27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Despite its on-again, off-again merger talks with Barrick Gold, Newmont Mining and its $1.65 billion in cash and equivalents may instead want to focus on some of these smaller gold mining names that have seen their share prices beaten down during the past few years.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
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Despite a quiet summer, 2014 has been off to a promising start in regards to Merger & Acquisition activity in the gold mining sector. On April 16, 2014, Yamana Gold (NYSE: AUY) and Agnico Eagle Mines ( NYSE: AEM) announced a joint agreement to acquire Osisko Mining Corporation, trumping a sweetened offer from Goldcorp (NYSE: GG).
Andon May 21, 2014, Ubika Gold 20 Index component Sulliden Gold (TSX: SUE) said it had agreed to be acquired by Rio Alto Mining (TSX: RIO), creating a Peru-based, mid-tier gold producer with near-term production potential of about 300,000 ounces of gold annually.Newmont Mining (NYSE: NEM), meanwhile, has been relative quiet despite the on-again, off-again merger talks with Barrick Gold Corporation (NYSE: ABX).
Seeing that Newmont had cash and equivalents of $1.65 billion as of June 30, 2014, up 32.5% year over year, it may instead want to focus on some of the smaller gold mining names that have seen their share prices beaten down during the past few years. The following 5 companies could be appealing acquisition targets for Newmont Mining:
1. Rio Alto Mining (TSX: RIO): After striking a deal to buy Sulliden Gold (TSX: SUE), the hunter could be the hunted. The newly-merged company is expected to produce about 300,000 ounces of gold annually within the next couple of years. Rio Alto forecasts its all-in costs to fall to between US$990 and $1,094 per ounce in 2014, and adding Sulliden’s assets could create even greater cost-savings synergies in the future. Newmont Mining has a significant stake in Peru’s Yanacocha mine, the largest gold producer in Latin America.
2. Pilot Gold Inc. (TSX: PLG): The gold project developer has an interest in two projects in Turkey with joint venture partner Teck (40% in one and 40% with the possible of earning up to 60% in the other), as well as an 80% interest in the high grade Kinsley Mountain property in Nevada (recent drill results included 10.6 g/t gold over 30.0 metres). Kinsley is located south of Newmont Mining’s Long Canyon deposit and Newmont already owns about 13% of Pilot Gold.
3. Alamos Gold Inc. (NYSE: AGI): This gold producer owns and operates the Mulatos Mine in Mexico, and has exploration and development activities in Mexico, Turkey, and the United States. Alamos has approximately $410 million in cash and cash equivalents and is debt-free. The company said it expects to produce between 150,000 and 170,000 ounces of gold in 2014 at cash operating costs of $630 to $670 per ounce of gold sold, excluding royalties. Alamos’ Quartz Mountain Property in Oregon is relatively close to Newmont’s Nevada operations.
4. New Gold Inc. (NYSE MKT: NGD): The miner currently has four producing assets: the New Afton Mine in Canada, the Mesquite Mine in the United States, the Peak Mines in Australia, and the Cerro San Pedro Mine in Mexico. The company’s total gold production in 2014 is estimated to be between 380,000 and 420,000 ounces at total cash costs of US$320 to $340 or all-in sustaining cash costs of $815 to $835, using a $1,300 per ounce gold price assumption. New Gold has 18.5 million ounces of proven and probable gold reserves. Newmont Mining has two producing mines in Australia.
5. Asanko Gold Inc. (NYSE MKT: AKG): Asanko has already defined more than 9 million ounces of gold at its project in Ghana, West Africa, and could be mining there within two years. The company has about $230 million in cash on its books and the project’s capital cost are estimated at less than $300 million. Newmont's Ahafo operation and Akyem project in that country comprise about 20% of its core assets worldwide.
While other companies could have been included in this list, these five were chosen based on one or more of the following factors that include: assets in politically-secure jurisdictions, reserve/resource size, production costs or estimated production costs that are below US$1200 an ounce, as well as having mines and/or development projects located near existing Newmont Mining interests, which could result in potential cost-saving synergies.