The AFR proudly announced in “Street Talk” yesterday afternoon that $20bn Newcrest Mining (NCM) might be about to receive a bid with the likely suitors being touted as either Barrick Gold Corp (GOLD US) or Newmont Corp (NEM US), either way, all we can say is bring it on! – we hold 5% of our Flagship Growth Portfolio in NCM. The logic and synergies for both of these US-traded heavyweight gold producers make perfect sense as does the timing with NCM searching for a new CEO and the relative weakness of the share price:
- Newcrest (NCM) is trading over 40% below its 2020 high while at the same time, the $A has depreciated more than 35% over the last decade.
In other words for a buyer with $US in their pockets NCM is looking very attractive, especially if like ourselves they believe both the gold price and $A will be higher in the coming years. In terms of pricing, assuming the word on street proves correct, we cannot imagine NCM being sold for much below $32, or in other words ~40% higher.
An important point to understand from this brief note on NCM is that other quality local miners might already be under the microscope from offshore players with the $A trading around 69c – remember a few weeks ago we pointed out that every morning when the local currency dipped offshore buying seemed to hit the ASX around lunchtime, a recent characteristic which has helped the markets outperformance in 2023.
MM is long and bullish NCM
Add To Hit List
