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Newcrest Mining share price on watch after JV announcement with Greatland Gold

Old fashioned scales weighing two gold bars in front of dark background, gold share price, newcrest mining share price
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The Newcrest Mining Ltd (ASX: NCM) share price will be on watch this morning after announcing a new exploration farm-in agreement with Greatland Gold late on Monday evening.

What did Newcrest announce?

Newcrest has entered into an exploration farm-in agreement that establishes a joint venture (JV) with Greatland Gold plc on their Havieron tenement, located in Western Australia’s Paterson province and 45 kilometres east of Telfer.

Management believes the Havieron tenement has the potential to deliver high-grade ore feed to Telfer and the farm-in agreement includes tolling principles that the JV ore will be processed at Telfer (subject to a successful exploration and feasibility study).

Newcrest will be the manager of the exploration program during the farm-in period and while it maintains a majority interest, with a minimum commitment of US$5 million over an initial 12-month period with the potential for Newcrest to earn up to a 70% JV interest through total expenditure of US$65 million over a 6-year period.

Newcrest may acquire an additional 5% interest at the end of the farm-in period at fair market value.

Is the Newcrest share price a Buy?

I would expect the potential upside for earnings from the latest JV announcement could see the Newcrest share price jump higher in early trade and would be a welcome boost after the company announced a 13% decrease in gold reserves and 34% decrease in copper reserves in its half-year results.

From an earnings perspective, Newcrest reported an underlying net profit after tax (NPAT) of $237 million, up 204% on prior corresponding period (pcp) in a solid result for the miner. Copper production also increased 33% on pcp and gold was up 6% on pcp at an all-in sustaining cost (AISC) of $747 per ounce, down 13% on pcp.

The gold miners have enjoyed a strong start to the year, with Newcrest up over 12.50% year-to-date to slightly outpace the S&P/ASX200 Index (ASX: XJO). The technical environment remains sound for gold in my view, but for those that aren’t as keen on defensive exposure, it’s worth checking out these top growth shares that have been tipped as market beaters.

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Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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