Newcrest has settled its insurance claim in relation to the seismic event on April 14, 2017 at Cadia. The settlement is reported to be US$155m.
Credit Suisse calculates that US$130m of the insurance payment relates to business interruption and may be taxable at the company’s 30% tax rate, while US$25m compensates the damage repair costs.
The broker adjusts estimates to capture the contribution. The surprise settlement raises the possibility of future compensation for the more recent business disruption from the tailings wall failure.
Neutral maintained. Target is raised to $20.30 from $20.10.
Target price is $20.30.Current Price is $21.19. Difference: ($0.89) – (brackets indicate current price is over target). If NCM meets the Credit Suisse target it will return approximately -4% (excluding dividends, fees and charges – negative figures indicate an expected loss).