Newcrest Mining (NCM)

Discussion in 'Stocks & Derivatives' started by SilverSanchez, Mar 8, 2012.

  1. SilverSanchez

    SilverSanchez Active Member

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    Recently started trading on the TSX

    Loads of gold loads of copper - the company name speaks for itself.

    Easy to find out about em.

    One question to the more business savy guys here.

    When a company gets a secondary listing - how do they get the shares for the secondary listing.
    Newcrest did a share buyback last year - does anyone know if this buy back was used to launch the TSX listing - because Newcrest say they did not use the listing to raise any capital.

    ------

    I believe every invester needs to have a top tier miner (large Cap) and as far as i know - Newcrest fits that bill

    You may think $30 per share is expensive.
    On the contrary $30 is quite cheap in relation to the resources Newcrest have - they pay a 1% div with a history of special divs in recent history
    I personally encourage all investors to do their numbers on this company - it is very cheap (imo) at the moment @ under $31
    Counld it go down? Yes of course - but if you believe the gold story downside is far less that upside potential - especially long term (+10years)

    Do your own research of course.
     
  2. finicky

    finicky Well-Known Member Silver Stacker

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    Trading at 3x its FY2012 intrinsic value according to Skaffold. Intrinsic value rise to 15.20 in FY13 and 16.78 in FY14
     
  3. SilverSanchez

    SilverSanchez Active Member

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    How does trading according to the Skaffold intrinsic value work out for you finiky? I have no experience with this valuation method - whether it is current price (ie it is backward looking) or it includes fundamental analysis (future looking).

    According to the ratio of total value of defined resource to ev - newmont have a 0.15 score
     
  4. theiain1

    theiain1 New Member

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    NCM's TSX listing didn't' involve any new equity (capital) i.e. there are no new shares issued

    Just a wider pool of investors / traders buying and selling same issued shares via the ASX and now the TSX
     
  5. finicky

    finicky Well-Known Member Silver Stacker

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    Skaffold is both backward and forward looking. It uses past earnings as reported and for future estimated earnings it uses analyst forecasts which are updated.

    That's where I think you're off track - you don't concern yourself too much with resource size or how it relates to price because it is too easy to be misled by optimistic or devious managements. Firstly the resource might not really be there as I experienced say with BMA Gold (now defunct) or Bendigo Mining (BDG - now a shadow of its ambitions). Macmin Mining (defunct - now resurrected as AYN), Croesus Mining (defunct), Gympie Gold (defunct) - the resource of these and many others was B*s**t, it wasn't real, so any ratio off the resource like dollar of share price per oz of resource was crap designed by managements to get you to buy the stocks.

    Then let's say the resource is there but is refractory or too costly to mine and get through the plant. You need an earnings record so that an analyst can make credible forecasts of future earnings. It's earnings per share that will raise your share price reliably and pay you a dividend. Have a look at how AXM went day before yesterday - they had a resource too, now its divided up amongst billions and billions of new shares, and probably won't be got out of the ground at a profit this go around either.

    Then about size. Size has nothing to do with earnings quality of a company. One of the best stocks on the ASX has been Arb Corp (ARP), a non mining stock, which has a market cap of $611m, sailed through the GFC, and has raised earnings per share and dividends year after year. It's a much better business to be in than the huge Banks, QBE, or BHP. It has quality.

    NCM doesn't have quality, but paradoxically it has performed as a share price on a a decade scale. But that's not because it has earned well, i suspect it must be because it has so much market capital that it is liquid and is being used by the institutions as a proxy for gold. On a decade chart of NCM it has soared above its true value for the entire time on a bloated P/E. During 2007 it was on average P/E of 109! Until last year its yield was usually under 0.5% unfranked. It's average Return On equity (ROE) over a decade would be about 10% with bull markets for both gold and copper. Recently we hear it has production problems at Lihir that will take massive capital to correct.
     
  6. SilverSanchez

    SilverSanchez Active Member

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    So you mention the company that works well with this valuation.

    Have you considered what this method of evaluation would have bought over the last 10+ years in the gold mining sector?

    My point is - this method can only say security of earnings - but as we all know past success if no garentee of future performance.
    If this method is all its cracked up to be - hypothetically how much money would you have made in a fantasy portfolio based on this method of evaluation from mining stocks from 2001 to 2011?

    Alternatively how long have you been using it and how much money have you made - because it seems your implying its pretty fool proof.
     
  7. finicky

    finicky Well-Known Member Silver Stacker

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    I assume you mean RoG Montgomery's Skaffold program - some gold stocks that are valued quite highly by the program are Kingsrose (KRM), Regis (RRL), Ramelius (RMS), Silverlake (SLR), Saracen (SAR). That's not to suggest go out and buy them now because a few are now heavily over-priced

    Yes - way waaay better off. I would not have bought Citigold (CTO), Macmin (MMN) or a host of other bogus ASX approved scams run by managements who are just this side of being white collar criminals.

    Past success is a hell of a lot better guarantee of future success than most other things such as: past failure, or non earnings, or company advertisements about their JORCed inferred, indicated or measured resources

    Skaffold is only recent, but it automates R Montgomery's valuation method, and if I had followed his ideas or subscribed to his advice I would have been kept way clear of poor quality companies that I thought I knew something about, but in fact did not.

