Cadia Shutdown Shakes Newcrest Profit

By Glenn Dyer | More Articles by Glenn Dyer

The Good Friday quake at its Cadia mine in NSW this year has taken some of the gloss off what was a solid result from Australia’s biggest gold miner Newcrest Mining for the year to June 30.

Full year underlying profit of $394 million, was up 22% jump on the previous year, which was well short of market forecasts of $434 million.

Despite that the company yesterday revealed a new, minimum dividend figure for the company from now on.

The company will pay a final dividend of 7.5 US cents a share (70% franked) – for a full year dividend of 15 US cents a share – which is the minimum for the new policy which calls for the dividend payout to be at least 10-30% of that financial year’s free cash flow.

Newcrest said that under the new policy, the dividend would be "no less than US 15 cents per share on a full year basis".

The gold producer recorded free cash flow of $US739 million in 2916-17, and reduced net debt by 29% to $US1.5 billion (as other miners such as global giants like Rio Tinto and Fortescue metals have been doing). Statutory profit for the year to June was $US308 million ($A390 million), down 7% thanks to the impact of that small earthquake at its Cadia mine in NSW which slashed output from Newcrest’s best mine.

Sales revenue for the year to June 30 rose 6% to $US3.48 billion and according to Newcrest chief executive Sandeep Biswas.

“All operations contributed to the free cash flow generation of the Group, which has been applied to both further reducing net debt and strengthening the balance sheet as well as increasing dividends to shareholders. free cash flow for the year was $US739 million.

Newcrest last month said its full-year gold production dropped 2.4% to 2.38 million ounces, after Cadia – its biggest and lowest-cost mine – was hit by a magnitude 4.3 earthquake in central west NSW in April, prompting suspension of operations.

Production has resumed in Cadia’s panel cave 2, but repair work continues in panel cave 1, with production there expected to resume in the next few weeks.

The miner has forecast gold production of between 2.4 and 2.7 million ounces and copper output between 80,000 and 90,000 tonnes for the 2018 financial year, subject to any delays at Cadia.

It said group production will likely be lower in the September quarter, compared to the June quarter as a result of a higher level of planned shutdown activity being undertaken.

“Gold production and free cash flow is expected to be higher in the second half of the financial year as Cadia East ore production ramps up and there are fewer planned shutdown events," it said.

The shares were down 1% at $21.62.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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