Newcrest Mining will acquire Pretium Resources resources and the Brucejack mine for US$2.73bn, which will add an incremental 370,000 ozpa of gold over the medium term. The acquisition will be funded 50:50 in scrip and cash.
Credit Suisse notes the mine presents technical challenges which have meant reserves have been downgraded in recent years. Yet Newcrest Mining is confident it can deliver value to justify the premium paid. Outperform rating and $31 target maintained.
Sector: Materials.
Target price is $31.00.Current Price is $25.66. Difference: $5.34 – (brackets indicate current price is over target). If NCM meets the Credit Suisse target it will return approximately 17% (excluding dividends, fees and charges – negative figures indicate an expected loss).
