I've just returned from the World Money Show, where some 10,000+ investors gathered to learn about global investing. I had a chance to meet with many of the advisors who were featured at the show, and over the next week I will be highlighting some of their favorite investment ideas. To view all of the stocks featured in this special global report, click here.
The international diversity of this top-tier conference is easily seen in this article, in which Adrian Day, a London-based advisor and editor of The Global Analyst looks at the prospects for a South African company with operations from China to Peru." Here's his review.
"Gold Fields (NYSE:GFI) is easily my favorite South African stock, and it's not difficult to see why: It has the best mines with the lowest cost and longest life; solid management; a strong balance sheet (with an ongoing emphasis on cost control); and a vision for international growth.
"Recently, however, its shares have lagged; this was because of a large equity issue occasioned by a substantial South African acquisition. But now that equity issue is concluded, we can buy again.
"Gold Fields has a focus on a few large, long-life assets, both in South Africa and internationally. Its recent $3 billion acquisition of the very deep and long-life South Deep mine has resulted in a jump in the share of its production from South Africa, as well as a significant increase in its share count and its debt.
"The acquisition took debt up to $1.9 billion, which while acceptable for a company that size, was beyond what management was comfortable with. Thus, an equity issue was used to raised over $1.2 billion, which the company intends to use to pay down debt.
"Due to that impending equity issue, the stock was an underperformer the last several months. But now the equity issue is behind us. Debt will shortly be back at traditional Gold Fields low levels. And the company has said it fully intends to continue its international diversification.
"The large Cerro Corona gold-copper project in Peru is scheduled to begin production a year from now, while two other international projects are progressing: the strategic relationship with Sino Gold in China has been cemented, and a new resource estimate on the Essakane joint-venture is scheduled for release this quarter.
"It is also worth noting that, though there is an initial increase in South African output following the acquisition of South Deep, over time, it mostly simply replaces declining production from other South African mines.
"In all, though, Gold Fields is forecasting that its production will increase to over 5 million ounces a year within 18 months, and that implies new mines coming on stream (including "high value, good-return potential projects in South America").
"The acquisition also establishes Gold Fields as one of the few major mining companies with a clear production life for years into the future. Indeed, South Deep alone, with 29 million ounces of reserves and 67 million of resources, increases Gold Fields reserves by 50%.
"There are certainly very few large mines available even approaching the size of South Deep, and Gold Fields was ensuring its future by the acquisition. For the long-term investor in gold, this is a good time to be accumulating shares in this top-quality gold company."
Steven Halpern's TheStockAdvisors.com provides a free, daily overview of the latest stock ideas from the nation's leading financial newsletters.
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