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Aug. 18, 2022, 7:49 p.m. EDT

Newcrest Announces FY22 Full Year Results

(figures are in US$ except where stated)

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Melbourne, Australia, Aug 18, 2022 (Newsfile Corp via COMTEX) -- Newcrest delivers strong FY22 performance as growth projects advance

  • Strong operating and financial performance supports final dividend [1] [,] [2] [,] [3] [,] [4] [,] [5]

  • Robust balance sheet and significant liquidity to fund growth

  • Advancing Newcrest's global organic growth portfolio

  • Successful acquisition of the high grade, Tier 1 Brucejack mine in British Columbia, Canada [9]

  • Creating a brighter future for people through safe and responsible mining

Melbourne, Australia--(Newsfile Corp. - August 18, 2022) - Newcrest (asx:NCM) /zigman2/quotes/200289815/delayed CA:NCM +3.60% (pngx:NCM) Managing Director and Chief Executive Officer, Sandeep Biswas, said, "Newcrest has delivered a strong performance in FY22 with our operations producing just under two million ounces of gold at an All-In Sustaining Cost of $1,043 per ounce. We were particularly pleased with our costs trending lower in the second half of the year, with Cadia achieving its lowest ever annual All-In Sustaining Cost of negative $124 per ounce. Our balance sheet has also remained extremely robust with significant liquidity available to support our growth aspirations."

"Works have continued to advance across our global organic growth portfolio, with Cadia, Red Chris, Havieron and Lihir all expected to reach key study milestones throughout FY23. Our track record of exploration success has also continued at Brucejack, Red Chris and Havieron, with strong drilling results supporting our view of significant resource growth potential."

"We are very pleased to have a substantial and increasing exposure to copper, a critical metal of the future with a positive long term outlook that will allow us to participate in the potential opportunities presented by a global shift to decarbonisation."

"In March 2022, we completed the acquisition of Pretium Resources, adding the high grade Brucejack mine to our quality portfolio. We are now the leading gold miner in the Tier 1 jurisdiction of British Columbia, with global exposure to six Tier 1 orebodies and a significant long-life advantage compared to our peers. Brucejack has generated immediate production and cash flows for the Group and our three phase transformation program has already made exciting progress with a number of initiatives underway to maximise the long-term potential of this asset and district."

"We remain relentlessly focused on the safety and wellbeing of our workforce and the local communities in which we operate. Pleasingly, we are now nearly seven years free of fatalities, which is a credit to our people and testament to how far safety is embedded into our culture. We continue to make inroads into building a high performing, inclusive and psychologically safe workplace, and remain steadfastly focused on eliminating sexual assault and sexual harassment in our workplace. We've also continued to progress our sustainability agenda through the development of our Group Net Zero Emissions Roadmap, which will outline the pathway for Newcrest to deliver its goal of net zero carbon emissions by 2050. We are particularly proud of the care we have provided to many communities through the Newcrest Community Support Fund and have a significant opportunity to drive strategic social investments with the recently established Newcrest Sustainability Fund."

"Newcrest remains committed to disciplined capital management and we are pleased to announce a fully franked final dividend of 20 cents per share, bringing our total dividends for the 2022 financial year to 27.5 cents per share, which exceeds the minimum payout targeted by our dividend policy."

"We are delighted with the progress made against our Forging an Even Stronger Newcrest aspirations this year and are well positioned for a very bright future, with our strong exploration and technical capabilities, a robust balance sheet, and a clear, well understood growth strategy," said Mr Biswas.

Summary of Operating and Financial Results

       For the 12 months ended 30 June
    Endnote   UoM   2022   2021   Change   Change %
TRIFR 12 mhrs 3.9 2.3 1.6 70%
Group production
 - gold 13 oz 1,956,182 2,093,322 (137,140) (7%)
Group production
 - copper
t 120,650 142,724 (22,074) (15%)
Revenue
$m 4,207 4,576 (369) (8%)
EBITDA 7 $m 2,054 2,443 (389) (16%)
Statutory & Underlying profit 6,7 $m 872 1,164 (292) (25%)
Cash flow from operating activities
$m 1,680 2,302 (622) (27%)
Free cash flow before M&A activity 7 $m 229 1,125 (896) (80%)
Free cash flow* 7 $m (868) 1,104 (1,972) (179%)
All-In Sustaining Cost 7,13,14,15 $/oz 1,043 911 132 14%
All-In Sustaining Cost margin 16 $/oz 732 876 (144) (16%)
Realised gold price 17 $/oz 1,797 1,796 1 -
Realised copper price 17 $/lb 4.36 3.66 0.70 19%
Earnings per share (basic)
US$ cents 103.4 142.5 (39.1) (27%)
Earnings per share (diluted)
US$ cents 103.1 142.1 (39.0) (27%)
Dividends paid per share
US$ cents 47.5 32.5 15.0 46%
Net debt or (net cash)
$m 1,325 (176) 1,501 853%
Leverage ratio 7 times 0.6 (0.1) 0.7 (700%)
Gearing
% 10.2 (1.8) 12.0 667%

