Gold miner Newmont's stock slips after downgrade

NEW YORK (Reuters) - Shares in Newmont Mining Corp. (NEM.N), the world's second-largest gold producer, slipped on Tuesday, after an investment bank lowered its investment rating, citing "lackluster performance" and lack of production growth.

Since 2002, "the company has found it difficult to maintain its production levels and ... has failed to outperform its peer group," said analyst Victor Flores, of HSBC Global Research.

"Even though the company possesses those attributes typically prized by investors -- large capitalization, liquidity, and largely unhedged exposure to the gold price -- Newmont Mining has consistently underperformed the HSBC Global Gold Index in three of the past five years," Flores wrote in a research note.

He noted the company's "lackluster performance" was initially ascribed to competition from the new exchange-traded gold trusts (ETFs), but lately "the market has focused more on the company's inability to grow its production, and on its rising cost profile."

Flores estimated Denver-based Newmont will find it difficult to maintain production at 5.0 million to 5.5 million ounces of gold per year over the medium- to long term without a significant new discovery or additional acquisitions.

"Barring a major, new discovery, this would require expenditures on the order of $2 billion to $3 billion for acquisition, and a like amount for development," Flores wrote.

"It is difficult to see what catalysts might drive the shares in the near- to medium term, while over the long term, we believe that the company will need to build up its portfolio of development stage projects."

HSBC reduced its share target price to $47 from $62 and downgraded Newmont's rating to "neutral" from "overweight."

In afternoon trading on the New York Stock Exchange, Newmont shares were down $1.07, or 2.45 percent, at $42.66.