The Newcrest (ASX:NCM) share price is having a year to forget. What's next?

What's on the agenda for Newcrest?

| More on:
A woman sits with her hands covering her eyes while lifting her spectacles sitting at a computer on a desk in an office setting.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Newcrest Mining Ltd (ASX: NCM) share price has been on a rollercoaster ride throughout 2021. The company holds the title of owning and operating some of Australia's largest gold and copper mines. While the company appears solid on paper, its shares have not been immune to weakened market conditions.

In fact, Newcrest shares fell 5% in the past week alone, nearing their 52-week low of $21.85. This means that the Newcrest share price is now down 18% year to date, after shedding last Friday with a 1.04% loss.

At last trade the price of Newcrest shares stood at $22.77.

Why are Newcrest shares falling?

A common theme with gold mining companies, the Newcrest share price has been dumped amid the deterioration of gold prices.

Traditionally, investors flock to the yellow metal as a safe-haven asset when there is uncertainty in the market. However, with the world moving past COVID-19, amid renewed investor confidence across the US dollar and inflation numbers, gold has lost its value.

In the past few months, the price of gold soared above the US$1,800 barrier, but has since fallen by the wayside. Currently, one ounce of gold is fetching US$1,783.35.

Compare this to the start of the year when the precious metal had been swapping hands for US$1,898.66, today's price is down by 6.07%.

What's ahead?

Last month, Newcrest agreed to purchase the remaining stake in Canadian metals and mining company Pretium Resources.

Valued at $2.8 billion, Newcrest is hoping to acquire all of the outstanding common shares it does not already own. The Australian gold miner holds a 4.8% stake in its Canadian counterpart.

The Pretium board of directors has unanimously recommended shareholders vote in favour of the transaction. However, for the deal to go through, it must receive approval from 66.66% of the total votes cast by shareholders.

In addition, the takeover will need to be authorised by the Supreme Court of British Columbia, along with competition clearances and Investment Canada Act approval.

Should all go according to plan, the acquisition is expected to close in the first quarter of CY2022.

Pretium is the owner of the Brucejack gold mine, which is one of the highest-grade operating gold mines in the world. It has an estimated gold production of 311koz (thousand ounces) per annum at an all-in sustaining cost of $743 per ounce. The projected mine life is around 13 years.

Furthermore, Brucejack is conveniently located about 140 kilometres from Newcrest's majority-owned and operated Red Chris mine. This allows the company to strengthen its position in the region by having close access to critical infrastructure.

Newcrest share price summary

Since August 2020, the Newcrest share price has been on a gradual decline, posting a loss of almost 40%. Year to date, however, its shares are down around 18% for investors.

As Australia's largest gold miner, Newcrest commands a market capitalisation of $18.62 billion, with approximately 817.96 million shares outstanding.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

Female miner smiling at a mine site.
Resources Shares

Up 60% this year, this ASX 200 mining stock just smashed production records

Production surge headlines quarterly results.

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Resources Shares

After lifting its price target, Macquarie now expects 36% upside from this ASX mining stock

The precious metals producer released better-than-expected production guidance.

Read more »

A miner in a hardhat and high visibility clothing makes a thumbs up symbol.
Resources Shares

4 reasons to buy Rio Tinto shares today

A leading expert forecasts strong growth potential for Rio Tinto shares.

Read more »

Man with rocket wings which have flames coming out of them.
Resources Shares

Why Macquarie expects this ASX All Ords copper stock could surge 38%

With costs coming in below expectations, this ASX All Ords copper stock could rocket higher over the coming months.

Read more »

Iron ore price Vale dam collapse ASX shares iron ore, iron ore australia, iron ore price, commodity price,
Resources Shares

Major miners up as China announces new mega project

Can a new mega-dam absorb iron ore oversupply?

Read more »

A young man sits at his desk with a laptop and documents with a gas heater visible behind him as though he is considering the information in front of him. about the BHP share price
Broker Notes

Leading broker has just downgraded BHP shares. Is it time to sell?

Macquarie sees little upside. But why?

Read more »

A young woman wearing a blue blouse with white polkadots holds her phone up with an intrigued and happy look on her face as she reads some news.
Resources Shares

3 reasons why the BHP share price could be a buy

Here are my optimistic thoughts on BHP.

Read more »

mining asx shares represented by miner writing report on clipboard
Resources Shares

This ASX 200 miner is ramping up copper output as prices reach all-time highs

Copper production leads quarterly update.

Read more »