Is 2015 finally the year to invest in Newcrest Mining Limited (ASX: NCM)?
After several years of poor financial performance shares in the gold and copper miner have rocketed 30% in 2015 and it looks like the stars could be finally aligning for the company.
Newcrest's financial performance is heavily influenced by macro factors outside of its control and many of these factors have shifted in the company's favour in the last three months.
Lower Aussie dollar
The Aussie dollar has continued to slump against the US dollar, dropping from US 82 cents in January to US 77 cents today. That's a 6.5% fall which should increase revenues from gold sales priced in US dollars.
Unfortunately, it will also increase the cost of paying down Newcrest's significant debt pile which is set in US dollars.
Higher gold price
The price of gold has also risen and is up 11.5% since January, hovering around US$1,200 per ounce today. This is in contrast to the savage sell downs to hit iron ore and oil this year. Gold has performed especially well given the US economy is booming and inflation remains low, which traditionally puts pressure on the price of gold.
Higher copper price
Copper made up almost 19% of Newcrest's sales revenue for the six months to 31 December, 2014, and is a by-product of the gold mining process. After sliding downward in the last 12 months the price of copper has bounced back from a February low of US$2.50 per pound, up 9% to US$2.73 per pound.
Strong outlook
The strength in external factors, combined with Newcrest's recent up-grade to production guidance has investors expecting a strong result when the company announces its quarterly results on 23 April. If the price of gold and copper continue to rise and Newcrest can maintain low production costs, it's likely its shares will keep rising.
So too will other ASX-listed gold miners benefiting from the same drivers. Shares in Evolution Mining (EVOLUTION FPO (ASX: EVN)), have rocketed 38% this year, while the irrepressible Northern Star Resources Ltd (ASX: NST) has continued its stellar run to climb 52% in 2015.
