Newcrest Mining has warned of a one-off non-cash earnings impact of $US260 million to $US270 million in its 2017-18 financial results, due later this month, and confirmed that it cut debt by $US459 million in the year to June.
The major write down comes from a reduction in the carrying values of its huge Telfer mine in Western Australia and a project in Fiji after tax.
The Telfer gold and copper mines are in the Great Sandy Desert in the East Pilbara region of Western Australia, while the other asset involved is the Namosi joint venture in Fiji.
Newcrest said in a statement to the ASX yesterday that its latest life-of-mine plan for Telfer indicated lower levels of ore mined and higher levels of waste from West Dome, lower gold recoveries, higher estimated closure costs and higher operating costs than previously forecast.
It will account for about $US190 million of the impairment.
At Namosi, it had reassessed the appropriateness of continuing to carry forward previous study costs. The cost there will be $US70 million
“The outcomes of these [carrying value] reviews may potentially impact the reported mineral resources and ore reserves for these assets," Newcrest said.
Newcrest is due to release its full-year results on August 22.
Newcrest has previously indicated other significant items totalling a net $US6 million gain after tax in the year to June 30 – at the Gosowong mine a $US8 million write-down of non-current tax asset and Bonikro $US15 million asset write-down following its reclassification as ‘held for sale’ (both initially recognised in the Financial Report for the half year ended 31 December 2017).
As well there’s the positive of a release to profit of $US29 million foreign exchange gain on the completion of the Bonikro sale in March 2018 (and noted in the Financial Report for the half year ended 31 December 2017).
Newcrest also detailed its free cash flow for the year ended 30 June 2018 which it said will be approximately $US600 million, inclusive of net $48m cash proceeds from the sale of Bonikro and after expenditure on growth focussed investments during the financial year.
That spending included $US251 million for a 27.1% interest in Lundin Gold Inc, $US15 million for a 19.9% interest in Azucar Minerals Ltd (formerly Almadex Minerals Ltd); and a further investment of $US9 million in SolGold Plc.
Newcrest said its free cash flow (after those investments) was applied to the $US459 million reduction in net debt; $US105 million paid in dividends to Newcrest shareholders; US$24 million paid in dividends to non-controlling interests; and $US11 million purchasing Newcrest shares to meet future entitlements of share based incentive schemes.
Newcrest shares rose 2.4% to $21.50 yesterday, helped by a small bounce in world gold prices.