Welcome news for shareholders in Newcrest Mining (NCM) – they will receive the first interim dividend for four years thanks to a combination of higher prices and higher gold and copper production in the six months to December 31 which saw the company more than double its first-half profit.
Australia’s largest gold miner reported a net profit for the six months to December 31 of $US187 million ($A244 million), up sharply from the $US81 million in the December half of 2015-16.
And eliminating the impact of one-off items, underlying profit more than quadrupled to $US273 million, from $US63 million.
“We remain on track to achieve our annual guidance for the fourth year in a row,” chief executive Sandeep Biswas said in a statement yesterday. ”Our near – medium – and longer-term growth options remain on track."
The rebound helped the company declare an unfranked interim dividend of 7.5 US cents a share, matching what it paid for the whole of 2015-16.
Newcrest resumed dividend payments in August 2016 after a three-and-a-half-year break during which it suffered from production problems, especially at its Lihir mine and huge write offs and a serious corporate governance breach surrounding those write offs and who knew what and when.
Gold prices weakened as well and copper prices also spent time in the doldrums, along with other commodities.
Management and board changes were made after the run in with ASIC over the write-downs and governance problems and Newcrest now seems to back on an even keel.
Mr Biswas said there was no change in the company’s dividend policy and the board would review payouts every six months.
As previously reported gold production for the half-year rose 2% to 1.23 million ounces, while copper output leapt 26% to 48,899 tonnes.
In 2017 has stared promisingly for Newcrest. Gold prices have firmed in the past week after a slide in the early weeks of 2017, and copper prices have followed suit with the strike at BHP’s Escondida mine in chile and troubles at the Grasberg mine in Indonesia.
The company also benefited from higher gold prices in the half year, with average realised price up 15% at $US1,277 per ounce. Copper prices remained flat at $US2.30 a pound (Now closer to $US2.80 a pound).
Newcrest has previously forecast gold production in the range of 2.4-2.65 million ounces for the year to June 30, and copper production in range of 80,000 and 90,000 tonnes, largely unchanged from the previous year.
The shares rose 0.8% at $22.72.