In a Dec. 7 research note, analyst Andrew Kaip reported BMO Capital Markets initiated coverage on Newcrest Mining Ltd. (NCM:ASX) with a Market Perform rating and an AU$23 per share target price. The stock is currently trading at around AU$20.67 per share.
"Newcrest meets BMO's criteria for a best-in-class mining company," Kaip noted, with "strong execution and above average outlook in addition to peer-leading returns since restructuring began four years ago and industry-leading asset base and reserve life."
Company risks include concentration of assets, decreasing gold production at Cadia as of 2020 and heightened jurisdictional risk with Ecuador exposure and surrounding development of Wafi-Golpu, the joint venture project in Papua New Guinea.
In light of these issues, Newcrest is "reasonably valued," Kaip noted. The company could trade at a premium valuation, but that would require it to add to its asset portfolio to increase production and lower jurisdictional risk.[NLINSERT]
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Disclosures from BMO Capital Markets, Newcrest Mining, December 7, 2018
I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
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Company Specific Disclosures
Disclosure 16: A research analyst has extensively viewed the material operations of Newcrest Mining.
Disclosure 17: Newcrest Mining has paid or reimbursed some or all of the research analyst's travel expenses. Disclosure 18: A redacted draft of this report was previously shown to Newcrest Mining (for fact checking purposes) and changes were made to the report before publication.
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