With market cap exceeding $12 billion, Newcrest Mining (NCM) is Australia’s largest gold miner, although Evolution Mining (EVN) which is about a fifth in terms of the market cap of Newcrest has been considered the most profitable among the top three mining companies in Australia. The last few months have witnessed frenzied activity in the gold mining industry in Australia. In August, Evolution declared that it was taking over the Ernest Henry copper-gold operations in Queensland from Glencore for an upfront payment of A$880 million.
The company recently followed it up by entering into a binding agreement with Newcrest for the acquisition of Marsden copper-gold project from Newcrest Mining, which is located at central New South Wales. The site is expected to possess more than a million ounces of gold and close to 700,000 tons of copper; and according to the deal, Evolution will make an up-front payment of $3 million to Newcrest and another $7 million if it intends to carry out mining activity on the site. The agreement is subject to conditions including government approvals.
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Marsden Project (Source: Company Reports)
There was also some other news for Newcrest Mining, the largest gold miner in Australia, which produces more than 1.5 million ounces of gold annually with estimated reserves of 33 million ounces. In August, the company reported a 24 per cent drop in full-year FY16 profits to $323 million from $424 million a year earlier. The company however agreed to pay a final dividend of 7.5 US cents per share, the first dividend pay-out since February 2013. Also, Moody’s Investor Services had changed the outlook for the company to positive from stable and affirmed the Baa3 long-term issuer rating. According to Matthew Moore, Vice President and Senior Credit Officer at Moody's, "The confirmation of Newcrest's Baa3 rating is based upon the company's deleveraging and continued improvements in operating costs".
In the recent outlook for gold prices, Evolution Mining has maintained that gold prices are likely to remain high due to geopolitical and fiscal uncertainty. At a recent event, the executive chairman of Evolution, Jake Klein said that "Until global economies can address the underlying systemic reality that we are all spending more than we can afford, it may be good for gold but not much else."
Shares of Evolution have risen over 66.5 percent this year to date (as of October 21, 2016) in terms of price while shares of Newcrest Mining have spiked 68.83 percent this year to date and are currently priced over $21.9.
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