Newcrest returns to the black

Australia’s largest independent gold miner posted a net profit of A$546 million ($402 million) for the year to June 30, following a A$2.2 billion loss a year due to writedowns at its flagship Lihir mine in Papua New Guinea.

Meanwhile, the group’s underlying net profit (which excludes one-off costs and benefits) was $515 million, a 19% improvement year-on-year, with revenue surging 8% to roughly $4.34 billion and in-line with analyst expectations.

Newcrest said its bottom line was boosted by lower costs, greater gold and copper production and a weaker Australian dollar.

Newcrest investors have not received a dividend since April 2013.

The excess money was mostly used by Newcrest to repay loans which helped in reducing its net debt by US$819 which is mostly dominated by the US dollar.

The company had had a good year, with the only blight being two deaths at the company’s mining operations during fiscal 2015, and another fatality in July. S. dollars from the current financial year.

CEO Sandeep Biswas says Newcrest’s improved financial position provides a platform for future growth.

Newcrest, which operates mines in four countries and employs around 10,000 workers, said it was the ninth straight quarter of either meeting or exceeding its production targets.

Newcrest started reviewing options for the Telfer mine – including a partial or full sale – in February.

Newcrest lowered its costs by 12 per cent during the year, while copper production rose 12 per cent to 96,800 tonnes and gold by one per cent to 2.423 million ounces.

The miner said total capital expenditure is expected to be in the range of $700 million to $825 million over the coming year while it also expects to produce between 2.4 million and 2.6 million ounces of gold, and between 80,000 and 90,000 tonnes of copper.

Biswas said heat in the sector had driven up valuations for assets on the market and Newcrest was more focused on growth through exploration. The company made efforts to cut down its cost in all its businesses. “It really looks like they (Newcrest) have passed the worst of that”, Mr Hodge said.

Newcrest’s shares were up 4.66% to $11.46.