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9 Pages

Value creation in the mining sector: A long term divergence between copper and gold producers


Value creation in the mining sector: A long term divergence between copper and gold producers

Report summary

In one of the most significant divergences observed across the mining sector, gold miners - which in the year 2000 commanded a 50% market premium over copper miners, have seen their relative valuations erode and now trade at a 25% discount relative to copper miners. We've tracked nineteen gold and pure play copper companies over a fifteen year period and discuss how and why the copper sector has outperformed despite gold prices rising faster than copper prices over the analysis period.

What's included?

This report includes 1 file(s)

  • Value creation in the mining sector: A long term divergence between copper and gold producers PDF - 578.75 KB 9 Pages, 1 Tables, 9 Figures

Description

This Metals Insight report highlights the key issues surrounding this topic, and draws out the implications for those involved.

For industry participants and advisors who want to look at the trends, risks and issues surrounding this topic, this report gives you an expert point of view to help inform your decision making.

Our analysts are based in the markets they analyse and work with high-quality proprietary data to provide consistent and reliable insight.

We provide unique in-depth analysis of the metals supply industry so you can make confident strategic decisions.

  • Executive summary
    • Copper miners have outperformed gold miners significantly
    • The approach to capital allocation has dictated the divergence in returns between the copper and gold sectors
  • Cross-sector performance between 2000 and 2015
  • Understanding long term value creation in the mining sector – net worth per share growth
  • M1 and residual cash flow margins and dividend policy across the two sectors
  • External financing in the copper and gold sectors between 2000 and 2014
  • Business growth versus per share business growth diverge – shareholder dilution
  • Randgold Resources and First Quantum Minerals shine
  • Erosion of gold mining premium and state of the industry
  • Conclusions and outlook
  • Methodology

In this report there are 10 tables or charts, including:

  • Executive summary
  • Cross-sector performance between 2000 and 2015
    • Value creation in the mining sector: A long term divergence between copper and gold producers: Table 1
    • Miners share price appreciation along with underlying commodity prices from 2000-present
  • Understanding long term value creation in the mining sector – net worth per share growth
    • Tracking the correlation between tangible net worth per share and share prices for nineteen mining companies between 2000 to 2014
  • M1 and residual cash flow margins and dividend policy across the two sectors
    • A comparison between copper and gold miners residual cash flow margins from 2000-2015F
    • A comparison between copper and gold miners dividend payout and yield between 2000-2014
  • External financing in the copper and gold sectors between 2000 and 2014
    • A comparison in the total shares outstanding and total debt growth between the gold and copper sectors between 2000 and 2014
  • Business growth versus per share business growth diverge – shareholder dilution
    • A comparison of business net worth of selected copper and gold miners compared with net worth per share between 2000 and 2014
  • Randgold Resources and First Quantum Minerals shine
    • A comparison of net worth per share and share price for Randgold Resources and First Quantum Minerals
  • Erosion of gold mining premium and state of the industry
    • Valuation and leverage of gold and copper miners
    • Share price, net worth and metal prices for gold and copper miners
  • Conclusions and outlook
  • Methodology
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