Newcrest Mining (NCM) Stock Recommendation

Submitted by Craig Strzelecki on 29 January, 2007 - 21:39

Newcrest Mining (NCM) have a Neutral 2 Stock Recommendation with a share price target of $23 from stock analyst UBS. Their price target for the miner comes from the global average P/NPV of 2.3x to their valuation of the company which is $9.91 – based on the worst case scenario for Telfer. NCM have reported a soft Q2 production result, gold production was 6% below UBSe as a result of power outages at Telfer and lower grades. The supergene ore reserve has been downgraded by 12% for Au, 11% for Cu following detailed re-estimation of the model, this results in a downgrade to production guidance, while further reserve downgrades have been flagged for Telfer underground and open pit. The analyst have downgraded our earnings forecasts reflecting the lowered production guidance. NCM now expect 675-700koz from Telfer in FY07 vs prior stretch target of 770koz. NCM provided guidance for FY08E of 800koz vs UBSe of 982koz. The analyst continue to look for near term improvements at Telfer as the underground ramps up and gravity recoveries lift, however, with further reserve downgrades ahead for Telfer we believe outperformance in the near term is unlikely.

Newcrest Mining Limited is listed on the Australian Stock Exchange (ASX) under stock code NCM. You can view their investor website here. NCM was listed on the ASX on 4 June, 1987 as Newmont Mining. Newcrest Mining Limited was formed in 1990 from the merger of Newmont Australia Limited and BHP Gold Limited. Newcrest and its predecessors have a strong history of successfully exploring, developing and operating gold mines, predominately in Australia. Ian Smith is the CEO of Newcrest Mining and Don Mercer the Chairman. Current operations are: Ridgeway, Cadia Valley, Telfer, Toguraci and Cracow. They have current explorations in the Cadia District, Gosowong, Telfer District, Cracow and Ashburton, WA. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade NCM. Check your charts and good luck with your share trading!

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