Although 2015 has been a trying year for gold miners, the mix of good and bad news has been fairly balanced lately. Even as some struggle, there are always others who outperform the rest of the sector. We’ll take a look at a mash-up of some recent news in the industry.
Anglo American to Weather Storm
Anglo American Plc (LON:AAL) is trying to counter the worst impact of the commodities rout by restructuring its operations. In addition to selling off some $4 billion in assets (a 60% reduction), the firm plans to simplify its divisions by consolidating them from 6 to 3, as well as cutting capital expenditures by $1 billion per year over the next three. It also aims to save money through gradual improvements in efficiency. Anglo predicts greater efficiencies will help it save more than $2 billion over each of the next two years.
The boldest action the company took (from investors’ perspective) was suspending its dividend for the second half of this year and next year. It will move from a progressive dividend policy to a simpler pay-out policy when dividend payments do resume. The company’s target for debt reduction remains near $13 billion.
The time for AAL to restructure is perhaps overdue, as the bleeding has yet to stop. Company shares traded above £1,000 per share this summer on London’s FTSE100, but is now priced in the £300s. The stock lost another 11% on Tuesday, and has erased just shy of 75% of its value in the past 12 months. The company still has a market cap of £4.58 billion ($6.87 billion)
Winners This Quarter
On the other end of the spectrum, at least 5 other major miners have enjoyed a recent run of success over the second half of the year. TheStreet notes that the first four of these five companies have stock prices that remain below their “Death Cross” level (when the 50-day moving average drops below the rolling 200-day moving average). In other words, despite the recent rally, these mining stocks could remain relatively cheap until breaking above these trend lines.
Each company’s market capitalization is included for a gauge of the size of each firm.
Barrick Gold (Mkt cap: $8.85 billion)
Barrick (NYSE, TSX:ABX) shaved its yearly losses (which are still considerable) by an encouraging 27% rally so far during the fourth quarter. Share prices are trading between the $7.50 to $8 range.
Yamana Gold (Mkt cap: $1.99 billion)
Shares of Yamana (NYSE:AUY; TSX:YRI; LON:YAU) did tumble 10% on Monday alone, somewhat putting a dent in an otherwise stellar quarter: even at $2.10/share on Tuesday, the firm’s stock prices are still 40% above their lows from 2 months ago.
Goldcorp (Mkt cap: $10.07 billion)
Somewhat less impressive has been Goldcorp (NYSE:GG; TSX, SWX:G). The company has been steady if nothing else, however, still trading more than 4% above its 10-year low hit in mid-November. The company’s CEO and President Chuck Jeannes also recently announced that he will be retiring next April.
Newmont Mining (Mkt cap: $10.49 billion)
Newmont (NYSE, SWX:NEM; TSX:NMC) has seen its share price return to where it started this year after a volatile ride up and down. A solid 25% surge during Q4 helped the stock wipe out its steep losses from the summer. Prior to the slump, shares were actually 30% in the green by early June.
Harmony Gold ($303.18 million)
Shares of Harmony (NYSE:HMY) have surged almost 10% since Thanksgiving. It’s an encouraging sign for a small-cap stock that had lost half of its value during the past 6 months overall. Investors will be thankful for any uptrend.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.