Cadia Quake Shakes Newcrest Profit

By Glenn Dyer | More Articles by Glenn Dyer

Gold and copper miner, Newcrest Mining has held its interim dividend despite reporting a weaker than expected half year profit.

Revenue slid and there was also problems at the company’s problematic Lihir gold mine in PNG – a source of much woes for Newcrest in the past decade.

It announced an interim dividend of 7.5 cents per share, the same as last year.

But much of the blame for lower revenue and earnings can be sheeted home to the effects of a ground quake at its huge Cadia mine on Good Friday (April 14) last year.

That damaged the underground mining areas at Cadia, cutting output for months and earnings (as gold prices rebounded)

Newcrest reported earnings before interest, tax, depreciation and amortisation of $US624 million for the six months to the end of December, down 20% from the same period a year earlier and well short of a median forecast of $US653 million from analysts.

Revenues fell 5% for the period to $US1.72 billion and statutory profit sank 48% to US$98 million.

Underlying profit slid to $US116 million, down from $US273 million the year before and below a market forecast of $US143 million.

Newcrest said the half year result was “significantly impacted” by the large seismic event in April that saw the temporary shutdown of mining at Cadia, one of Australia’s largest mining operations.

A negative impact from a higher Australian dollar was partially offset by a higher gold price.

The company left guidance for the rest of the financial year unchanged.

Newcrest also blamed cited unplanned maintenance at the Lihir mine in Papua New Guinea as impacting profits.

Gold production in the quarter that ended in December inched down from a year ago but improved from the previous three months, as the company reported in January.

As a result the company maintained its production estimate of 2.4 million to 2.7 million ounces of gold and 80,000 to 90,000 tonnes of copper in the year to June, 2018.

Newcrest said the problems at Cadia and loss of output saw its cost of production on an “all-in sustaining basis” rise by about 12%.

Newcrest expects gold production to improve in the current half-year as Cadia ramps up.

Newcrest shares of the miner closed up 3.4% at $23.05 on Thursday. The result was released after trading closed for the day.

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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