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  • Newcrest Mining’s (NCM), gold production may have dropped in FY20, but it was the precious metal’s price surge which boosted its financials
  • Over the 2020 financial year, the company’s gold production dropped 13 per cent to 2.2 million ounces
  • However, the price of gold surged in FY20 as the coronavirus took its toll on global markets and sent investors running for the precious commodity
  • As a result, both Newcrest’s statutory and underlying profits remained in the green, even after spending US$1.3 billion (around A$1.8 billion) to purchase the Red Chris mine in British Columbia
  • The gold producer also reported roughly $1.5 billion in operating cashflow, based on an average realised gold price of US$1530 (roughly A$2139.56), for the 2020 financial year
  • Newcrest’s Managing Director and CEO, Sandeep Biswas, said FY20 was the year Newcrest invested in the future
  • Company shares are down 1.36 per cent on the market this afternoon and is trading for $34 per share

Newcrest Mining’s (NCM), gold production may have dropped in FY20, but it was the precious metal’s price surge which boosted its financials.

The company’s gold production dropped 13 per cent to 2.2 million ounces compared to FY19, but its full-year statutory net profit rose 15 per cent to US$647 million (approximately A$905 million).

In fact, the price of gold surged in FY20 as the coronavirus took its toll on global markets and sent investors running for the precious commodity.

Newcrest’s profits were even in the green after spending US$1.3 billion (around A$1.8 billion) to purchase the Red Chris mine in British Columbia. The gold producer also reported roughly $1.5 billion in operating cashflow, based on an average realised gold price of US$1530 (roughly A$2139.56), for the 2020 financial year.

The miner was pleased to report zero fatalities and life-changing injuries and has further reduced its underlying injury rate.

Underlying profit for the year totalled US$750 million (approximately A$1 billion), which is US$189 million (around A$264 million) or 34 per cent higher than the prior period. This increase was due to the higher gold price, increased copper production at Cadia and Telfer, the impact from the lower Australian dollar and lower expenses.

Managing Director and CEO, Sandeep Biswas, said FY20 was the year Newcrest invested in the future.

“We invested US$1.3 billion (approximately A$1.8 billion) to acquire Red Chris and increase our exposure to Fruta del Norte and a further approximately US$400 million (roughly A$559 million) to progress our organic growth options and on exploration,” he said.

“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 added.

Significantly, the gold producer reported minimal impact from COVID-19 —Sandeep chalks this up to the effort of his employees, who implemented a range of measures to deal with the pandemic. Sandeep was also impressed with drilling figures at Newcrest’s Havieron and Red Chris assets.

“Drilling results from Havieron and Red Chris continued to expand the known mineralisation with high-grade intercepts. Our ownership of Havieron over the year increased to 40 per cent as we track towards 70 per cent underpinning the
future of Telfer,” he explained.

“We are in the unique position of having three outstanding growth options from which we expect to add new production ounces to our portfolio in due course,” he added.

Newcrest will also pay a US$0.175 cents (about A$0.24) cents-per-share final dividend on the back of the result, up from US$0.145 cents (around A$0.20) a year ago.

Company shares are down 1.36 per cent on the market this afternoon and is trading for $34 per share at 2:12 pm AEST.

NCM by the numbers
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