Newmont Mining Corp (NYSE:NEM)

CAPS Rating: 3 out of 5

A gold producer, engaged in the exploration for and acquisition of gold properties. The Company has operations in the United States, Australia, Peru, Indonesia, Canada, Bolivia, New Zealand, Ghana and Mexico.


Player Avatar XMFSinchiruna (27.49) Submitted: 1/23/2008 4:22:32 PM : Outperform Start Price: $48.89 NEM Score: +27.81

Bought Newmont today (1/23/08) on valuation. Pitch from the last time I traded NEM is below, with my sentiments being pretty much the same for this purchase:

Newmont is not my favorite miner, but in a price environment like this one where gold is poised to smash through $1,000 this year and on to $2,000 by 2011, just about any miner is a 'can't miss' in my opinion. Newmont is one of the majors, to be sure, but I have been consistently unimpressed with the company's management, and they appear to be struggling to replace reserves. They have some very old mines, which are still producing nicely, but eventually these will require more effort to yield less gold. What is their way around this sceanrio? Acquisitions! That is how the major miners will remain competitive... by buying junior and mid-tier miners to increase production.

I have owned Newmont and several other large-scale miners for a few years now, and they've done extremely well. Given the stage of the commodities bull cycle that we're presently in, I foresee the mid-tier miners outperforming the big guys for the next couple of years, with a chance that the juniors will outperform them all in 2008 as well, depending on how fast this all plays out. I own a basket of mid-tier and juniors, many of which will be purchased by the Newmonts of the world. If I end up owning more Newmont next year because they purchase IamGold (IAG) or Gammon Gold, then so be it. I think my returns will be better owning the acquirees.

I bought NEM for my CAPs portfolio a few weeks ago simply because the entire sector was oversold, and gold was nearing the end of its mini-correction and was preparing to break-out over $850 like it did today. $900 coming very soon! Happy New Year!

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