 Good day, fellow investors. As we look at the portfolios from Deilio, from Claremont, they all have a little bit of gold, or better to say gold miners in their portfolio. Even Einhorn had gold, not now gold miners, but perhaps he even changed his mind. So I also think that in order to protect your portfolio from long-term monetary craziness, inflation, whatever that can happen in the next decade or two decades, whenever it happens, it is nice to have some gold miner portfolio exposure in your portfolio, of course. I don't like gold because the volatility is much less than gold miners. Many people prefer gold because of the lower volatility than miners, but if you know what can happen with miners, then you know how to go about it, and then you know how to take advantage because mining is actually a business. Gold is gold, gold is a metal. So that's the difference I prefer to analyze businesses and finding the best businesses that fit my portfolio and give me a hedge. So I'll make more videos in the future about gold mining, investing and what to think about, but today we're going to start with analyzing one of the biggest gold miners in the world, Newmont Mining. As we are looking for portfolio exposure to gold, we have to see, okay, what's the stock price sensitivity, the dividend sensitivity towards fluctuations in the price of gold because I'm looking at gold and gold miners as a hedge, and I have to say it five times, hedge, hedge, hedge, hedge. Not as, okay, in the next two quarters, gold will go up and down a full breakout of gold or whatever the 99% of the population that looks at gold miners does. So they are trying to make money by trading. I'm using gold miners as a hedge, and then I rebalance accordingly, but I want to see what to put in that portfolio hedge. So let's start with Newmont company overview and a sensitivity to what happens to Newmont if gold prices go up and down. So Newmont is almost like an ETF. You have more than 20 mines across the world, mostly focused on North America and Australia, so very good jurisdictions, little risk if you mine in Africa or South America or I don't know Asia, Kazakhstan, the risk is much higher from a jurisdictional perspective. So you can almost call Newmont an ETF with 20 mines, plus it pays a dividend. They have a good project pipeline execution, they have two projects on a feasibility, pre-feasibility projects that might replace production somewhere in the future and some also green fields. They have recently acquired Nova Gold stake in Galore Creek, which will add also a bit of copper to the mix in the future. That's a very long-term investment as they paid only 100 million now, and there is another 150 million contingent on the development progress of the mine. All in all, Newmont is a steady, long-term gold producer. The reserve is about 12 years of production and you can expect stability over the long term. They are reinvesting about 60% of their EBITDA now of their operating cash flows, so to cover for the depletion, so stability is what you can expect from Newmont. Now this is very interesting. As gold prices were in a bubble in 2011-12, a lot of miners went crazy and a lot of shenanigans happened. However, since then, Newmont is the perfect example of how they got disciplined, of course, until the next bubble comes, but they have managed to increase their return on capital employed, even with gold prices significantly decreasing, and they increased also their free cash flow per share. As said, 12 years of reserves, a normal stable grade 1.14, however, take into account that they also have a lot of underground. As we are looking for a gold hedge, if gold prices hit 1400, then we can add 12 million gold ounces to the reserves, as those will become economical at that price level. So as gold prices go higher, the fundamentals also improve for the gold miners. Just a short-term operational outlook, you can see gold production stable, 4.9 to 5.4 million ounces, 4.6 a little bit less in 2020-22, then we can expect a pickup, all in sustaining costs around 1,000, a little bit less in 2019 expected, but I'm going to take 1,000 as a conservative measure, because management is always over-promising, no matter the company. What is also important here is the cash average cost, so Newmont will be cash flow positive operationally, of course, at 700, 750 per ounce of gold. So whatever happens below 750, then Newmont gets into trouble. All in sustaining costs include capital depreciation and all the other costs that have been already incurred and then are added also. So profitability from an earnings perspective, we are at 1,000, from a cash flow perspective, we are at 750. And you have to look at cash flows when you analyze mines and then at the capital of how much are they reinvesting. They are reinvesting, the two investments largest are the TwinMine underground and of course a very important mine, the Carlin mine in Nevada. So you can just invest in Newmont just for the name of this mine and you'll do well. With such a name they must deliver and they must do good. They are extending the Carlin mine that has been mined for already 50 years, so that's a strong brand, a strong name and they are adding about 10 years of production and there is more even perspective exploration around. However, there is also exploration all around the world almost and we can expect