Comments: NEM is seriously undervalued here. It was valued higher in 2006 when Gold was $475 and even higher in 2004, when Gold priced at $425. I know they have reserve replacement issues, and declining production in some mines, and recently they've been bitten with the country risk issuen in Uzbekistan, but it's still a very solid company. Barron's was right to recently state that Newmont could still sail to $70+.
Sunday, November 26, 2006
Newmont Mining Corp. is Undervalued
Comments: NEM is seriously undervalued here. It was valued higher in 2006 when Gold was $475 and even higher in 2004, when Gold priced at $425. I know they have reserve replacement issues, and declining production in some mines, and recently they've been bitten with the country risk issuen in Uzbekistan, but it's still a very solid company. Barron's was right to recently state that Newmont could still sail to $70+.
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2 comments:
Newmont doesn't have reserve replacement problems, infact they are probably the best in the world at replacing reserves. The problem is on the production side with lower ounces and costs issues. It seems everytime Newmont makes the news it's negative and that's impacting the stock valuation. Newmont needs to buy it's ounces in the form of a M&A. They need to buy mid to senior level miners before they are all gone! they have been accused of taking too long to evaluate companies, but you wouldn't think so when you look at Newmont Capital's portfolio the amazing returns they have had!!
Perhaps I should have said that they face the "constant challenge" of replacing reserves.
I agree though that there's been a lot of negative news recently and people have been focussing on the negatives more than the positives. But that's why I think NEM creates a good opportunity now. As I mention here before, I think it's a positive that Newmont doesn't intend to rush out and do the biggest merger they can come up with. Some of the bigger mergers recently have led to some digestion problems--GG and KGC come to mind.
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