining has cut its dividend based on the drop in gold prices and could make further cuts in the future if gold stays at current levels. Yamana has room to sustain its payout even if earnings decline, but a slump could put an end to its fast dividend growth in recent years.

In Yamana’s report, watch for the latest progress update on the company’s Cerro Moro mine

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Trending Now: A New Gold Rush?

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By Doug Ehrman, The Motley Fool

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After plunging first through $1,500 per ounce and then $1,400 per ounce, gold seems to have not only reversed, but begun to trend higher, rising seven of the eight trading days since the two-day slide. Helping the rise in prices has been increased demand for physical gold by both individuals and central banks. Further aiding the recovery is that many of the short-term forces that were weighing on gold prices have either been resolved or removed. Still, you must wonder if gold prices are getting an extended dead-cat bounce before falling lower, or if a new trend is being established.

Gold Price in U.S. Dollars data by YCharts

Look out below
After falling through a critical support level at $1,500, gold wasted no time dropping all the way through the next century mark at $1,400. So severe was the fall that Goldman Sachs quickly advised its customers to avoid the precious metal, pointing out that cash outflows were likely to take the commodity lower. With the investment bank’s price target for gold at $1,545 for 2013, however, current prices make the metal look cheap, at least as a near-term proposition. That said, it has set its 2014 price target at $1,350, so the longer-term outlook is not great.

The impact of the Cyprus crisis shouldn’t be overlooked, either. As a part of the bailout, Cyprus had to liquidate its gold positions to raise cash. This isn’t expected to have a lasting effect, but it probably added to the downward pressure. Even Goldman’s negative view on gold discounts the short-lived impact of these events: “With our economists expecting few ramifications from Cyprus and that the recent U.S. slowdown will not derail the faster recovery they forecast in 2H13, we believe a sharp rebound in gold prices is unlikely.”

One of the effects of Cyprus and other global macroeconomic events is that the U.S. dollar strengthened. This has been a drag on gold as safe-haven capital is enticed out of the precious metal and into dollar-denominated options. All of these factors pushed down prices, but only temporarily.

Trending does not make a trend
Just because gold has come off its recent lows, that alone doesn’t mean a new trend has started. Factors that should be considered, however, include the fact that despite the highest level of capital outflows from the SPDR Gold Trust ever, the ETF has also recovered since the slide. There also seems to have been a structural shift going on in the past week, potentially driven by the increased demand for physical gold. Central banks have been buying bullion, and individuals have bought sufficient quantities that the U.S. Mint has temporarily halted sales of one-tenth-ounce coins.

More fundamental to the structural shift in the market is that after an extended period of underperformance by gold miners such as Goldcorp and Newmont Mining , this phenomenon has reversed for the time being. As of

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Barrick Battles Rage on 2 Fronts

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By Rich Duprey, The Motley Fool

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Underscoring the turmoil ripping through the world’s biggest gold miner in the wake of a court order suspending its Chilean Pascua-Lama project, Barrick Gold reported that three top executives from its South America operations have resigned, including the president, Guillermo Calo, who was appointed to the position just last July.

Pascua-Lama is one of the world’s largest gold and silver resources, with nearly 18 million ounces of proven and probable gold reserves, 676 million ounces of silver, and an expected mine life of 25 years. It was expected to produce an average of 800,000 to 850,000 ounces of gold and 35 million ounces of silver in its first five years of operation.

Earlier this month, the Chilean court agreed with the concerns of local indigenous tribes that Barrick is mining in pristine glacial regions and causing environmental damage. It ordered the project suspended until the miner addresses those concerns. The Reuters report of the executive resignations indicated that it was part of a larger effort by Barrick to shake up the project and meet the regulatory mandates necessary to get it back on track.

South America has become an unsettled region to mine in. Newmont Mining had its Peruvian Conga project brought to a short stop over environmental concerns, while Vale recently abandoned an Argentinean project because of the country’s policies. Costs for Pascua-Lama have ballooned over the past decade and now stand at about $8.5 billion, putting it at risk of becoming an albatross around the miner’s neck even before the court decision. Barrick even resorted to bringing in engineering specialist Fluor to expand the scope of its project management before the court order.

Barrick now says it is reviewing all options available to it, warning that if construction activities in Chile did not resume before the end of the year, it could suspend the project altogether.

Investors are also becoming restless with management, which sought to give its co-chairman, John Thornton, a massive $11.9 million “signing bonus.” An equally massive 82% of those voting on the non-binding referendum at the annual shareholders’ meeting the other day rejected the payout, even as they approved all the directors that stood for re-election.

Although management isn’t required to follow the shareholder statement, it would probably be a wise move to placate investors until it can also mollify Chilean regulators. With falling gold prices eating into profits, Barrick can’t afford to fight a war on two fronts.

