Newcrest Mining lifts dividend, full-year profit as gold price soars
Newcrest will pay a higher full-year dividend after hiking profit 15pc, even after spending $US1.3bn on growth options.
Australia’s biggest gold miner is considering a listing on the US exchange, amid rising investor interest in gold stocks and its expanding presence in the Americas, according to Newcrest Mining managing director Sandeep Biswas.
Mr Biswas told reporters on Friday the company would need a solid trigger to act on plans to list on the New York stock exchange, or return to the Toronto bourse, but said the idea was under “active consideration, all the time”.
Newcrest left the Toronto Stock exchange as the gold price crashed in 2013 after just 18 months of trading on the Canadian market, after the gold major booked massive losses, saying it did not believe the listing would deliver any significant future value.
But with top-tier gold companies in short supply on North American markets after last year’s merger of Newmont with GoldCorp and Barrick with Randgold, Mr Biswas said a listing on either the New York exchange or a return to Toronto could again be on the cards.
“We’ve always got a file on whether we do it or not. You’ve got to have a reason to do it and this is a trigger as to whether we do it or not. We’ve stepped into the Americas more than we ever have. We’ve never managed an operation in the Americas – we’re now the manager of Red Chris. We’re in Ecuador with Lundin Gold and with the investment in SolGold,” he told reporters.
“Would we list sometime? It’s under active consideration all the time. And if there’s the right trigger to do it then we’ll do it.”
Newcrest raised $US1.15bn ($1.6bn) on the US debt market in May, and its $1bn capital raising the same month was well supported by international funds.
Mr Biswas said gold majors were back in demand as investors “rediscovered” gold amid the global coronavirus crisis, saying he expected the gold price to remain volatile but it still had plenty of room to rise.
“The fundamentals are good for gold going forward in terms of the financial policies of various governments and the rediscovery among some investors about the importance of gold,” he said.
“You’ve got generations of investors that may not understand gold’s history, but they are learning about it very quickly. It’s a fantastic investment in terms of hedging, particularly in bad times. It’s good to have gold in your portfolio.
“If there’s a major discontinuity in the world, or something else happens, it could shoot up.”
On Friday Newcrest announced an improved full-year dividend on the back of the soaring gold price after booking a $US647m net profit, even after spending $US1.3bn on growth options for future years.
Australia’s biggest gold miner will pay a US17.5c a share final dividend on the back of the result, up from US14.5c a year ago, after booking earnings before interest, tax, depreciation and amortisation of $US1.8bn, and before-tax earnings of $US1.2bn.
Its results were impacted by its $US769m acquisition of the Red Chris mine in Canada, and the $US460m acquisition of financing facilities of Lundin Mining’s Fruta del Norte mine, along with the $US79m it spent increasing its stake in Lundin to a 32 per cent shareholding.
Newcrest said it booked free cash flow from operations, before its M&A activity, of $US670m, down 24 per cent on that back of increased spending on exploration and capital works.
After producing just shy of 2.2 million ounces of gold last financial year, at all-in-sustaining costs of $US862 per ounce, Newcrest says it expects output of 1.95 to 2.15 million ounces in the current year.
Mr Biswas said the year was one of investment for Newcrest’s long-term future.
“We invested $US1.3bn to acquire Red Chris and increase our exposure to Fruta del Norte and a further ~$400m to progress our organic growth options and on exploration. We further strengthened our balance sheet to ensure we are well positioned to deliver our near-term growth options of Havieron, Red Chris, and Wafi-Golpu,” he said.
“Newcrest delivered a solid performance for the financial year, producing 2.2 million ounces of gold at an all-in sustaining cost of $US862 per ounce. Our free cash flow generation (excluding major M&A activities) remained strong at $US670m and we report statutory and underlying profits of $US647m and $US750m respectively.”
Newcrest shares closed down 31c, or 0.9 per cent, to $34.16 on Friday.