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||April 21, 2017
- Continuing Portfolio Upgrade
- Solid Return Potential
- Shares Underpriced as Gold Grinds Higher
Michael S. Dudas
||Buy (at time of publication)
||Metals & Mining
||$ 45.00 (at time of publication)
Newmont Board has reached an investment decision to develop its Subika underground mine and Ahafo mill expansion in Africa.Together, these two projects, for a combined capital spend of $300-$380 million, would increase Newmont's Ahafo production by 200,000-300,000 ounces and reduce costs applicable to sales (CAS) by $150-$250/oz for the first five years. In Figures 1 and 2, we estimate IRR to be in the low 20s for these two projects at $1,200/oz gold price. Newmont remains a top pick within our universe with at target of $45.