Looking for more commodities-based ideas? Download the free report “The Tiny Gold Stock Digging Up Massive Profits.” The Motley Fool’s analysts have uncovered a little-known gold miner they believe is poised for greatness; find out which company it is and why its future looks bright — for free!

The article Barrick Battles Rage on 2 Fronts originally appeared on Fool.com.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool owns shares

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Is South America Losing Its Luster for Miners?

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By Rich Duprey, The Motley Fool

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After Barrick Gold became the latest miner to have a development project halted in South America, investors need to ask whether the continent will lose its sheen as an attractive haven for mining.

A Chilean appeals court ordered Barrick to stop development at its Pascua-Lama gold and silver project on the Argentinean border after approving complaints from local indigenous groups until it addresses their environmental concerns. 

Mining collapse
Last year, Newmont Mining saw its Conga gold project in Peru brought to a standstill after environmental concerns were also raised. The government says it’s on the “back burner” now and with most of the locals opposed to it going forward, a project that was once estimated could yield some $2 billion annually in gold is now collecting cobwebs. Vale abandoned an iron ore project in Argentina after the country’s fiscal policies caused costs to soar and government and labor unions made untenable demands while Yamana Gold previously had operations suspended at its Agua Rica project in Argentina after violent clashes with locals and suspended export sales — since restarted — from Alumbrera after the country adopted revenue repatriation laws.

Sticker shock
Barrick, as the world’s biggest gold miner, had been looking to the $8.5 billion Pascua-Lama mine to carry it forward, but under development for a decade, the cost and scale of the project has escalated beyond its ability to control it. It subsequently outsourced much of the work to engineering and construction firm Fluor following the successful completion of its development of Pueblo Viejo, a joint venture between Barrick and Goldcorp.

Yet there’s trouble brewing there as environmentalists contend Barrick is violating the law against mining on or near glacial areas. Ejecting the gold miner from the country completely would not upset the groups arrayed against it.

Sic semper tyrannis
In the end, it becomes a question of whether the cost of doing business in South America is worth the risk. As many industries saw in Venezuela during strongman Hugo Chavez‘s rule, and as they’re witnessing now under his protege Cristina Kirchner, livelihoods will be expropriated on a whim or the cost of doing business will be raised to such a degree as a result of ruinous fiscal policy that it no longer makes economic sense to do business there.

Investors will not only need to question what the price of gold and silver will be in determining whether Barrick or Yamana or Goldcorp is a worthwhile investment, but considering geographic risk will become just as big a component of one’s due diligence.

Goldcorp is one of the leading players in the gold mining market. For the last several years, investors have been the beneficiaries of several successful acquisitions and strong organic growth. Goldcorp’s low-cost production of one of the most sought-after metals in the world continues to make this stock an attractive choice for long-term investors. To learn everything you need to know about this mining specialist, you’re invited to check out The Motley Fool’s premium

From: http://www.dailyfinance.com/2013/04/12/is-south-america-losing-its-luster-for-miners/

Business, Finance, Occupation & Industry

Why Cyprus May Save the Gold Market

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By Doug Ehrman, The Motley Fool

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While it may be too soon to fully gauge the lasting effects of the Cyprus crisis and subsequent bailout, one certainty is that the EU will forever handle these situations differently. The critical change that was a part of the Cyprus package, and that you should expect to see in any scenario that occurs in the future, is that large depositors will shoulder a portion of the loss as the failing banks receive supportive funds from abroad. The measure is designed to encourage increased financial responsibility on the part of countries with weakening banking systems, but an ancillary effect is to undermine the faith large depositors may have in EU banks across the board.

In the simplest terms, depositors with more than 100,000 euros in the affected banks will lose 10% of their deposits to help facilitate the bailout. To put the importance of the Cyprus economy in perspective, it accounts for 0.5% of the EU economy, and yet the ramifications of this decision may be severe. With significantly decreased comfort as to the safety of deposits, investors will be likely to – at least to an extent – flee to safety. When a flight to safety on a global scale occurs, the most obvious place for capital to flow is into gold.

So why is gold falling?
You might be wondering why gold continues to fall if the Cyprus situation is so negative for the global economy and so bullish for gold. There are several reasonable explanations that should be considered. First, given the tiny relative size of Cyprus, the risk of immediate contagion is limited. The real impact will be felt when the next country in the EU gets hit.

On Tuesday, contrarian investor Marc Faber told CNBC that he sees similar situations to the one in Cyprus occurring all over the world: “You have more people that vote for a living than work for a living. I think you have to be prepared to lose 20 to 30 percent. I think you’re lucky if you don’t lose your life.” Leaving aside some of the obvious rhetoric, Faber’s point is that these situations result in a massive wealth transfer from the rich to the government. When this type of redistribution happens, it has a lasting impact. As investors prepare to weather this storm, or at least protect against it, gold looks increasingly attractive.

