Why this ASX 200 gold stock is ‘the BHP of gold mining’

S&P/ASX 200 Index (ASX: XJO) gold stock Newmont Corp (ASX: NEM) only began trading on the ASX on 27 October.

The United States-based gold mining giant was previously only listed on the New York Stock Exchange (NYSE).

But following Newmont’s successful acquisition of former ASX-listed gold miner Newcrest Mining, the company opted to dual list in the United States and Australia.

And having swallowed up Newcrest’s assets, Newmont’s market cap now stands at a whopping $76 billion.

That dwarfs the second biggest ASX 200 gold stock, Northern Star Resources Ltd (ASX: NST), which has a market cap of $16.8 billion.

Indeed, Newmont’s wide range of high-quality gold mines has Blake Henricks, portfolio manager at the Firetail Australian High Conviction Fund, labelling the company the “the BHP Group Ltd (ASX: BHP) of gold mining”.

Here’s why Henricks is bullish on Newmont shares.

A massively overlooked ASX 200 gold stock

The Firetail Australian High Conviction Fund recently increased its holdings of Newmont shares.

That’s despite, or perhaps because, the ASX 200 gold stock tumbled a painful 25% over the first two months of 2024.

“It was one of our biggest detractors over the last six months – and it’s fair to say the market has put Newmont in the sin bin,” Henricks said (quoted by The Australian Financial Review).

Commenting on Newmont’s performance on the NYSE, Henricks added, “Gold prices are up more than 20% in the past two years, and yet Newmont is down close to 30%. That’s a very large dislocation.”

Indeed, the gold price has had a strong run over the past two years, with the yellow metal really taking off at the end of February.

On 28 February, gold was trading for US$2,035 per ounce. At market close yesterday, that same ounce was trading for US$2,414. That sees bullion up almost 19% in just 10 weeks.

As you’d expect, this has been a boon for most ASX 200 gold stocks, with Newmont shares surging 43.72% since market close on 28 February.

And citing the comparison to BHP’s market dominance, Henricks believes there’s more outperformance to come from Newmont.

According to Henricks (courtesy of the AFR):

[Newmont] is the BHP of gold mining. They own more than half of the world’s tier one assets… this is the kind of business you want to buy. We believe the market’s massively overlooked [this stock].

In April, the ASX 200 gold stock reiterated its FY 2024 guidance.

Newmont expects to produce 6.9 million ounces of gold over the full year at an all-in sustaining cost (AISC) of US$1,400 per ounce.

The post Why this ASX 200 gold stock is ‘the BHP of gold mining’ appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.