Newmont Mining (NEM), the world’s second largest producer of gold, kicks off the quarterly earnings announcements for gold mining companies before the market opens on Thursday, July 23. Based on our analysis, we are expecting Newmont to report better than expected results.

Gold mining stocks are leveraged plays on the price of gold. Gold accounts for 83 percent and copper is 14 percent of Newmont’s revenue. Spot gold prices averaged $908 per ounce in the first quarter and $922 in the second quarter of 2009. Newmont’s realized gold price was $906 per ounce in the first quarter on sales of 1.27 million ounces of gold. The company expects rising gold production for the rest of the year as they bring the Boddington project on line.

There are several ways to value large gold producers. One of the conventional methods is to use “price to earnings” ratio calculations, commonly referred to as “PE”. This method of analysis is the one of the most basic valuation techniques. Lower PE ratios suggest a company is undervalued relative to competitors. PE ratios are best used as a “first cut” in due diligence to see how the market is valuing gold mining companies relative to others in the industry.

As the table below (sorted by 2010 PE ratios) shows, current PE levels in 2010 for 14 major and mid tier gold producers elegantly break down into two groups—those above a 20 PE and those below.

The latest quarterly hedge book analysis compiled by GFMS Ltd. for Société Générale was released on June 13 and shows net dehedging in the first quarter of 2009 was 3 tons.

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I've been following emerging junior gold producers for 5 years and cannot remember such a prolific level of secondaries and private placements as we have seen over the past four months.

I did a quick Google search and came up with the following list of gold producers and explorers that have recently raised money through equity rather than debt placements. Several of these companies are followed by the Gold Stock Strategist (in bold).