Is it too soon to leap?
While the Cyprus bailout – which has been clearly explained as a model for future occurrences – poses significant risk to the global economy, shorter-term concerns are driving the market. A strengthening dollar is one of the primary culprits for the weakness being seen in the gold market. The SPDR Gold Trust is down roughly 6.5% on a year-to-date basis, while miners are down even more. Newmont Mining is down about 15% this year, but has several positive factors working for it. A strong growth profile …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Has Newmont Mining Become the Perfect Stock?

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By Dan Caplinger, The Motley Fool

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Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?

One thing’s for sure: You’ll never discover truly great investments unless you actively look for them. Let’s discuss the ideal qualities of a perfect stock, then decide if Newmont Mining fits the bill.

The quest for perfection
Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

  • Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it’s certainly a better sign than a stagnant top line.
  • Margins. Higher sales mean nothing if a company can’t produce profits from them. Strong margins ensure that company can turn revenue into profit.
  • Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management’s attention. Companies with strong balance sheets don’t have to worry about the distraction of debt.
  • Money-making opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
  • Valuation. You can’t afford to pay too much for even the best companies. By using normalized figures, you can see how a stock‘s simple earnings multiple fits into a longer-term context.
  • Dividends. For tangible proof of profits, a check to shareholders every three months can’t be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

With those factors in mind, let’s take a closer look at Newmont Mining.

Factor

What We Want to See

Actual

Pass or Fail?

Growth

5-year annual revenue growth > 15%

12.5%

Fail
 

1-year revenue growth > 12%

(4.7%)

Fail

Margins

Gross margin > 35%

56.4%

Pass
 

Net margin > 15%

18.3%

Pass

Balance sheet

Debt to equity < 50%

37.2%

Pass
 

Current ratio > 1.3

1.89

Pass

Opportunities

Return on equity > 15%

13.4%

Fail

Valuation

Normalized P/E < 20

12.37

Pass

Dividends

Current yield > 2%

4.1%

Pass
 

5-year dividend growth > 10%

28.5%

Pass
       
 

Total score

  

7 out of 10

Source: S&P Capital IQ. Total score = number of passes.

Since we looked at Newmont Mining last year, the company hasn’t been able to regain the point it lost from 2011 to 2012. The stock has gotten hammered, dropping 20% over the past year.

Newmont has had to deal with two major forces working against it lately. Gold prices have been fairly weak, with the SPDR Gold ETF having lost 5% of its value in the …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

1 Great Dividend You Can Buy Right Now

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By Sean Williams, The Motley Fool

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Dividend stocks are everywhere, but many just downright stink. In some cases, the business model is in serious jeopardy, or the dividend itself isn’t sustainable. In others, the dividend is so low, it’s not even worth the paper your dividend check is printed on. A solid dividend strikes the right balance of growth, value, and sustainability.

Today, and one day each week for the rest of the year, we’re going to look at one dividend-paying company that you can put in your portfolio for the long term without too much concern. This isn’t to say that these stocks don’t share the same macro risks that other companies have, but they are a step above your common grade of dividend stock. Check out last week’s selection.

This week, I’m digging deep into the mining sector and highlighting why Yamana Gold is a great dividend stock you can buy right now.

Gold, why has’t thou forsaken me?
Spot gold may have a 12-year streak of increases, but you’d be hard-pressed to know that based on the chronic underperformance of gold miners. Both domestically and abroad, miners have dealt with a rash of problems ranging from increasing labor and mining equipment costs to political instability in the countries they’re operating in.

In South Africa, miner AngloGold Ashanti came to a pay raise agreement with laborers at its TauTona and Mponeng mines in late October after a summer filled with worker sit-ins and violence in the region. Approximately 10,000 workers caused a complete shutdown in two of AngloGold’s mines, and when AngloGold’s mines came back online, other miners in the region, including Gold Fields, were still feuding with workers.

Closer to home, it’s just been the simple issue of getting the precious metal out of the ground at a reasonable costs. Newmont Mining , one of the world’s largest miners, took a complete $1.61 billion writedown on its Hope Bay project in Canada. It’s not that Hope Bay isn’t promising; it’s simply that Newmont has multiple large projects ongoing at once and costs for all of them are rising dramatically. Likewise, Thompson Creek Metals , which reported earnings earlier this week, is prepping to bring its Mount Milligan copper and gold mine online in the fourth quarter this year, but not after the cost of building out the mine soared considerably higher than the initial estimates, forcing the company to sell some of its gold interest to Royal Gold and to furlough some of its molybdenum mining in favor of cutting costs and receiving upfront cash from Royal Gold.

So where does this leave Yamana? As I noted in early January, better off than any other gold miner.

Yamana’s secret weapon
In January I examined the 12 largest gold producers and determined that, based on production cash costs, production growth, debt-to-equity, and forward P/E, Yamana possessed the best overall package of any miner. Of the miners I examined, Yamana’s cash costs …read more
Source: FULL ARTICLE at DailyFinance