Newmont, Kinross Gold a buy - Deutsche Bank

Deutsche Bank favours those gold firms with higher free cash flow

(Reuters)  - 

Deutsche Bank started coverage of four North American gold companies, favoring those that have higher free cash flow, and said U.S.-based Newmont Mining (NEM.N) was its top pick in the sector.

The brokerage sees gold averaging $1,150 an ounce in 2010 and $1,250 per ounce by 2011, and said institutional investment in the sector remains strong.

Analyst Jorge Beristain, who started Newmont and Canada-based Kinross Gold (K.TO) with "buy" ratings, said "growth versus value" was the key trade-off for North American gold equities, which could offer leverage and optionality as compared to gold.

The analyst also started Canada's Barrick Gold (ABX.TO) (ABX.N) and Goldcorp Inc (G.TO) (GG.N) with a "hold" rating.

"On both valuation and free cash flow yield Newmont appears the cheaper alternative vis-a-vis Barrick, while Kinross trades at a substantial discount to Goldcorp," Beristain added.

(Reporting by Gowri Jayakumar in Bangalore; Editing by Anil D'Silva)

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