Newcrest Mining was selected randomly for chart analysis.
Newcrest is Australia’s largest gold mining company with operations in four countries and employs more than 19,000. It has created value by keeping costs low, and increasing production, through ongoing exploration, and acquisition.
This is a time-line of events from the Newcrest web-site:
1966 – Newmont Holdings Limited established by Newmont Mining to explore for gold
1975 – Operated Telfer open-pit mine in WA with BHP Gold
1987 – Name changed to Newmont Australia and listed on the ASX
1990 – Acquired Australmin Holdings, and merged with BHP Gold to become Newcrest Mining
1999 – Gosowong mine on Halmahera Island, Indonesia, commissioned
2000 – Telfer mine operations suspended.
2002 – Mining commenced at Ridgeway mine in Cadia Valley NSW
2004 – Open pit mining commenced at Telfer
Cracow underground mine in Queensland commissioned
Newcrest admitted to ASX50 index
2006 – Gold production exceeded 1.5 million ounces.
2007 – $2 billion rights issue at $17.40 to close hedgebook and repay debt
Farm-in agreement with Nitetsu for 65% interest in Fiji exploration
2010 – The Hidden Valley Gold Mine in Morobe province of PNG commenced operations
Merger with Lihir Gold Limited, and listed on Port Moresby Stock Exchange
2011- Queensland mines, Cracow and Mount Rawdon spun off to new company Evolution Mining Limited but retains a 33% interest in the new company
2012 – 7.5% interest in Indonesia mine PT Nusa Halmahera Minerals sold.
A second issue of bonds to US institutional investors – $1 billion
Secondary listing on the Toronto Stock Exchange
Technical Analysis Highlights
Long term uptrend since listed in 1987 culminating in an all-time high of $43.54 in November 2010.
Down-trend since then finding support at about $21.68 before rebounding to $30 at 38.2% Fibonacci retracement.
Further decline to retest support at $22 before again rebounding in the last month.
The share price has been in decline since 19/9/2012 from a high at $29.96 to to a low of $21.53 on Jan 10, 2013.
The downwards trendline was broken 18/1/2013.
The last day of trading saw the share-price lift by $1 (4.25%), and by forming a higher high initiated a new uptrend. The closing price of $24.52 is just short of the 38.2% Fibonacci retracement level.
Adumbration of further share price movement
Friday’s 4.25% rally followed announcement of a 51% fall in profit. The inference from this anomalous movement is that the market had anticipated the profit decline with the fall in the share-price in the preceding months.
Should the share-price reverse and fall this week the expectation would be for support to emerge at the level of the high of $23.80 on January 3. Failure of this support would be an appropriate level at which to close a long position. The next level at $21.50 is a long term support level.
The more likely scenario is for further gains in the share-price. The next target to meet would be $26, the next resistance level, just above the 50% Fibonacci retracement level.
A longer term target might then be at $30 (100% retracement).
NB The share-price movements of resource stocks depend principally on unpredictable commodity prices, and can not therefore be foreshadowed with any certainty.
Disclaimer: This post is a personal view of the market forces, and not a recommendation to buy or sell Newcrest shares. Please see full Disclaimer in the Pages Menu.
- Newcrest profit slumps 51% (news.theage.com.au)
- Diverse market reactions to Newcrest profit slump (mining.com)
- Newcrest expansion to boost dividend (bigpondnews.com)
- Newcrest lifts production (bigpondnews.com)
Categories: Chart Analyses, Technical Analysis
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