This site requires a more recent version of Adobe Flash Player to function properly.
Go here to get Flash.
Trefis's graphical modelling tools require Flash, but here's a preview of some of the content you'll see once
Flash is enabled:
Investment Overview for Newmont Mining (NYSE:NEM)
Below are key drivers of Newmont's value that present opportunities for upside or downside to the Trefis price estimate for the company's stock:
- Newmont's Asia Pacific Gold Shipments: Newmont's Asia Pacific Gold Shipments have steadily increased as the decline in production from its Indonesia operation was offset by the start of production at its Boddington mines in Australia. However, the start of Phase 6 mining operations at Indonesia may significantly boost volumes. We currently forecast shipments to increase by about 3% annually throughout our forecast. However, should production exceed expectations at Batu Hijau, Indonesia, shipments could increase by 4-5% annually. This would represent a 4% upside to the Trefis price estimate.
North American Mines
- Newmont's North American Gold EBITDA Margin: Newmont's margins from its North American operations increased from 16% in 2007 to 47% in 2012 as the sharp rise in gold prices offset significantly higher cost of sales. Margins for the division fell to 37% in 2013 due to a fall in prices. We expect margins to be remain under pressure in 2015 due to a fall in gold prices. However, margins are expected to rebound in 2016, due to a rise in production volumes. If margins rebound lower than expected rates, that would represent a downside of nearly 5% to the Trefis price estimate.
Newmont Mining Corporation is a gold and copper producer with operations in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand, and Mexico. The company has nearly 100 million ounces in proven and probable gold reserves.
The company also produces copper, primarily through its Batu Hijau development in Indonesia and Boddington project in Australia.
Gold mining drives value
Gold mining is the most important division for Newmont Mining in terms of revenues and profits. In 2014, the company's consolidated gold production is expected to total 5.1-5.4 million ounces (4.7-5.0 million ounces of which were attributable to the company). Gold generally accounts for over 80% of the company's consolidated sales. Asia Pacific is the company's most valuable gold mining operation, according to our estimates.
Rising demand for gold from emerging economies
Demand for gold is expected to be quite robust from major emerging economies. Rapidly growing middle class populations and rising incomes in these countries, particularly China and India -- the world's largest gold consumers -- are expected to result in a sustained jewelry and investment demand for gold. The Chinese middle class population is expected to grow by over 60% or 200 million, to 500 million in six years time. Private sector demand for gold in China is expected to rise from 1,132 tons currently to at least 1,350 tons by 2017.
Weak global demand for copper
China is the largest consumer of copper in the world, accounting for nearly 40% of the total world consumption of copper. China's GDP growth is expected to slow to 7.3% and 7.1% in 2014 and 2015 respectively, from 7.7% in 2013. Slower economic growth in China has led to a moderation in demand for copper. Further, the proposed structural transformation of the Chinese economy from an investment and export led growth model to a consumption led growth model, may negatively impact Chinese demand for copper in the long run. Weak Chinese demand for copper will put pressure on copper prices.
How Does Trefis Modelling Work?
How do we get the historical numbers for this chart?
Trefis has a team of in-house Analysts who gather historical data from company filings and other verifiable sources. When historicals are available, we explain how we got them at the bottom of the Trefis analysis section below.
Who came up with the Trefis forecast for future years?
The Trefis team of in-house Analysts considers a variety of factors when projecting any forecast. The rationale for our projections is explained in the Trefis analysis section below.
How does my dragging the trendline on the chart impact the stock price?
- We use forecasts for business drivers to calculate forecasted Revenues and Profits for each division of the company.
- We then use forecasted Profits in a Discounted Cash Flow (DCF) model to obtain the Price Estimate for the company.
See more on: DCF Methodology
View All Help Topics