I too would like to add NCM to my SMSF portfolio, but looking at the summary financials leaves me scratching my head. I figure if NCM are digging oodles of golden ounces out of the ground, then they must be making oodles of profit and therefore paying oodles in dividends. If not, then where did all that profit go to ? In a brave attempt to answer my own question I delved into NCM's financial statements for FY2011. As well as operational costs theres CapEx, major changes in "Issued capital" and a major hit on item "Foreign currency translation". I never understand all this financial gobbledygook, so the only thing I had to show for my efforts is a headache. :/ I think SS has it right. For a miner the real question is how much economically viable gold / silver / copper etc do they have in the ground, and how much will it cost to extract ? From this you can work out total profit (after taxes etc) over the lifetime of the reserve per share, and then decide whether the share is "buy" or not. Cuts out all the financial mumbo-jumbo and gets back to the basics. My headache feels better already.
There is a nice write up / rant / technical analysis on hot copper that has answered some of my questions and provided some history on NCM that helps explain the recent price action. Take a read. http://hotcopper.com.au/post_threadview.asp?fid=1&tid=1728261&msgno=8040840#8040840 I think I will wait and watch a bit longer.
always pays to look at the long term trend. could go lower but can't see it going signifcantly lower unless gold tanks.
My call was 25.50 - we did that on thursday I seriously don't believe under $25 will happen without a rally first but if it does ill be selling juniors to buy it. They have most of their extra capital tied up in their development, spend money now work hard now Benefits later - secure 25 years of production today, pay dividends tomorrow
I really don't agree with everything he said - sounds slightly bitter He sounds like a money maker not an investor - so he and me having different time frames, different goals Good to read though
Source: http://forums.silverstackers.com/uploads/258_ncm.gif See the big support is not at 30, its at $24! AS soon as it hit 40 those that bought at the bottom and are still holding probably halved their positiions took back their capital. So you see a clear double from $20.5 all the way to $41 - no brainer - people have doubled - you take profits - between 20-24 there will be support - it will trade sideways between 25 and 33
Agree, but the long term trend for NCM is broken. The quarterly chart (i.e. 3 month price bars/candles) shows up well that the quality of this downtrend is more severe than the global financial crisis. The ma is just 4 period and points it out too - steady during 2008, steep dive this time. The candles now are full bodied - buying is too weak to lift the price from its lows. The volume bars are higher than the GFC dump too - shares being distributed. Bounce due on a weekly basis maybe but I suspect significantly lower prices in the longer term. Source:
Thats true it is brocken - but look at the sentiment indicators for the sector coupled with the issues and you get the current sell off... 100% rise in 3 years with 40 or 50% correction - not worried on my end
Price to book ratio is 1.5 P/E is 15 - has room to go to 10 but dot think it will Also here is a big deal - valuations are based on a declining gold price are the not?
Newcrest Mining: When down means up A second production downgrade has caused the share price to fall and our interest to rise. Gaurav Sodhi explains. 4.2 4.2128 Votes By: Gaurav Sodhi Newcrest Mining has downgraded production forecasts, sending the share price down 7% last week. Instead of producing 2.43-2.55 million ounces of gold for the year, it's now aiming for 2.25-2.35m ounces. Whether this is an opportunity or a glimpse into a far darker future depends on whether the company can fix its problems and reclaim lost production. And that won't be easy. Management, who are probably dancing around the rim of a volcano in their Speedos praying for sun right now, blamed the rain. In Papua New Guinea and at the NSW-based Cadia mine, higher than average rainfall did indeed impede mining. But it wasn't all the heaven's fault; a host of difficulties continue to plague Newcrest's complex mines. Key PointsRain and technical problems responsible for another production downgradeComplexity demands a large margin of safetyUpgrading to Hold The Lihir mine, for example, sits inside a dormant volcano on an island off New Guinea. It's one of the world's largest gold deposits, containing an astonishing 56m-ounce resource. It is also one of the world's most challenging mines. Whilst the volcano is dormant, there's still plenty of geothermal activity on the island, which contributes to a shallow water table. Lihir