Wednesday, September 16, 2009

Newmont Mining Raises A $2 Billion Dollar Blind Pool

In what I believe is the largest bond deal ever issued by a mining company, Newmont just raised $2 billion in what essentially amounts to a blind pool, as they have not indicated any specific use for the proceeds. Here's the link to the announcement:

Ten-year and 30-year Tranches - High Credit Quality Pricing

What is most significant about this deal is that it shows just how much money is on the sidelines and looking for investment opportunities in the precious metals and mining stock sector.  When I heard about this deal coming yesterday I expected, based on my experience in the bond market, maybe a $500 million deal.  The fact that big money is willing to give $2 billion to Newmont on these terms is a harbinger for the kind of capital that is starting to rush into the sector.

The bull market in precious metals and mining stocks is just beginning to enter its second stage.  If you position yourself correctly with gold, silver and mining stocks you will experience a change-of-lifestyle increase in wealth.


  1. I thought I posted this comment before, try again!
    An offering of 2Bln seems a bit aggressive. What do you think this will do to NEM stock near term? One of my arguments against a bubble in metals is due to the low participation rate. 2Bln is a lot of participation! I am not being difficult, you know I am way long metals (gold/silver) just wanted some input.

  2. Hey gyc. This is just the start. Institutions are just starting to move capital into the sector - the ABX and NEM deals show the growing demand. It's mainly hedge funds at this point. Just wait until pensions and big insurance companies start allocating even just 1-2% of their capital to the sector.

    The second stage of long term bull market is characterized by big institutions moving into the market (the 1st being smart money, like us). The 2nd stage is usually the longest and has the biggest move percent-wise.

    A good friend and colleague of mine was an oil and gas analyst at Salomon Bros from 1996-2005. He pointed out the real boom in oil and gas exploration stocks didn't start until the big companies were issuing massive bond deals (I remember that because a lot of them were junk bond deals and I was junk bond trader in the 1990's).

    While I expect some nasty pullbacks along the way, like the one we just went thru from really March '08 to mid-Oct '08 - and really from May '06 to Oct '08 in the juniors - I think the ABX and NEM deals are sign of things to come.

    As for participation rate, the sentiment measures are still very low given the move over $1000 for gold, and how many new precious metals mutual funds have you read about lately? I have not heard of any. The public still can't even spell "gold."