 

*Free cash flow in the current period includes the payment for the acquisition of Pretium Resources Inc. (Pretium) of $1,084 million (net of cash acquired).

Refer to the Company's "ASX Appendix 4E and Financial Report" released on 19 August 2022, and the Operating and Financial Review in particular, for more detail on the Company's financial results.

FY22 Final Dividend

Newcrest looks to pay ordinary dividends that are sustainable over time having regard to its cash flow generation, reinvestment options in the business and external growth opportunities, financial policy metrics and balance sheet strength. Newcrest targets a total annual dividend payout of 30-60% of free cash flow generated for the financial year, with the annual total dividends being at least US 15 cents per share on a full year basis.

Consistent with Newcrest's commitment to disciplined capital management, the Board has determined that a final fully franked dividend of US 20 cents per share will be paid on Thursday, 29 September 2022. The record date for entitlement is Monday, 29 August 2022.

The financial impact of the FY22 final dividend amounting to $179 million has not been recognised in the Consolidated Financial Statements for the year. The Company's Dividend Reinvestment Plan remains in place.

Including the interim dividend of US 7.5 cents per share, total dividends in respect of the 2022 financial year amount to US 27.5 cents per share, which exceeds the minimum US 15 cents per share on a full year basis.

Summary of Full Year Financial Results

Statutory profit and Underlying profit were both $872 million in the current period.

Underlying profit was $292 million lower than the prior period primarily due to lower production volumes at Cadia following the planned replacement and upgrade of the SAG mill motor (completed in November 2021).

Production volumes were also lower at Lihir which reflects the impact of major maintenance activity, lower autoclave availabilities and unplanned downtime.

The current period reflected lower gold and copper sales volumes driven by lower production. Operating costs were impacted by the acute inflationary pressures experienced globally across a range of input costs such as oil and gas, steel and labour as well as higher shipping costs due to the global tightness and challenges in the sea freight market.



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These impacts to Underlying profit were partly offset by a higher realised copper price, lower income tax expense as a result of the Company's decreased profitability in the current period and the receipt of a $75 million insurance settlement in relation to the Cadia Northern Tailings Storage Facility (NTSF) embankment slump. In addition, operating costs (including depreciation) were favourably impacted by the weakening Australian dollar against the US dollar, Newcrest's share of profits from its associates was higher, and price and volume linked costs such as royalties were lower.

Refer to the Company's "ASX Appendix 4E and Financial Report" released on 19 August 2022, and the Operating and Financial Review in particular, for more detail on the Company's financial results.

Guidance [3] [,] [18] [,] [19] [,] [20]

Newcrest provides the following guidance for FY23, subject to market and operating conditions.

The production guidance for FY23 assumes no COVID-19 related interruptions.

The AISC expenditure guidance for FY23 includes:

  • Approximately 6-8% of inflationary impacts to operating costs

  • 12 months of costs relating to Brucejack

  • The impact on costs of increased mining and throughput rates at Cadia and Lihir

Continued pressure on capital costs is expected due to competition for labour from infrastructure projects together with the acute inflationary pressures experienced globally across a range of input costs such as energy and steel, which has been factored into the FY23 guidance.

Newcrest uses multiple levers to manage operating and capital cost pressures in the current inflationary environment and continues to evaluate cost estimates as it progresses its Feasibility Studies.

