Newcrest surges despite posting $5.7bn loss

Gold miner swings into red on $6.23bn in writedowns, shares spike over 6%.

Investors have cheered Newcrest Mining Ltd after it said it would slash capital expenditure by almost half as it slumped to a $5.78 billion full-year loss on writedowns of $6.23 billion.

At the 1443 AEST official market open, Newcrest shares were 7.49% higher at $12.34, against a benchmark index rise of 0.8%.

The miner blamed the slump from the prior year's profit of $1.117 billion on a severe fall in the gold price and lower-than-expected production volumes at its Lihir and Gosowong mines.

The gold miner's underlying profit fell to $451 million for the year to June, from $1.084 billion in the previous corresponding period.

Newcrest's writedowns ballooned by a further $230 million to $6.229 billion, after it advised the market on Thursday they had increased to $6.2 billion.

The $6.229 billion writedowns included impairments of $5.556 million, asset writedowns of $349 million, a write-down of its investment in Evolution Mining Ltd of $273 million and restructure costs of $51 million after tax.

Newcrest said it would cut capital expenditure to about $1 billion, from the $1.946 billion spent in 2012-13, a 24% drop on the $2.556 million spent in the prior year.

The group also posted a 15% drop in revenue to $3.775 billion to the prior year, on reduced gold sales volumes and lower metal prices.

Gold revenue dropped 16% to $3.149 billion, from $3.74 billion in the previous corresponding period, mainly on a 12% reduction in gold sales volumes to 2.054 million ounces.

The company said it expected to be free cash flow positive in 2014 at a gold price of A$1,450 per ounce and aimed to fund all capital expenditure, exploration programs and corporate overheads from operating cash flow.

"The 2014 financial year budget was developed in the context of a volatile market climate, including a sharp deterioration in the gold price," the miner said.

Newcrest said a low level of gearing was not "appropriate" for an unhedged gold producer and it will focus on "progressively reducing gearing to the target level of around 15%, and returning to paying dividends".

Newcrest will not pay a final dividend.

The miner also said it would delist from the Toronto Stock Exchange in the current quarter, just 18 months after its debut on the Canadian bourse.

"The anticipated benefits have not been realised to date and it is not expected that maintaining the listing will deliver significant future value for the company," Newcrest said.

Expected FY14 Production

Newcrest has tipped gold production of between 2 million and 2.3 million ounces for the current financial year, and copper production of 75,000 to 85,000 tonnes.