BMO Capital Markets views Newmont Mining Corp NEM's recently announced sale of stake in the Indonesian mine as a positive development as it de-levers the risk profile of Newmont.
Newmont agreed to sell its 48.5 percent stake in the operator of the Batu Hijau copper and gold mine in Indonesia to PT Amman Mineral Internasional for $1.3 billion.
"[T]he sale of Batu Hijau removes a number of uncertainties related to operating in Indonesia and the capital requirements related to Phase 7 expansion set against prevailing low copper prices," analyst Andrew Kaip wrote in a note.
"In the context of BMO Analysis, NEM will receive a further $76 million in contingent payments by 2021," Kaip added.
Post Batu Hijau, Kaip estimates EPS to drop on average 9 percent and sees CFPS and EBITDA falling by 13 percent. As such, the analyst now expects EPS of $1.47 for 2016 and $1.79 for 2017. The Street expects earnings of $1.35 a share for 2016 and $1.71 a share for 2017.
However, Kaip expects Newmont to be in a comparable net cash position by 2025, with or without Batu Hijau, given lower capital requirements.
Kaip reiterated his Outperform rating and $45 price target on the stock, which is currently up 2.02 percent to $39.91.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
|---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
