Gold mining giant Newmont’s $26 billion green-lit merger with Newcrest has investors talking about the broader sector.
While some told Street Talk they dumped their Newcrest shares ahead of the takeover, others noted that large-cap investors generally own one or two gold miners. That could benefit other gold miners as CDI-averse investors shake up their portfolios and migrate down the sub-index.
This week, UBS analyst Levi Spry published his musings on which miners investors should pick up.
He prefers Evolution Mining (PT $4.15) over Northern Star Resources (PT $2.20) of the large caps. In small-cap land, he likes the look of Gold Road Resources (PT $2.20), De Grey Mining (PT $1.55) and SSR Mining (PT $25.60).
Spry still has an eye on Newmont, noting that it’s flagged some non-core asset sales next year. This should kick off a flurry of M&A dealmaking in Western Australia as the company ditches assets that don’t fit its new merged look. However, as the Financial Review’s Brad Thompson writes, recent comments by Newmont boss Tom Palmer have challenged speculation that its ageing Telfer mine is headed for the auction block.
UBS reckons gold is poised to reach new heights as markets refocus on recession risks and growth concerns start to take over, forecasting “significant earnings upgrades” across its coverage.
Happy reading,
Emma Rapaport
Co-editor, Street Talk
From the column
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