Newcrest Mining Limited - Financial Results for the 12 months ending 30 June 2013

PR Newswire

MELBOURNE, Australia, Aug. 12, 2013 /CNW/ - Newcrest Mining Limited ("Newcrest") (NCM.AX) (NM.TO) today released its Financial Results for the twelve months ending 30 June 2013.

Key Points

  • Asset impairment and asset write-down A$6,229 million resulting in Statutory loss of A$5,778 million
  • Underlying profit1 A$451 million
  • Operating cash flow A$707 million
  • Major project delivery at Cadia East and Lihir; both operating in line with the Company's expectations
  • A$958 million in cash and undrawn, committed bank facilities, and gearing of 29.1%, at 30 June 2013
  • Company expected to be free cash flow positive in FY14 at a gold price of A$1,450 per ounce with all capital expenditure, exploration programs and corporate overheads funded from operating cash flow
  • Each asset is being managed to be free cash flow neutral or positive in FY14 at gold price of A$1,450/oz

Overview

The 2013 financial year was a significant one for Newcrest with the completion of major projects at Cadia Valley and Lihir. The projects establish a platform for cost effective production growth at the Company's two largest and most important assets.

After a period of price weakness, the gold price suffered a large fall in mid April 2013 which has been sustained and accompanied with increased volatility. The year-end 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, and contributed to the write-down in the book value of some assets and the recognition of costs associated with business restructuring. As a result, Newcrest has reported a Statutory loss of A$5,778 million for the 12 months ended 30 June 2013, after significant items totalling A$6,229 million after tax relating to asset impairments of A$5,556 million after tax, asset write-downs of A$349 million after tax, a write-down of its investment in Evolution Mining Limited of A$273 million after tax and a charge for restructure costs of A$51 million after tax. The Statutory profit for the prior year was A$1,117 million.

Underlying profit for the 12 months ended 30 June 2013 was A$451 million. This was lower than the prior year of A$1,084 million, reflecting the expected transitions of an operating nature occurring at certain assets in the 2013 financial year, lower than planned production at Lihir and Gosowong, and the decline in commodity prices.

1      Underlying profit is profit/ (loss) after tax before significant items attributable to the owners of the parent.  Underlying Profit is non-IFRS financial information and has not been subject to audit by the Company's external auditor.  Refer to page 12 for the reconciliation to Statutory Profit/(Loss).

Operating cash flow was A$707 million for the year ended 30 June 2013 and reflects a substantially different operating environment to the prior year which generated operating cash flow of A$1,726 million.  The reduction in the current period was primarily attributable to lower gold sales volumes and lower gold and copper prices. Increased investment in the year in waste stripping to expose ore for future gold production and a 13% increase in ore processed, coupled with elevated levels of plant maintenance activity, also contributed to reduced cash flow.

On 7 June 2013, Newcrest reconfirmed its focus on maximising free cash flow in a lower gold price environment by removing higher cost ounces from the production profile and accelerating reductions in operating costs, corporate costs and capital expenditure.

Capital expenditure for the year ended 30 June 2013 was A$1,946 million, 24% lower than the prior period of A$2,556 million. The reduction reflects the completion of the Company's two major projects during 2013, being achievement of commercial production at Cadia East and the processing plant expansion at Lihir.

At 30 June 2013, Newcrest's gearing level was 29.1% and the Company had A$958 million in cash and undrawn, committed bank facilities (at the applicable exchange rates). Newcrest remains committed to maintaining a conservative balance sheet and is managing its business activity in the lower gold price environment with the objective of being free cash flow neutral or positive in the 2014 financial year.

The Newcrest Board has determined there will be no final dividend in relation to the 2013 financial year due to the reduced level of profitability in the 2013 financial year, the increase in the level of gearing at 30 June 2013, and the planned application of operating cash flow to progression of the Cadia East Panel Cave 2 in the coming 2014 financial year.

