Newcrest’s Value Creation Approach Discussed at the Macquarie Conference

  • May 01, 2019 AEST
  • Team Kalkine
Newcrest’s Value Creation Approach Discussed at the Macquarie Conference

Newcrest Mining Limited (ASX: NCM), on 30 April 2019, released a presentation given by CFO Gerard Bond at the Macquarie Bank Conference in Sydney.

CFO Gerard Bond highlighted the approach of the company to value creation. He highlighted that the vision of the company is to be a miner of choice. The company’s pillar comprises of safety & sustainability, people, operating performance, technology and innovation and the profitable growth.

By improving safety performance, the company is committed to sustainability with zero fatalities for close to 3.5 years and Lihir Mine Department has not lost production time due to employee injury.

The assets of the company include Cadia, Lihir, Telfer, Wafi-Golpu and Gosowong. Out of these assets, only Lihir and Cadia have an ore reserve base in surplus of fifteen moz. Newcrest Mining Limited is the lowest cost major gold producer.

Since 1 January 2014, the cumulative free cash flow was reported at $3.5 billion. Also, in the last five years, the company has outperformed major gold peers.

On the technology and innovation front, the company has a unique suite of technical capabilities. At Telfer, Screening & sorting, NextGen caving and NextGen leaching were being trialled. Optimization of Cadia included activities like coarse ore flotation, Mass sensing & sorting followed by NextGen caving.

The company is to acquire 70% of the Red Chris mine from Imperial Metals for US$806.5 mn in British Columbia, Canada. Here, Newcrest will be the operator of the mine. The company expects the transaction to complete by 15 August 2019. Apart from organic growth, the growth approach of the company also includes the Greenfield exploration, early entry partnerships with explorers and M&A, where the company can create value through the application of strong and unique technical capabilities.

The Long reserve life, Low-cost production, Organic growth options, ability to meet the set targets, Strong exploration as well as technical capabilities and a strong financial position helps Newcrest differentiate itself from its peers.

On 30 April 2019, the company also announced that it received the final report from the independent technical review board (ITRB) to investigate the technical root cause of the tailings dam embankment slump at its Cadia operations.

Sandeep Biswas, the MD and CEO of the company, acknowledged the findings and recommendations of the ITRB and will be working on the recommendation provided by ITRB with the shareholders along with the regulators of NSW.

Let’s take a quick look at the quarterly reports for the period ended 31 March 2019. During the period, the total gold production was down by 5% to 623koz as compared to its previous quarter. The copper production was also down by 6% on Q2 FY2019. As compared to last year, there was an increase in the YTD gold production by 7% and copper production by 33%. There was a fall in the YTD AISC by 12% to $744/oz.

In the previous six months, the shares of NCM generated a return of 20.24%. NCM is trading at A$25.210 on ASX (as at AEST:1:10PM, 01 May 2019) marginally up by 0.80% as compared to its previous closing price. NCM holds a market capitalization of A$19.22 billion and approximately 768.48 million outstanding shares.


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