Newcrest – Buy

Newcrest Mining has moved to bolster their balance after raising $1.1bn which will be used for growth.

Newcrest’s balance sheet is in good shape with over $1.5bn in cash and about the same in undrawn facilities. Gearing remains low at 15%.

NCM has now rallied to $30+ and we will consider taking profit within the $31 – $32 price range. 

GDX – Gold ETF

The below post is a copy of a publication on the 18th of October. Since making the post, gold stocks have performed well and we now look to trim the gains and rotate into oversold industrial & REIT names.

Vaneck Vectors Gold Miners  is under Algo Engine buy conditions following the entry condition earlier this year at $30. It is a current holding in our ALL ASX ETF model portfolio.

GDX ETF has corrected from $45 to $38 over the past 8 weeks. We feel buying support will now begin to increase.

Individual names are also now appearing on the radar, such as Newcrest Mining Northern Star Resources, Evolution Mining, OceanaGold and Gold Road Resources.


NCM – Valuation Review

Newcrest Mining is under Algo Engine sell conditions. Our preferred gold names have been EVN and NST, which remain in our ASX 100 model portfolio.

Whilst there’s upside risk to NCM, if the gold price continues
higher, we remain cautious following the latest earnings update.

FY19 EBITDA of US$1,670m was close to market consensus and FY20 production guidance is similar to FY19, with 2.35-2.5 million ounces.

Our base case is FY20 earnings are unlikely to top FY19 and with the stock trading on an FY20 forward dividend yield of 1.6%, we see better opportunities elsewhere.

We’ll continue to monitor NCM and will review further following the next Algo Engine buy signal.