Financial Highlights 2
12 months ended
30 June 2013
A$M
30 June 2012
A$M
Change
%
Statutory profit / (loss) (5,778) 1,117  
Underlying profit 451 1,084 (58%)
Operating cash flow 707 1,726 (59%)
EBITDA 1,367 2,151 (36%)
EBIT 756 1,590 (52%)
2   EBITDA, EBIT and Underlying profit are non-IFRS financial information and have not been subject to audit by the Company's external auditor.  Refer to page 12 for the reconciliation of EBITDA, EBIT and Underlying profit to the Statutory profit/(loss)

Copies of the:
1) Market Release - Financial Results,
2) Preliminary final report (ASX Appendix 4E); and
3) Full Year Results 2012-2013 presentation can be found on Newcrest's website: www.newcrest.com.au; and on SEDAR: www.sedar.com.

Disclaimer

Forward Looking Statements

These materials include forward looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as "may", "will", "expect", "intend", "plan", "estimate", "anticipate", "continue", and "guidance", or other similar words and may include, without limitation, statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs.

Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the company's actual results, performance and achievements to differ materially from any future results, performance or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licenses and permits and diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which the company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation.

Forward looking statements are based on the company and its management's good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the company's business and operations in the future.  The company does not give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the company's business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the company or management or beyond the company's control.

Although the company attempts and has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in forward looking statements, there may be other factors that could cause actual results, performance, achievements or events not to be as anticipated, estimated or intended, and many events are beyond the reasonable control of the company.  Accordingly, readers are cautioned not to place undue reliance on forward looking statements.  Forward looking statements in these materials speak only at the date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information the company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.

Ore Reserves and Mineral Resources Reporting Requirements

As an Australian company with securities listed on the Australian Securities Exchange ("ASX"), Newcrest is subject to Australian disclosure requirements and standards, including the requirements of the Corporations Act and the ASX. Investors should note that it is a requirement of the ASX listing rules that the reporting of ore reserves and mineral resources in Australia comply with the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the "JORC Code") and that Newcrest's ore reserve and mineral resource estimates comply with the JORC Code. As a company listed on the Toronto Stock Exchange ("TSX"), Newcrest is subject to certain Canadian disclosure requirements and standards, including the requirements of National Instrument 43-101 - Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators ("NI 43-101").  In accordance with NI 43-101, Newcrest reports its ore reserves and mineral resources estimates in compliance with the JORC Code, along with reconciliation to the material differences between the JORC Code and the applicable definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum (CIIM Definition Standards). In relation to the December 2012 Resources and Reserves Statement, the reconciliation is set out in Newcrest's Canadian News Release dated 8 February 2013, and is available at www.sedar.com and at Newcrest's website www.newcrest.com.au.  Except as otherwise noted in that document, there are no material differences between the definitions of Measured, Indicated and Inferred Mineral Resources, and Proven and Probable Reserves, under the CIM Definition Standards and the equivalent or corresponding definitions in the JORC Code.

Competent Person's Statement

The information in this report that relates to Exploration Results and other scientific and technical information is based on information compiled by C. Moorhead, EGM Minerals for Newcrest who is a Fellow of The Australasian Institute of Mining and Metallurgy, and a full-time employee of Newcrest. Mr Moorhead has sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the JORC Code and is a Qualified Person within the meaning of NI 43-101. Mr Moorhead consents to and has approved the inclusion in this report of the matters based on this information in the form and context in which it appears including sampling, analytical and test data underlying the results.  For details of exploration reports refer to the Newcrest website at www.newcrest.com.au.

Non-IFRS Financial Information

This release uses Non-IFRS financial information including Underlying profit, EBITDA and EBIT.  Underlying profit is presented to assist in the assessment of the relative performance of the Group.  EBITDA and EBIT are used to measure segment performance and have been extracted from the Segment Information disclosed in the ASX Appendix 4E.  Non-IFRS information has not been subject to audit by Newcrest's external auditor.

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