An investor's guide to Newmont Mining Corporation (Part 17 of 19)
Positive catalysts for Newmont
Gold price rebound would of course be a very big positive catalyst for Newmont Mining (NEM) stock as well as its peers like Barrick Gold (ABX), Goldcorp (GG), and Agnico Eagle Mines (AEM). Gold price rebound will also positively impact the ETFs investing in these stocks like the Market Vectors Gold Miners ETF (GDX). It will also be positive for ETFs tracking spot gold price like SPDR Gold Trust ETF (GLD).
In this article, we’ll look at other company-specific catalysts that investors should look out for in Newmont.
Reserve and resource update
When Newmont publishes its annual results in February 2015, investors should look out for the reserve and resource update, which will factor in lower price assumption of gold based on the weaker gold prices lately. Any substantial increase or decrease in the reserves could cause a share price reaction.
Batu Hijau
Newmont’s production from Batu Hijau has been quite lackluster in 2014 due to stalled operations following export ban on unprocessed minerals from Indonesia. The company was also waste mining Phase 6 and processing lower grade stockpiles. In 2Q15, the update on higher grade ore sourced from Batu Hijau in Indonesia will be available, which will increase the grade and production from this project significantly.
First production
Apart from the above mentioned catalysts, the decision to proceed with Ahafo mill expansion is due in 3Q15. The turf vent shaft and Correnso first production are expected in 4Q15. A timely and on-budget start to these developments would be positive for the stock, while any delay or cost escalation would be negative.
Finally, Newmont expects first production from Merian in 2016. As we discussed, Merian is quite crucial to maintaining the production profile for the company going forward. Any significant delay or positive surprise could be a catalyst for the stock price.
In the next part of this series, we’ll talk about the risks investors should be aware of before considering Newmont.
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