Scotia Capital analyst David Christie, providing a brief overview of the acquisition of Australian gold miner Lihir Gold Ltd by Newmont Mining Corp., According to David Christie’s acquisition of mining company Lihir Gold would be advantageous to Newmont, because of Lihir gold mine could increase gold production by Newmont Mining 9% and drop fee of 2% cash equity. So the acquisition of mining company Lihir Gold production will reduce costs incurred by Newmont gold is below U.S. $ 500 per once.
“In our view, the Lihir mine would be a good fit for Newmont’s Australia-Asia operating group, and [Lihir's] Bonikro mine and vast exploration ground would fit well into Newmont’s African operating unit,” he wrote.
Newmont needs to consider acquisitions because it has a negative growth profile. Mr. Christie wrote that production is expected to decline by 8.7% in 2015 compared to 2010. However, the company is also in a good position for M&A activity with US$5.8-billion in available liquidity, he noted.
Mr. Christie initiated coverage on Newmont with a “sector perform” rating and a one-year target price of US$67 a share.
He wrote that Newmont trades at a price-to-net-asset-value multiple of 1.98 times, which is well ahead of its large-cap gold peers at 1.49 times. However, Newmont is cheaper than its rivals on other metrics.
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