Why is the Newcrest (ASX:NCM) share price struggling in 2021?

Shares in the Aussie gold miner have been under pressure throughout the year

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The Newcrest Mining Ltd (ASX: NCM) share price has been under pressure this year. Shares in the Aussie gold miner have slumped 9% lower in 2021 despite strong gains for other ASX resources shares.

What’s going on with this S&P/ASX 20 Index (ASX: XTL) constituent right now and why is it under pressure?

Why the Newcrest share price is struggling in 2021

Newcrest is primarily a gold and copper miner, and a large one at that. According to the group’s recent FY21 results, Newcrest produced 2.1 million ounces of gold and 142.7 thousand tonnes of copper last year.

It’s perhaps surprising to see the Newcrest share price struggle given the strong realised prices seen in FY21. Newcrest’s realised gold price jumped 17% to US$1,796 per ounce while copper prices were up 42% to US$3.66 per pound.

Group revenue climbed 17% in FY21 to $4.6 billion with earnings before interest, taxes, depreciation, and amortisation (EBITDA) up 33% to $2.4 billion. That helped Newcrest post record free cash flow in FY21 of $1.1 billion.

Those strong headline numbers weren’t enough to arrest the recent Newcrest share price slump. Shares in the Aussie gold miner have been sliding lower since the middle of the year.

Gold prices and market expectations could help explain the recent valuation slump. A large proportion of Aussie gold miners have seen their share prices fall in the last year.

In fact, it’s hard to find many S&P/All Ordinaries Gold Index (ASX: XGD) companies that are seeing strong gains. That sub-sector index has seen double-digit declines in 2021 as expectations for a continued gold rally have subsided.

There has also been the supply-side factors with a number of miners ramping up capacity and production in anticipation of sustained higher prices.

The Newcrest share price has remained under pressure in 2021. However, the Aussie miner still remains one of Australia’s largest listed companies with a market capitalisation in excess of $20 billion.

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Motley Fool contributor Ken Hall 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 Bruce Jackson.

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