    I've never implied that. It's a hell of a lot better than picking a mining company because of its big market cap or its claims about resources in the ground though. Take BHP - we're in it, wish we weren't - Skaffold gives it a B1 quality and performance rating and suggests a valuation of about where it is now on market. BHP is the biggest miner on the ASX and just about the world, with massive in ground resources of many metals including gold and silver, but to the investor it's worth fk'all. Arrogant distant management that is massively rewarded, makes generational blunders, is only concerned with finding far dated legacy assets that will make them legends, skimps dividends, and has little capital growth during a secular bull market in commodities.
     
  8. SilverSanchez

    SilverSanchez Active Member

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    It just all sounds like the logicall fallacy of ad hoc propter hoc (i dont think ive spelled that right)

    As sherlock holmes says - we need to select the theory to suit the facts not select the facts to proove the theory

    You're telling me what you wouldnt have bought, not what the valuation method said was great and tanked or what the valuation method said was terrible and stunningly outperformed.

    The method might be great for all i know - but it sounds unsuited for mining, more suited for finance and retail etc
     
  9. finicky

    finicky Well-Known Member Silver Stacker

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    Why make an effort in response to glib off the cuff comments. You'll have to learn the hard way and pay your dues like I did.
     
  10. SilverSanchez

    SilverSanchez Active Member

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    Their not off the cuff - im asking really specific questions honestly - because i want to understand. Ok, thanx - ill just do my own research. do you have a web site or a book that outlines the method?
     
  11. Stackman

    Stackman Member Silver Stacker

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    Referring back to SilverSanchez's original post, can anyone comment on why NCM's dividend yield is a paltry 1.2% ? How is the share price justified on that ??
     
  12. glam

    glam Member

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    A good question and still goes unanswered. I have to wonder myself too.

    Share price today is back to late 2008 levels...... 25.50

    I would like to add a large gold miner to my portfolio, but having looked at NCM I have to ask why is it blue chip if it only pays 1.2% (maybe a bit more after this weeks drop).
     
  13. fishball

    fishball New Member Silver Stacker

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    Blue chip doesn't always mean it pays good dividend...

    Sometimes there are no dividends and it's still a blue chip :p
     
  14. SilverSanchez

    SilverSanchez Active Member

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    Last time it was this price was Jan 2009! It opened below the support and everyone rushed to sell
    I bought today @ 25.9

    This is a 38% drop from recent high - oversold imho
    I suspect a number of factors calaborated to bring it to these prices

    General Sentiment for the sector
    TSX Listing (naked shorting possibly)
    Guidance
    Weather issues
    Cost per ounce
    Soverign Risk

    All this = FEAR! ..... B. E. A. utiful
     
  15. Nukz

    Nukz New Member

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    What i would be interested in Sanchez, would you prefer to put your money into NCM or ASX:GOLD or other gold etf's?

    Comparing ASX:GOLD to NCM they seem quite similar charts. I guess one has a dividend and the other has no dividend but no exposure to things like weather.
     
  16. SilverSanchez

    SilverSanchez Active Member

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    My portfolio is not structured in such a way that i need to chose between them
     
  17. finicky

    finicky Well-Known Member Silver Stacker

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    This stock is a 'Pissweak Hendersons Kids' stock.

    This stock is so bad that today, Thursday, it broke on massive volume the support trend-line of an already savage downtrend.
    Awful Thursday follows a high volume gap down on previous trading day, Tuesday

    Over to the 5yr weekly - strong support at $30 should have held, then to $28 - crashed through that on high vol, bringing into focus a pustulent looking 3 yr top. Due for a bounce soon maybe, but should be contained within the vicious downtrend channel. Vacuum between here and $18-$16 is conceivable target, which still be over-priced probably. Just imo.


    http://www.youtube.com/watch?v=RAax9nJPEb8
     
  18. SilverSanchez

    SilverSanchez Active Member

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    The more I read and research about Skafold the more i realise that
    It is not fundamental in the sense of commodities but in the sense of financial (so it is useless to valuate non-producing mining stocks)
    It can only talk about potential earnings on the basis of the past - cant see money printing, or factor in future events.
    As such its a great valuation system when everything is normal and healthy, but everything is not normal and healthy and as such is misleading - because prices for future events are being factored into the valuation when I do mine.

    My valuations arent perfect - they may not even be great - but at least its logical and not done by a computer which cannot factor it the future or fears about euro debt, or war in the middle east.
     
  19. SilverSanchez

    SilverSanchez Active Member

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    All that you have said has temporal reasons - you really need to get out of technical analising only and start looking at the bigger picture - just my opinion
    Mining is not like the insurance business, or a retail chain - go buy a bunch of A1 companies and have a coke and a holiday - coz according to you skaffold is all you need ;)
     
  20. SilverSanchez

    SilverSanchez Active Member

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    Managment bought back 100,000 shares yesterday (representing 1% of total shares exchanged yesterday)

    They had a highest price of $25.49 for yesterdays and it closed not much higher than that yesterday

    I think they did this to break the downfall - and it seemed to have worked for yesterday
     

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