again stability for Newmont with these new projects to cover for the depletion. Something very important with miners, the larger the debt, the larger is the volatility and the risk of course. Newmont has some debt, about 4 billion but has also 3 billion in cash so the net debt is just 1 billion but also when you look at the debt repayment schedule most of it is beyond 2035. Who knows what will happen beyond 2035 and they'll probably pay back the debt that matures in 2019 and 2022 as they have the cash and they are cash flow operative. That depends on what happens with gold. Probably they're also going to do some acquisitions and in the short term as in the short term, medium term they look for early stage projects and cash flowing assets. Now let's discuss the stock price sensitivity to gold. They are prepared for whatever happens. In case of the downside they will reduce pending on exploration. They will discontinue early debt repayments and re-evaluate the dividend. So that's in case gold prices go down. In case gold prices remain around 1200 that's the current situation. If they go up you can expect higher dividends, higher debt repayment and investments only in the projects with the highest return. Thus discipline not like it was the case in 2010-11-12. Let's take a look at the costs. The costs are relatively high for my taste. Average all-in sustaining costs are 1000 and something not good from Carlin. It has the highest all-in sustaining costs of the mines almost at 1119. So they expect to debt to improve in the next two quarters as less waste going to be mined. So that might change and give a positive boost also in the short term but we'll see. Now this is very important. For every 100 dollars increase in gold prices the free cash flow increases by 360 million or 345 million for Newmont. So that's what we have to put in our sensitivity model. I think let's say gold can go to 800 and gold can also go to 2000 in the next recession with more monetary easing, inflation, helicopter money and whatever can happen. The current cash flows operating cash flows are 2 billion reinvestments. We are at a free cash flow of 1.1 billion that I'll use for the stock price sensitivity analysis. The current price to cash flow is 15. If I multiply what can happen to the cash flow per share if gold prices go to 2000 the cash flow per share might go to 7 so times 15 those valuations will also change if we have an exuberant gold market. But let's just put this in a back of an app in calculation. The possible price is around 100. If things go south then okay I don't think Newmont will hit two three dollars because that's a bit extreme because of the book value because of the project the scaling down of the various costs that range from 400 to 1200. So they're going to invent something so we could see a low at 10 I wouldn't go lower no matter the gold price and we can see also the low was 15 in 2015 so let's say that 1510 is what should be expected as a low. So that's the long term on a short term note why is the stock down from 42 in March? Well let's see gold was down by 100 since then deduct 348 million of cash from 539 million shares that's 62 per share times the cash flow valuation of 15 that's 9.3 per share and that's why the stock price is down from 40 42 40 something to 40 around 9 10 bucks per share. If we compare this to the gold price and Barrick gold we can see that Newmont is performing better than Barrick however it was also performing alongside gold prices but then simply everything crashed in a bad week in August and didn't recover since then. Nevertheless I'm looking at the long-term picture hedges this is my table that I'm going to fill as we move on with gold miners so Newmont target let's say 5 10 15 in case of gold 800 gold 1200 we are at 31 2000 gold 106 so the upside is let's say three four times the downside is also very big let's say 50 to 75 percent the growth is zero and the only in sustaining costs are 1000 when we finish this table you will see which one will best fit your portfolio because that's what you want to have. So I'll simply continue to look compare when the table is full then we'll know which ones you should pick for your portfolio because it is a hedge and you want to see okay how much exposure do I want to have to cover for the other part of your portfolio don't know what is the other part of your portfolio. So I just sold Navsoon so my copper gold many people forget that Teamock with Navson had a lot of gold so that exposure is gone and I'm looking for more exposure to gold especially as price are a little bit subdued and there is negative sentiment you have to buy gold when nobody wants to touch it with a 10 foot mile kilometer pole whatever so that's my exposure I then rebalance please subscribe for more videos about gold more gold mining stocks in such a hedge perspective. To summarize on Newmont I think it's a good company stable company a little bit high all ins to sustaining costs but manageable plus manageable debt so in the long term I think when gold prices spike Newmont will do very well in the short medium term it will be volatile so the key is always with rebalancing if you buy Newmont I think you will have a quality hedge in your portfolio but let's keep digging to have a better comparison thank you for watching looking forward to your comments and I'll see you in the next video