Tuesday, November 17, 2009

Newmont Mining next Chinese target?

In just a week, Newmont Mining (NEM), one of the world's top producers of gold, saw its stock leap to 51.24 from 43. The jump is no surprise, since Newmont's third-quarter profits more than doubled as gold hit $1,100 an ounce. But there's something more intriguing: The speculation on Wall Street that China may be eyeing Newmont.

"The buzz is that if China wants to protect its currency and diversify its assets, it makes sense to buy Newmont," says Vincent Carrino of Brookhaven Capital Management, which owns stock. In 2008, Newmont's proven and probable gold reserves were 85 million oz., in such places as Nevada, Peru, and Australia. Carrino figures Newmont is worth 70.

China this year acquired a majority stake in Australia's OZ Minerals for $1.7 billion after an unsuccessful run at mining giant Rio Tinto (RTP). China's current No. 1 gold producer is China National Gold, accounting for 20% of the country's output. In 2007, China mined 9.7 million oz.—7% of the global yield. (more)

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