This is one of the largest mining companies, as well as a solid buy for more conservative accounts and a top pick at Deutsche Bank. Newmont Mining Corp. (NYSE: NEM) is a leading gold and copper producer. It employs approximately 29,000 employees and contractors, with the majority working at managed operations in the United States, Australia, Ghana, Peru, Indonesia and Suriname.
Newmont is the only gold producer listed in the S&P 500 index, and it was named the mining industry leader by the Dow Jones Sustainability World Index in 2015. The company is an industry leader in value creation, supported by its leading technical, environmental, social and safety performance. Newmont was founded in 1921 and has been publicly traded since 1925.
The company announced recently that “first gold” has been poured at its new mine, called the Merian gold mine in Suriname in South America. Newmont reported Merian contains gold reserves of 5.1 million ounces and that annual production is expected to average between 400,000 and 500,000 ounces of gold at competitive costs during the first five full years of production. Costs are expected to be among the lowest in Newmont’s portfolio, averaging between $650 and $750 per ounce in all-in sustaining costs in the first five years.
Newmont investors receive a tiny 0.3% dividend. Deutsche Bank raised its price target to $50 from $49. The consensus price objective is $47.05, and the shares closed Tuesday at $34.25 after retreating more than 10%.
This is another top company that many on Wall Street favor. Silver Wheaton Corp. (NYSE: SLW) is the largest pure precious metals streaming company in the world. Based on its current agreements, forecast 2015 estimated annual attributable production is approximately 44.5 million silver equivalent ounces, including 230,000 ounces of gold. By 2019, estimated annual attributable production is anticipated to increase significantly to approximately 55 million silver equivalent ounces, including 325,000 ounces of gold.
This anticipated growth is expected to be driven by the Silver Wheaton’s portfolio of low-cost and long-life assets, including precious metal and gold streams on Vale’s Salobo mine and Hudbay’s Constancia project.
Silver Wheaton has 18 long-term purchase agreements and one early deposit long-term purchase agreement associated with silver and gold relating to 27 various mining assets. It has silver and gold interests primarily in the San Dimas, Zinkgruvan, Yauliyacu, Stratoni, Los Filos, Peñasquito, Keno Hill, Neves-Corvo, Cozamin, Minto, Barrick, Aljustrel, 777, Salobo and Sudbury mines, as well as the Rosemont, Loma de La Plata, Constancia and Toroparu projects.
The company fits nicely into the Merrill Lynch metrics for quality assets and royalty streams, and the kind of balance sheet that has protected the company from the pitfalls of miners with huge capital expenditures.
Silver Wheaton shareholders are paid a 0.8% dividend. The $37 Deutsche Bank price target compares with the consensus target of $33.55. The shares closed Tuesday at $23.56, also down more than 10%.
Proper asset allocation should always include a single-digit percentage holding of precious metals like gold and silver. Not only do they hedge over the long term, but they can really help if the market goes into correction or bear market mode, as they tend to trade inverse to markets. Adding shares after the big sell-off Tuesday looks like a very solid move.