Guidance for the 12 months ending 30 June 2023


Cadia Lihir Telfer Brucejack Red Chris Fruta del Norte [(a)] Havieron Other Group
Production
Gold - koz 560 - 620 720 - 840 355 - 405 320 - 370 ~30 125 - 145 - - 2,100 - 2,400
Copper - kt 95 - 115 - ~20 - ~20 - - - 135 - 155
All-In-Sustaining Cost (AISC) - Includes production stripping (sustaining) and sustaining capital
AISC - $m 10 - 130 935 - 1,035 550 - 640 330 - 380 80 - 120 110 - 120 - 110 - 130 2,100 - 2,400
Capital Expenditure ($m)
- Production stripping (sustaining) - 95 - 115 55 - 75 - - - - - 155 - 185
- Production stripping (non-sustaining) - 75 - 95 - - 35 - 55 - - - 115 - 145
- Sustaining
capital
215 - 255 115 - 135 35 - 55 30 - 40 60 - 70 - - ~15 470 - 520
- Major projects
(non-sustaining)
300 - 350 100 - 140 - 50 - 60 95 - 115 - 70 - 85 ~15 [(b)] 660 - 760
- Business integration capital - - - ~20 - - - - ~20
Total Capital Expenditure 515 - 605 385 - 485 90 - 130 100 - 120 190 - 240 - 70 - 85 ~30 1,420 - 1,630
Exploration and Depreciation ($m)
Exploration expenditure 150 - 160
Depreciation and amortisation (including depreciation of production stripping) 1,000 - 1,050

 

(a) For H1 of FY23, Newcrest has derived its guidance range for Fruta del Norte by taking the mid-point of Lundin Gold's CY22 guidance range of 430koz to 460koz for gold production and $820/oz to $870/oz for AISC. For H2 of FY23, Newcrest has derived its guidance range for Fruta del Norte by taking the mid-point of Lundin Gold's CY23 guidance range of 390koz to 430koz for gold production and $850/oz to $915/oz for AISC. The mid-points for both calendar years were then divided by two and multiplied by Newcrest's 32% attributable interest. Lundin Gold's guidance ranges were sourced from their website ( www.lundingold.com ) as at 9 August 2022.

(b) Other major project expenditure (non-sustaining) includes non-sustaining capital in relation to Wafi-Golpu.

Creating a brighter future for people through safe and responsible mining

People - Safety and Culture

Newcrest delivered another twelve month period free of fatalities and reported a Total Recordable Injury Frequency Rate (TRIFR) of 3.9 per million hours worked. Injury rates were higher than the prior period driven by minor hand injuries and other low severity incidents. Newcrest is actively focused on enhancing safety behaviours with the aim of ensuring all employees and contractors go home safely each day.

Newcrest continues to implement actions through its Respect@Work program to enable everyone across its global workforce to feel safe, respected and valued. In particular, a dedicated team has been established to focus on actions to prevent and eliminate any form of sexual assault and sexual harassment at Newcrest. In conjunction with Newcrest's program to promote inclusion, diversity and psychological safety across all of its operations and locations, this is expected to support Newcrest's aspiration of a high-performing and inclusive culture in which everyone can thrive and excel.

Sustainability

Newcrest continued to progress its sustainability commitments during the period. The A$20 million Community Support Fund continued to benefit many communities with approximately 67 initiatives receiving funding since its inception, with a total value spent of A$11.4 million as at 30 June 2022. Initiatives ranged from immediate health assistance to livelihood restoration and economic recovery across Papua New Guinea, Australia, Canada (British Columbia), Ecuador and Fiji. A new A$10 million Newcrest Sustainability Fund has now been established to drive strategic social investments in support of the United Nations Sustainable Development Goals.

The Group Net Zero Emissions Roadmap has identified key steps for Newcrest to deliver its goal of net zero carbon emissions by 2050. Scoping and planning of key trials and studies is currently underway.

As previously announced, Newcrest entered into a 15-year renewable Power Purchase Agreement (PPA) to secure a significant portion of Cadia's future projected energy requirements from 2024. The Rye Park Wind Farm, which is the underlying asset for the PPA, reached financial close during the period, with construction of the project underway.

COVID-19

Newcrest did not experience any material COVID-19 related disruptions to production or to the supply of goods and services during the period. Some project activities have experienced a level of disruption as a result of COVID-19 with efforts made to minimise their impact on the overall cost and schedule. The operating cost of managing COVID-19 risks in the current period was approximately $52 million (of which $41 million related to Lihir), including additional costs related to flights, transport, rosters, leave, screening and testing (excludes additional COVID-19 costs related to capital projects).

Cadia underground operations update

Activities to remediate instability in one of the ventilation rises at Cadia have been completed and underground mining has safely resumed. Cave production has steadily ramped up over recent days, with the mine now returned to full capacity. Development of PC2-3 has also recommenced with critical path activities restored.

