NEW YORK (TheStreet) -- Shares of Newmont Mining (NEM) were falling 2.6% to $23.78 on heavy trading volume Wednesday after the gold miner priced the 29 million shares of common stock in its underwritten offering.
Newmont Mining said it will sell the 29 million shares of common stock in the offering to Citigroup (C) and JPMorgan (JPM), which are acting as underwriters for the offering, for gross proceeds of about $682 million. The company expects the offering to close on June 15, 2015.
The mining company said it will use the proceeds from the offering, along with other cash from its balance sheet, to fund the acquisition of the Cripple Creek & Victor mine in Colorado from AngloGold Ashanti (AU). Until the acquisition closes the company will put the proceeds in its short-term liquid investments.
About 24.1 million shares of Newmont Mining were traded by 12:37 p.m., well above the company's average trading volume of about 6.7 million shares a day.
TheStreet Ratings team rates NEWMONT MINING CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate NEWMONT MINING CORP (NEM) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 17.3%. Since the same quarter one year prior, revenues rose by 11.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- 46.60% is the gross profit margin for NEWMONT MINING CORP which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.27% trails the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, NEWMONT MINING CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- NEM's debt-to-equity ratio of 0.62 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.11 is sturdy.
- You can view the full analysis from the report here: NEM Ratings Report