Newcrest Mining will cut more jobs and close its Brisbane office as the company implements a raft of cost cutting measures to improve cashflow.
The company this morning released its business plan review and 2014 budget which outlined capital expenditure for 2014 will be revised down from $1.5 billion to about $1 billion and exploration expenditure would be cut from $160 million to $85 million.
"Newcrest reconfirms its focus going forward will be on maximising free cashflow by reducing operating costs, corporate costs and capital expenditure," the company said.
Newcrest also expects to record an impairment of up to $6 billion in coming months.
Newcrest’s chief executive Greg Robinson has been under mounting pressure to respond to the sudden share price slump that saw almost 15 per cent wiped off the company value in just 48 hours, SMH reports.
In a market release this morning the miner said cost cutting will continue “in response to the change in market conditions”.
Newcrest flagged discretionary spend on projects and studies would be cut, it will move to reduce exploration activities, and is suspending the production of higher cost ounces across all operations.
The company said shutting the Brisbane office and further rationalising support functions is estimated to deliver a 20 per cent reduction in corporate costs.
A Newcrest spokesperson told Australian Mining that employees were today advised of the cost cutting measures, but that a total job loss figure was not available.
The spokesperson said it will take a few weeks to work through the changes and some roles will be relocated to the Melbourne office.
News that three of Newcrest Mining’s major gold mines may be unprofitable at recent gold prices below $US1400 has sent shares diving and sparked more job cut rumours.
A number of analysts this week have downgraded Newcrest stock, agreeing that three of Newcrest's mines are likely to be unprofitable under a softer gold price.
Tuesday morning saw Newcrest shares trading as high as $15.68, but by close on Thursday they had fallen to $13.36.
At Easter shares in Newcrest Mining slumped to their lowest levels in four and a half years following the company’s announcement that it would fail to meet its gold production promises.
It was the fourth production downgrade in less than two years, and further volatility has only exacerbated the miner’s issues with shares more than halving in value since September.
''Many in the market find this extraordinary that in the last 24 hours, [three] brokers have suddenly downgraded the stock [two] to a sell and [one) to neutral – but what amazes everyone is that there has been no new info from the company,'' Goldman Sachs broker Richard Coppleson wrote in his afternoon report on Thursday.
Earlier this year Australian Mining reported Newcrest had sacked 150 workers from its Melbourne and Brisbane offices.
Gold miners are facing increasing pressure with the gold price dropping to trade at around $1400 an ounce, and analysts are tipping it to fall lower.
This morning Barrick Gold announced a number of layoffs at its Western Australian operations and warned there will be more to come.