Newcrest reports record loss

Newcrest Mining on Monday reported its first annual loss in 11 years as well as the biggest annual loss in its history, after an $AU6.23 billion write-down.

“The full year review of Newcrest’s asset carrying values in the context of the continuing lower gold price environment, combined with a compression of valuations in the gold industry and other factors, has resulted in the impairment of the carrying value of some assets, contributed to the write-down in the book value of some assets and the recognition of future costs, associated with business restructuring,” the company said in financials issued Monday.

Among the impairments taken were $AU3.5 million at Lihir, $AU1.17 million at Telfer, $AU406 million at Hidden Valley, and $AU486 million in West Africa. Write-downs of non-current assets include Lihir $AU136 million, Telfer $AU88 million, West Africa $AU20 million, and corporate $AU105 million.

Gold production dropped 176,000 ounces below the prior year due to grade and recovery impacts.

Production for the 2013 financial year was 2,109,784 ounces, an eight percent drop below the lower end of the original production guidance of 2.3 million ounces. Of Newcrest’s four major producing assets, Cadia Valley and Telfer achieved the original guidance while production was lower at Lihir -primarily due to plant reliability issues and major project delivery occurring one month later than planned – and at Gosowong due to restricted access to high-grade stopes. Production at Hidden Valley and Bonikro was also lower than planned.

Newcrest’s copper production 80,000 tonnes for 2013 increased 6 per cent over 2012’s copper production of 76,000 tonnes, and was in line with 2013 guidance.

The company also reported silver production of 1,931,816 troy ounces for fiscal year 2013, a 3 per cent drop from 1,997,247 ounces from fiscal year 2012.

During its conference call with analysts Monday, Newcrest announced Fiscal Year 2014 production guidance of 2 million to 2.3 million ounces of gold, copper production ranging from 75,000 to 85,000 metric tons, at all-in sustaining costs of ~A$1,200 (US$1,104) per ounce.

However, the first quarter gold production for the 2014 financial year is expected to be lower than the June 2013 quarter, with production expected to progressively increase over the course of the year.

Financials

Newcrest reported a net loss of $AU5.778 billion ($US5.32 billion) for the 2013 financial year results, a 617.3 per cent plunge from a net profit of $AU1.117 billion ($US1.028 billion) for financial year 2012.

The company announced that Newcrest has taken and will continue to progress a range of actions to maximise free cashflow over the next three years.

These actions include: a significant reduction in exploration activities; a continuous cost cut program across all operations; increasing stockpile utilization at Lihir and reducing open pit material movements generally; and remove higher cost ounces from the production profile.

 

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