By Dan Stratful
Monday 10th October 2011 2 Comments
|Text too small?|
The recent pullback in the gold price from US$1,920oz to US$1,650oz provides gold bugs with a buying opportunity in the precious metal, which some investors believe will head towards US$2,500oz and beyond, as European sovereign debt issues and global uncertainty persist.
Gold mining shares are one way of accessing the gold sector and Newcrest Mining (NCM) is Investment Research Group’s (IRG) preferred exposure to gold. NCM is the world's fifth-largest gold miner by production, and has since completed the acquisition of Lihir Gold in August 2010. While the PNG gold assets of Lihir raise the operational risk, NCM is still the premier gold stock on the ASX.
Newcrest had a transformational financial year in the year to 30 June 2011 with the successful acquisition and integration of Lihir Gold, a good operational performance, strong reserve and resource growth and solid progress on development projects. These results culminated in record net profits, strong cash flows, a final dividend of 20 cents and low gearing.
Underlying Profit of $1.05 billion was an increase of 36% from the corresponding year. The Statutory Profit increased by 63% from $557 million to $908 million. Gold production of 2.52 million ounces was 43% higher than the corresponding year. Copper production decreased from 86,816 tonnes to 75,631 tonnes, with lower production from Cadia Valley and Telfer.
The average price for all metals increased sharply in US$ terms, with gold rising to US$1,360/oz (2010: US$1,106/oz) and copper to US$3.88/lb (2010: US$3.02/lb). The corresponding impact on A$ revenue was reduced somewhat due to the increasing strength of the A$ versus the US$.
NCM will benefit from a rising gold price and its balance sheet leaves it in good position to make further acquisitions and fund growth.
Investment Research Group (IRG) views Newcrest Mining shares as a GROWTH BUY and the shares can be used as a hedge in the portfolio, for when markets turn south. NCM generally tends to outperform the market when the frequent sell-offs occur as investors tend to rush to gold as a form of safety.
NCM shares today traded at $35.95.
For sharemarket and fixed income trading enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, firstname.lastname@example.org
**A disclosure statement is available, on request and free of charge by calling 0800 437 8489, 09 304 0232 or email@example.com
In accordance with the Financial Advisers Act 2008 (“the Act”) Sharechat is “Class Advice” and any advice or recommendations contained on this webpage is not “Personalised Advice” as defined by the Act. This means Sharechat does not take into account an investor’s particular financial position, financial needs, financial goals, risk profile or asset allocation. Investor’s who require “Personalised Advice” should contact an Authorised Financial Adviser (AFA).
Delegat Group Limited (NZX: DGL) $333 million syndicated bank facilities
7th December 2021 Morning Report
Sky Network Television Limited (NZX: SKY) Transformation accelerates - Sky raises FY22 guidance
PGG Wrightson Limited (NZX: PGW) FY22 Operating EBITDA forecast to better last year
Vulcan Steel Limited (NZX: VSL) Trading Update & Earnings Upgrade
6th December 2021 Morning Report
Synlait Milk Limited (NZX: SML) Partnership to enhance soil health; test regen ag practices
Property for Industry Limited (NZX: PFI) Strong Valuation Outcome, Penrose Acquisition
3rd December 2021 Morning Report
Fonterra Shareholders Fund (NZX: FSF) Fonterra provides Milk Price, earnings and Q1 update