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Newcrest Mining : First-Half Profit More Than Doubles

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02/12/2017 | 11:41pm CET
   By Rhiannon Hoyle 

SYDNEY--Newcrest Mining Ltd.'s (>> Newcrest Mining Limited) first-half profit more-than doubled as Australia's largest listed gold miner deepened productivity improvements, increased metal production and benefited from higher market prices.

Newcrest on Monday reported a net profit of US$187 million for the six months through December, up from US$81 million in the same period a year earlier.

The company said it will pay an interim dividend of 7.5 cents a share. A year ago, it hadn't offered investors a midyear payout. The miner resumed dividend payments in August for the first time in three years, with Chairman Peter Hay citing a strengthening financial position and outlook for the company.

Newcrest, one of the world's top gold producers, has been working to improve the reliability of its mining operations, which have in recent years reported a patchy performance. A one-time darling of Australia's share market, Newcrest faced setbacks of almost every sort: from problems with processing machinery to large writedowns and an investigation into the miner's disclosure practices.

"Over the past two years, Newcrest has made solid strides to turn sentiment around," UBS analyst James Brennan-Chong said in a Jan. 30 note. "Operational consistency has improved and the balance sheet has strengthened."

Shares in the gold miner rose almost 60% in 2016 and are up another 11% already this year.

On Monday, the company said it continues to reduce net debt, which totaled US$1.9 billion at the end of December, down from US$2.65 billion the same time a year earlier.

Last month Newcrest reported a 2% on-year rise in half-year gold production, to 1.23 million troy ounces, and a 26% jump in copper output, to 48,899 metric tons.

It said it was paid an average US$1,277 an ounce for its gold, up from US$1,113 an ounce in the same period a year earlier. The copper price it received edged up to US$2.30 a pound from US$2.29 previously.

Throughput at the company's Lihir mill in Papua New Guinea--a key mine for Newcrest acquired as part of its A$9.5 billion takeover of rival Lihir Gold Ltd. in 2010--hit a targeted annualized rate of 13 million tons for the first time during the period.

The company recorded a loss of US$10 million, however, on the sale of another Papua New Guinea gold operation during the period. Newcrest sold its 50% stake in the Hidden Valley gold mine to partner Harmony Gold Mining Co. Ltd. (HMY.JO)--a deal that included Newcrest providing a one-off contribution of US$22.5 million toward future liabilities.

It also recorded a net investment hedge loss of US$62 million and a US$14-million write-down on exploration at its Bonikro operation in Ivory Coast.

Write to Rhiannon Hoyle at [email protected]

Stocks mentioned in the article : Newcrest Mining Limited
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