must lower it and often needs to cool and depressurise the boiling liquids in order to mine. Once the ore has been extracted, it needs to be baked under heat and pressure before processing. It ain't easy. To cope with the problems, a vast processing facility has been built which makes Lihir a high fixed-cost operation. Newcrest must dramatically increase output in order to justify the $10bn purchase of Lihir but consistent mechanical problems, electrical failures and bottlenecks make it clear that previous management skimped on maintenance. Spending the cashBringing facilities up to standard and expanding output will consume well over $1bn and take several years. Yet without this investment, Lihir won't make adequate returns. It's a conundrum. Spend money to make money, or maintain a status quo that has been a burden for decades. Newcrest is opting to spend the cash. The same strategy is being used at Cadia. In order to expand output to 800,000 ounces of gold, Newcrest is investing $1.9bn. All up, almost $5bn is being invested in mines over the next few years. If these expansions are successful, profits will soar, but much has to go right and a lot can go wrong. If innocuous rain can alter investment returns, imagine what falling commodity prices or technical difficulties could do. As we said in Panning for profits: Stocks to avoid on 11 Jul 11, investors in Newcrest should demand a discount for unleashing so much cash to chase so much complexity, especially when Newcrest's reported costs, which sit in the lowest quartile of the industry, aren't as impressive as they appear. Reported cash costs of $609 an ounce are possible because of high copper prices, which Newcrest produces as a by-product of its gold mining. If one removes these metal credits, cash costs rise to over $900 an ounce, taking Newcrest from one of the lowest cost producers in the industry to merely average. Copper credits clearly have some value but low cash costs aren't the buffer they appear if they're dependent on high copper prices. Margin of safety?With a 35% fall in Newcrest's share price in 12 months, is it now low enough to provide that elusive margin of safety? At current gold and copper prices, Newcrest earns cash margins of almost $1,000 an ounce. If we assume lower production and lower copper prices, Newcrest should still generate net operating cashflow of over $1.5bn a year. That makes today's market capitalisation of $20bn seem reasonable, especially when you consider Newcrest has the longest reserve life in the industry and has uncovered, in Papua New Guinea, the largest new gold mine anywhere in the world. If there was one miner we'd back to fix these demanding technical problems, it's Newcrest. There is a good chance it can reclaim lost production. The bet is slowly falling in our favour, but not quite yet. With the share falling 24% since 14 Feb 12 (Avoid - $34.41), a further tumble may tempt us, although the enormous capital expenditure programand the poor free cash flow it impliesstill poses risks. For now, we're upgrading to HOLD. Should the share price fall another 10-15% we'd consider a further upgrade and look to add it to our buy list. Here's hoping. For the second time this year, Newcrest Mining has downgraded production forecasts, sending the share price down 7% last week. Instead of producing 2.43-2.55 million ounces of gold for the year, it's now aiming for 2.25-2.35m ounces. Whether this is an opportunity or a glimpse into a far darker future depends on whether the company can fix its problems and reclaim lost production. And that won't be easy. Management, who are probably dancing around the rim of a volcano in their Speedos praying for sun right now, blamed the rain. In Papua New Guinea and at the NSW-based Cadia mine, higher than average rainfall did indeed impede mining. But it wasn't all the heaven's fault; a host of difficulties continue to plague Newcrest's complex mines. Key Points Rain and technical problems responsible for another production downgrade Complexity demands a large margin of safety Upgrading to Hold The Lihir mine, for example, sits inside a dormant volcano on an island off New Guinea. It's one of the world's largest gold deposits, containing an astonishing 56m-ounce resource. It is also one of the world's most challenging mines. Whilst the volcano is dormant, there's still plenty of geothermal activity on the island, which contributes to a shallow water table. Lihir must lower it and often needs to cool and depressurise the boiling liquids in order to mine. Once the ore has been extracted, it needs to be baked under heat and pressure before processing. It ain't easy. To cope with the problems, a vast processing facility has been built which makes Lihir a high fixed-cost operation. Newcrest must dramatically increase output in order to justify the $10bn