NEW YORK (Reuters) - Are base metals as good as gold? The world's largest gold companies might be asking themselves that question as growth becomes harder to achieve. And diversifying into other metals appeals to many bankers and analysts who say the so-called gold majors would improve their profiles if they did. But the move could be a risky for gold companies such as Barrick Gold Corp (ABX.TO) or Newmont Mining Corp (NEM.N), whose shares get a premium for being pure gold plays. Base metals and other precious metals such as silver have traditionally been priced at a discount. Growth in gold is becoming more difficult as the companies struggle to replace the large volumes of the metal they have mined economically. "If your base business is so challenging, why wouldn't you look at something that has a better model?" asked one banker who follows the industry and spoke on the condition of anonymity. It could also be a good time for gold companies to consider acquisitions in other metals, as the price of gold has rebounded during the recession, while prices for base metals have dropped sharply, making relative values attractive. Targets could include companies with copper and gold resources such as First Quantum Mining Ltd (FM.TO), or even Freeport McMoRan Copper & Gold Inc (FCX.N); or other mining companies such as Teck Comico Ltd (TCKb.TO) and Hecla Mining Co (HL.N). But investors have long looked to gold companies for their relatively high multiples -- the average gold company stock is currently valued at about 30 times 2009 earnings -- and would be reluctant to give those up. "The multiple that you get from being a pure gold company is about as premium a multiple as you can derive in the industry. The more diversification, the more your multiple is likely to contract," said Ron Coll, a mining analyst with Jennings Capital Inc. Indeed, Brian Hicks, who helps invest more than $2 billion at U.S. Global Investors in San Antonio, said if a gold company over-diversified, it could change his mind on whether to invest in it. "Larger companies would fare better if they focused on returns rather than growth," Hicks said. "If (a deal) was dilutive, we might have to look at repositioning." STEALTH DIVERSIFICATION Still, the premiums for the largest gold companies are not that different from their largest competitors in diversified mining. Newmont and Barrick are currently trading just over 20 times projected earnings, while Rio Tinto (RIO.AX)(RIO.L) and BHP (BHP.AX)(BLT.L) hover around 15 times. And Yamana Gold Inc (YRI.TO), which has a sizable copper business, is trading at a multiple of more than 18 times earning.

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