uploads///NCM vs GDX

Analyzing Newcrest Mining’s Rising Costs and Falling Gold Prices

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Nov. 20 2020, Updated 4:14 p.m. ET

Production and costs

Ranked among the top ten gold miners globally, Newcrest Mining is an Australia-based company. It’s engaged in the exploration, mining, and sale of gold and copper. Newmont produced about 2,396,000 ounces of gold in 2014. The figure has fallen since 2013. It’s lower than the 2011 high of 2,527,000 ounces.

Its copper production also rose close to 7.50% from the figure in 2013. Newcrest also has operational mines in Indonesia. The company confirmed that it’s also advancing an exploration program. It has added potential growth projects in New Zealand and Queensland, Australia.

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With an AISC (all-in sustaining cash) cost of close to $941 as of September 2015, the figure rose from an AISC cost of $897 in 2014. Newcrest Mining (NCM) accounts for 5.26% to the VanEck Vectors Gold Miner ETF (GDX). It’s trading close to the price of $10.90 per share. The above chart gives a price comparison of Newcrest Mining and GDX.

Falling gold prices

Gold prices have fallen in the past two years. As a result, Newcrest Mining’s book charges totalled about $8.9 billion Australian dollars in fiscal 2013 and 2014, according to the company fillings. Australia’s biggest gold producer said that its margin rose 13% in the current year through June 30. However, Newcrest’s realized gold price fell to $1,236 per ounce from $1,292 per ounce.

Other mining equities

Precious metals futures have been falling on a YTD (year-to-date) basis. This has impacted the precious metal miners immensely. Gold, silver, platinum, and palladium fell 6.80%, 6.90%, 20%, and 26%, respectively, on a YTD basis.  The equities have lost almost 3–4x when comparing the mining equities to the futures. Other equities that are part of GDX like Franco-Nevada (FNV), Alamos Gold (AGI), Aurico Gold (AUQ), and Rio Alto Mining (RIO) have also fallen on a YTD basis.

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