purchase of Lihir but consistent mechanical problems, electrical failures and bottlenecks make it clear that previous management skimped on maintenance. Spending the cash Bringing facilities up to standard and expanding output will consume well over $1bn and take several years. Yet without this investment, Lihir won't make adequate returns. It's a conundrum. Spend money to make money, or maintain a status quo that has been a burden for decades. Newcrest is opting to spend the cash. The same strategy is being used at Cadia. In order to expand output to 800,000 ounces of gold, Newcrest is investing $1.9bn. All up, almost $5bn is being invested in mines over the next few years. If these expansions are successful, profits will soar, but much has to go right and a lot can go wrong. If innocuous rain can alter investment returns, imagine what falling commodity prices or technical difficulties could do. As we said in Panning for profits: Stocks to avoid on 11 Jul 11, investors in Newcrest should demand a discount for unleashing so much cash to chase so much complexity, especially when Newcrest's reported costs, which sit in the lowest quartile of the industry, aren't as impressive as they appear. Reported cash costs of $609 an ounce are possible because of high copper prices, which Newcrest produces as a by-product of its gold mining. If one removes these metal credits, cash costs rise to over $900 an ounce, taking Newcrest from one of the lowest cost producers in the industry to merely average. Copper credits clearly have some value but low cash costs aren't the buffer they appear if they're dependent on high copper prices. Margin of safety? With a 35% fall in Newcrest's share price in 12 months, is it now low enough to provide that elusive margin of safety? At current gold and copper prices, Newcrest earns cash margins of almost $1,000 an ounce. If we assume lower production and lower copper prices, Newcrest should still generate net operating cashflow of over $1.5bn a year. That makes today's market capitalisation of $20bn seem reasonable, especially when you consider Newcrest has the longest reserve life in the industry and has uncovered, in Papua New Guinea, the largest new gold mine anywhere in the world. If there was one miner we'd back to fix these demanding technical problems, it's Newcrest. There is a good chance it can reclaim lost production. The bet is slowly falling in our favour, but not quite yet. With the share falling 24% since 14 Feb 12 (Avoid - $34.41), a further tumble may tempt us, although the enormous capital expenditure programand the poor free cash flow it impliesstill poses risks. For now, we're upgrading to HOLD. Should the share price fall another 10-15% we'd consider a further upgrade and look to add it to our buy list. Here's hoping. source: The Intelligent investor
My target zone is 20 - 21 To be honest I dont know if i will get it. But im in a happy possition - if I dont it means its not going down anymore
It was in the buy zone! I got some, have one more order in if it tries to get to $20 where a major moving average is
Starting to get interesting. Dipped below $21 today. Thinking about putting in an order, but I understand that production report is due in a couple of weeks, so if it disapoints again it could continue the downtrend.
I expectantly looked up the ASIC site showing the percentage of shares that have been sold short, and surprisingly NCM does not have a big short position, as of 6/07/12: NEWCREST MINING ORDINARY NCM Shares short:1,579,089 Shares issued: 765,000,000 % Issuance sold short: 0.21% http://www.asic.gov.au/asic/asic.nsf/byheadline/Short+position+reports+table?openDocument For what it's worth, I can detect no technical indications that the stock is ready to reverse yet. Why anyone would buy this beats me.
yeah, it's down near the 50% retracement now I think. No need to rush, see how the qtrly goes and whether it turns it back up again.
The chart continues to look horrible. Some might think it will bottom around the 20.50-21.00 mark, but the velocity of the downtrend scares me. Better value around in other stocks
Both of my PM stocks have been performing poorly recently.PM stocks still sliding overall it seems. What is this i hear about Indonesia now wanting local mines to be 50% Indonesian owned by 10th year of production? Wondering how much this will affect NCM.
NCM have legal advice stating that Gosowong will not be affected by the new Indonesian laws until their existing contract expires in 2029. http://www.zimbio.com/Mining/articles/Om13k2EpjAw/war+between+Indonesia+law+Australian+miners Intrepid was always worried about the new laws, even back in March. That's when it got deleted from my watchlist.
Strong performance this last 10 trading days despite attempts by newspapers to deliver unfavorable reports. I believe its bottomed
