Newcrest battens down the hatches
Addressing shareholders at Thursday's annual general meeting, chairman Don Mercer said Newcrest's priorities were to deliver "reliable low-cost production" as well as to restore its reputation, which has been hurt by concerns over the selective briefing of analysts along with problems at its Lihir mine in PNG.
And investor sentiment towards the company has soured following the slump in the gold price, which saw earnings dive, the dividend suspended and heavy asset write-downs.
Mr Mercer said a priority was "strengthening the company's balance sheet so that it is positioned to withstand further gold price deterioration and/or take advantage of opportunities".
He also defended the purchase of Lihir, which has continued to perform poorly since its acquisition amid criticism Newcrest paid too much for the asset.
The Australian Securities and Investment Commission continues to investigate the claims of selective analyst briefings, shareholders were told. "Our reputation had clearly taken a battering," Mr Mercer conceded.
In the year to June, Newcrest booked $5.5 billion of asset impairments, of which $3.7 billion related to Lihir and $1.8 billion to Telfer.
Even so, further write-downs may be taken if the gold price remains weak.
"To the extent the gold price falls a great deal further, then all gold companies will have to review the carrying values of their assets," Mr Mercer said.
The gold price about $US1300 an ounce is keeping pressure on management to cut costs further.
"Most of our operations are profitable at these lower gold prices," chief executive Greg Robinson said. "But we continue to focus on reducing costs at all sites, particularly at Telfer, Hidden Valley and Bonikro."
Telfer remains a high-cost producer, he said, with capital spending being restricted as it focuses on lower-cost reserves to help improve operations.
The Bonikro and Hidden Valley mines were also high cost, Mr Robinson said, and the aim was to reduce costs further.
"Both are expected to do better in the quarters ahead," he said.
Frequently Asked Questions about this Article…
Newcrest Mining is preparing for further gold price declines to safeguard against potential asset write-downs and to position itself to take advantage of opportunities to acquire assets at lower prices.
Chairman Don Mercer stated that Newcrest Mining's priorities include delivering reliable low-cost production, restoring its reputation, and strengthening the company's balance sheet to withstand further gold price deterioration.
The slump in gold prices has led to a decline in Newcrest Mining's earnings, suspension of dividends, and significant asset write-downs, which have negatively impacted investor sentiment.
Newcrest Mining is focusing on reducing costs across all sites, particularly at high-cost operations like Telfer, Hidden Valley, and Bonikro, to improve profitability and operational efficiency.
Newcrest has faced criticism for overpaying for the Lihir mine, which has continued to perform poorly, contributing to significant asset impairments.
Newcrest Mining is working to restore its reputation, which has been damaged by concerns over selective analyst briefings and operational challenges at its mines.
The Australian Securities and Investment Commission is continuing its investigation into claims of selective analyst briefings by Newcrest Mining.
Newcrest Mining is restricting capital spending at high-cost mines like Telfer and focusing on lower-cost reserves to improve operations and reduce overall costs.
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