In recent days, I’ve received a significant number of inquiries about the implications of Newmont’s financing on existing stockholders. I will answer the question from two different perspectives:
Fundamentally:
Newmont’s management team has distinguished itself as being courageous, accepting of change, and having the ability to produce profits. That is a rare combination in the minerals industry which is generally run by strong personalities lacking elasticity.
I am therefore willing to assume that the new money being raised will not dilute new or old shareholders and in fact will produce a good return. The alternative methods of financing include hedging gold short to produce a recourse specific to project bank loans or by leasing gold. So an equity financing with a purpose undertaken by talented people should be welcomed rather than feared.
A shelf deal or a brokered placement?
As I read the Newmont announcement, I conclude that this is a brokered underwriting done by international investment houses. Assuming that conclusion is valid, it is history and will at worst cause some hesitation of the stock at the issue price but not much more.
Shelf deals on the other hand involve the registration of shares for sale which are then sold as people apply to purchase them usually not at a fixed price. Such offerings, in my opinion (IMO), lack class as a method of financing. IMO, they also demonstrate a disdain for old stockholders by representing constant supply which in turn encourages short sales.
Technically:
Please refer to the chart of NEM and keep it bone simple. The MACD has not yet crossed over and might not if gold firms here.
One Power Up Trend has already broken down but it is at the most acute angle. Use the other trend lines for your mental stops. That will protect you. I would assume that if gold appreciates from here, NEM will perform positively.
I do not see anything to be concerned about. I feel the price of gold will rule the price of NEM.
I understand some brokerage house’s analytical department may not have been kind to NEM recently. In such cases, it might be wise to see what firms these are and whether they represent one of the constant sellers on the Comex.
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The chart(s) he mentions can be seen at http://www.jsmineset.com/home.asp
bye.dub (i hold some NEM)
NEM Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
