The Newcrest (ASX:NCM) share price is having a year to forget. What’s next?

What’s on the agenda for Newcrest?

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The Newcrest Mining Ltd (ASX: NCM) share price has been on a rollercoaster ride throughout 2021. The company holds the title of owning and operating some of Australia’s largest gold and copper mines. While the company appears solid on paper, its shares have not been immune to weakened market conditions.

In fact, Newcrest shares fell 5% in the past week alone, nearing their 52-week low of $21.85. This means that the Newcrest share price is now down 18% year to date, after shedding last Friday with a 1.04% loss.

At last trade the price of Newcrest shares stood at $22.77.

Why are Newcrest shares falling?

A common theme with gold mining companies, the Newcrest share price has been dumped amid the deterioration of gold prices.

Traditionally, investors flock to the yellow metal as a safe-haven asset when there is uncertainty in the market. However, with the world moving past COVID-19, amid renewed investor confidence across the US dollar and inflation numbers, gold has lost its value.

In the past few months, the price of gold soared above the US$1,800 barrier, but has since fallen by the wayside. Currently, one ounce of gold is fetching US$1,783.35.

Compare this to the start of the year when the precious metal had been swapping hands for US$1,898.66, today’s price is down by 6.07%.

What’s ahead?

Last month, Newcrest agreed to purchase the remaining stake in Canadian metals and mining company Pretium Resources.

Valued at $2.8 billion, Newcrest is hoping to acquire all of the outstanding common shares it does not already own. The Australian gold miner holds a 4.8% stake in its Canadian counterpart.

The Pretium board of directors has unanimously recommended shareholders vote in favour of the transaction. However, for the deal to go through, it must receive approval from 66.66% of the total votes cast by shareholders.

In addition, the takeover will need to be authorised by the Supreme Court of British Columbia, along with competition clearances and Investment Canada Act approval.

Should all go according to plan, the acquisition is expected to close in the first quarter of CY2022.

Pretium is the owner of the Brucejack gold mine, which is one of the highest-grade operating gold mines in the world. It has an estimated gold production of 311koz (thousand ounces) per annum at an all-in sustaining cost of $743 per ounce. The projected mine life is around 13 years.

Furthermore, Brucejack is conveniently located about 140 kilometres from Newcrest’s majority-owned and operated Red Chris mine. This allows the company to strengthen its position in the region by having close access to critical infrastructure.

Newcrest share price summary

Since August 2020, the Newcrest share price has been on a gradual decline, posting a loss of almost 40%. Year to date, however, its shares are down around 18% for investors.

As Australia’s largest gold miner, Newcrest commands a market capitalisation of $18.62 billion, with approximately 817.96 million shares outstanding.

Motley Fool contributor Aaron Teboneras 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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