Newcrest to lift gold output after profit slips The Australian
1:21PM August 14, 2017 Newcrest Mining, the nation’s biggest gold miner, will put a floor under future dividend payments under a new policy unveiled alongside its worse-than-expected full-year result.
The Melbourne-based miner’s underlying net profit of $US394 million fell short of consensus forecasts of $US452m, but it beat expectations with a final dividend of 7.5c per share.
The payment took total dividends for the 2017 financial year to 15c per share, which will also be the minimum annual dividend under Newcrest’s new dividend policy.
The policy will see Newcrest commit to pay out at least 10 to 30 per cent of free cash flow each financial year.
The company (NCM) is still dealing with the fallout of a seismic event at its mainstay Cadia mine in NSW back in April, but said the mine would be back and bigger than ever by the end of this financial year. Newcrest has committed to spend $US10m on a debottlenecking exercise at Cadia that will lift its processing capacity from around 25 million tonnes a year to 30m tonnes. It also said it was considering the sale of its Bonikro gold mine in West Africa.
Newcrest managing director Sandeep Biswas said that despite the seismic event at Cadia, the group had met its production guidance for a fourth year in a row.
“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,” Mr Biswas said.
Gearing across the group has fallen from 22.8 per cent a year ago to 16.6 per cent at present.
The company issued production guidance for the coming year of 2.4-2.7 million ounces at an all in sustaining cost of $US780 to $US930 per ounce.
Macquarie analyst Hayden Bairstow said the headline miss in underlying profit was countered by lower-than-forecast debt and stronger free cash flow.
“Newcrest’s FY17 earnings result was mixed with a strong cash flow result offsetting weaker underlying profit, enabling a higher final dividend to be declared,” Mr Bairstow said.
“Production and cost guidance for FY18 is better than we had expected. NCM has showed strong confidence in the recovery at Cadia, setting a 30mtpa throughput target by the end of FY18.”
Shares in Newcrest were down 0.7 per cent to $21.69 in early afternoon trade, mirroring falls elsewhere across the gold sector. http://www.theaustralian.com.au/bus...s/news-story/31a0a679d1379ba62af1d4d0c69c5c95
NCM Price at posting:
$21.65 Sentiment: Buy Disclosure: Held
