Newcrest chases new investors

NEWCREST Mining is looking abroad to sustain its ambitious growth plans, with a new stockmarket listing in Canada set to complement its growing focus on Asian assets.

By InvestSMART · 16 Aug 2011

By InvestSMART ·
16 Aug 2011

Comments

NEWCREST Mining is looking abroad to sustain its ambitious growth plans, with a new stockmarket listing in Canada set to complement its growing focus on Asian assets.

A record annual profit of $908 million allows the goldminer to pay shareholders an unfranked 20? "special dividend" in addition to an unfranked 20? dividend.

The bonus payout came as Newcrest revealed yesterday that it would tap a bigger pool of shareholders within six months, after directors approved a long-discussed second listing on the Toronto stock exchange.

The chief executive, Greg Robinson, said the Canadian listing would give the company a broader base of shareholders in Europe and North America, and would pit it "more directly" against its goldmining competitors. The pitch to overseas investors will be matched by a stronger focus on foreign assets under a five-year, $9 billion plan to increase production by 50 per cent.

While the company's Cadia Valley operations in NSW will remain a significant part of the five-year growth plan, the Lihir Gold acquisition in Papua New Guinea is one of several projects in the Asia-Pacific region that will absorb large amounts of capital between now and June 2016.

After 2017, Newcrest's growth plans will be dominated by another PNG project, the Wafi-Golpu gold and copper joint venture.

Mr Robinson said Newcrest would channel its efforts into growing those projects rather than more costly local sites like Telfer in Western Australia.

"If we saw conditions that were more positive then we might look to expand [the mine] further into the five-year plan, but at this stage we are letting people know that our expectation is that they will be stable," he said.

Mr Robinson said he expected gold prices to remain high for the "medium term", and the company was confident it could fund its $9 billion growth plan through cash flows.

Newcrest shares closed 33? lower at $40.40 yesterday.

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

Why is Newcrest Mining pursuing a stockmarket listing in Canada (Toronto Stock Exchange)?

Newcrest has approved a second listing on the Toronto Stock Exchange to broaden its shareholder base in Europe and North America, raise its profile with overseas investors and position itself more directly against other global goldmining competitors.

What were Newcrest's recent financial results and dividend plans?

Newcrest reported a record annual profit of $908 million and announced an unfranked special dividend in addition to an unfranked dividend for shareholders. Despite the profit, the company’s shares closed lower at $40.40 on the day reported.

What is Newcrest's five-year growth plan and production target?

Newcrest has a five-year, $9 billion growth plan aimed at increasing production by about 50%. The plan emphasizes investment in overseas and Asia‑Pacific assets while retaining key operations like Cadia Valley in New South Wales.

Which projects will Newcrest prioritise under its growth plan?

In the near term Newcrest will invest heavily in Asia‑Pacific projects such as the Lihir Gold acquisition in Papua New Guinea (absorbing capital through June 2016). After 2017 the Wafi‑Golpu gold and copper joint venture in PNG is expected to dominate the company’s growth focus.

How does Newcrest plan to fund its $9 billion growth program?

Newcrest’s chief executive said the company is confident it can fund the $9 billion growth plan through operating cash flows, supported by an expectation that gold prices will remain relatively high over the medium term.

Will Newcrest continue to invest in Australian assets like Cadia Valley and Telfer?

Cadia Valley in NSW will remain a significant part of the five‑year plan. However, Newcrest said it will prioritise overseas projects over more costly local expansions such as Telfer unless market conditions become more favourable.

What does the Canadian listing mean for everyday investors in Newcrest shares?

The Toronto listing should give Newcrest greater visibility among North American and European investors and could broaden the shareholder base. Existing investors should note the company’s stronger international focus and ongoing capital commitments to Asia‑Pacific projects.

How might gold price expectations affect Newcrest’s strategy and investors?

Newcrest’s management expects gold prices to stay high in the medium term, which underpins their confidence in funding growth from cash flows. For investors, sustained higher gold prices would generally support the company’s expansion plans and dividend capacity, while weaker prices could challenge that outlook.