Newcrest Mining Enjoys Dual Exposure to Copper and Gold
- Newcrest Mining looks to benefit from strong Gold and copper prices.
- Gold prices remain strong after forming March double bottom.
- Goldman Sachs has forecasted an average copper price of $11,000 per ton.
Newcrest Mining (ASX: NCM) is set to enjoy a dual exposure to both Copper and Gold as the price of both commodities continues higher in recent weeks. The Australian Gold miner is the county’s largest Gold player with a market capitalization of 22.9 billion. Political tensions, Chinese demand and persistent inflation expectations have pushed the company’s predominant product, Gold, higher in recent months. Today, the company released an April Update and announced a $25 million Institutional placement and SPP for Antipa Minerals, a mineral exploration company.
Newcrest Mining owns low cost, long-life mines across Australia, Papua New Guinea and Canada. Newcrest Mining owns a 9.9% stake in Antipa Minerals and committed $2.4 million in capital raising, though shares in Antipas have fallen 8 per cent following the announcement.
In recent months the price of Gold has found significant technical support above $1,680 per ounce after forming a double bottom in March 2021. This consolidation follows a precipitous 19 per cent decline from the precious metals all-time highs at $2,075 per ounce in August 2020. Though the traditional use of Gold as a hedge against inflation has been challenged by alternative asset classes such as Cryptocurrencies, fears of price increases have arguably buoyed Gold in recent months. Following the 1.8 Trillion US stimulus package and excessive Quantitative easing programs by central banks across the world, increased money supply combined with a robust economic recovery presents perfect conditions for inflation.
Increased buying support has also been given to Gold, with domestic and foreign banks being allowed to purchase the metal. Following the Chinese New Year and a strong consumer demand and economic growth period, Chinese retails and manufactories have been restocking inventories.
Likewise, both restricted supply and bumper demand expectations for the remainder of the year have propelled the price of Copper. Further, the international focus on green energy products, with which Copper is a vital ingredient, has also supported prices. Leading International Investment Bank Goldman Sachs has forecasted an average copper price of $11,000 per metric ton over the next 12 months due to this focus on green energy. Likewise, Citi have also placed forecasts of $10,500 on the metal ‘within three months.’ Currently, Copper is trading just above $9,200 per ton, slightly off its February 25th high of $9,436.
As of the 21st of April 2021, Newcrest Mining is trading at $28 per share, a sharp 26 per cent correction from their all-time highs. The company’s dual exposure to commodities with a solid macroeconomic foundation places them in an ideal position to take advantage of current trends.