Acquisition of Pretium Resources

On 25 February 2022, Newcrest received the final regulatory approval for the acquisition of Pretium Resources Inc. (Pretium), the owner of the Tier 1 Brucejack mine in the highly prospective Golden Triangle region of British Columbia, Canada. Brucejack began commercial production in July 2017 and is one of the highest-grade operating gold mines in the world. Newcrest completed the acquisition of Pretium on 9 March 2022.

Brucejack delivered immediate production and financial contribution for the Group, including EBITDA [7] of $109 million and free cash flow of $88 million in the four-month ownership period [10] .

A three-phase transformation program commenced during the period with a range of initiatives in progress to maximise the long-term potential and value of the Brucejack mine and associated district.

Phase 1: Optimise

Brucejack achieved its best safety performance on record in FY22 with a TRIFR of 5.6 recordable injuries per million hours, reflecting behavioural safety improvements previously established by the Brucejack team, as well as a specific integration strategy focused on critical safety standard reviews and people engagement. The NewSafe safety program recently commenced which will further reinforce the safety culture at Brucejack.

The expected synergy benefits have increased from C$15-$20 million (~US$12-16 million) to approximately C$20-$30 million (~US$16-$24 million) per annum [11] . Opportunities continue to be evaluated through the synergy process including contract synergies, integrating Brucejack and Red Chris travel logistics, optimising the warehouse and logistics footprint and moving to a common Enterprise Resource Planning system. Newcrest expects around half of the recurring synergy value to be realised by the end of FY23 on a run-rate basis, with the remainder by the end of FY24 [8] .

In addition, Newcrest has commenced its EDGE program at Brucejack which aims to drive a culture of innovation, high performance, and continuous improvement. The program has identified additional opportunities of approximately C$15-$25 million (~US$12-$20 million) per annum [11] , with improvements in stope turnaround time and more efficient mine operations as the initial focus areas. Run-rate benefits from this effort are expected to be fully realised by the June 2024 quarter [8] .

Newcrest is also assessing ore sorting technology which aims to classify and separate mineralised material from non-mineralised material to deliver more consistent mill feed grades and increase operational flexibility.

Following a successful site trial, seven underground battery electric trucks are being commissioned at Brucejack, replacing the existing diesel fleet and abating approximately 65,000 tonnes of CO2 emissions through to 2030. The new fleet will improve truck productivity, lower unit costs and enhance operational efficiency from planning to production. Three of the Sandvik Z50 battery-electric trucks are already in production, with the full switch over expected to be completed in the December 2022 quarter [8] .

Phase 2: Unlock

A debottlenecking concept study is underway to investigate Newcrest's proposal to increase process plant capacity from the currently permitted rate of 3,800 tonnes per day to between 4,500 and 5,000 tonnes per day [21] . The study is anticipated to be completed in the December 2022 quarter, with the permit application expected to be submitted in the March 2023 quarter [8] .

A range of mine planning and processing scenarios are being evaluated to assess practical options for increasing production. A mine simulation review is currently in progress to assess various debottlenecking scenarios and is expected to increase mining rates from a combination of optimised mine planning and increased shift utilisation. In the mill, crusher modelling is complete with comminution, flotation and gravity modelling in progress with the goal of increasing the mill throughput rate.

Phase 3: Grow

The intensive exploration drilling program continued during the period with drilling results expanding the footprint of the higher grade mineralisation at the new Golden Marmot discovery, which is located outside of the Pretium Mineral Resource estimate for Brucejack and remains open in all directions. Further high grade intercepts were also identified at North Block, 1080 Level East, 1080 HBx Zone, the Bridge Zone and Gossan Hill North confirming the potential for resource growth at the Valley of the Kings deposit [22] .

Global organic growth portfolio advances

Cadia PC1-2 Feasibility Study

In August 2021, the Newcrest Board approved the Cadia PC1-2 Pre-Feasibility Study (PFS), enabling the commencement of the Feasibility Stage and Early Works Program. The PFS updated and defined a significant portion of Cadia's future mine plan, with the development of PC1-2 accounting for ~20% of Cadia's current Ore Reserves. The approved commencement of the Early Works Program allowed critical infrastructure to be established in parallel with the Feasibility Study before the commencement of the Main Works Program.

Early Works have been progressing well with development activities, raise boring and preliminary earthworks for construction of the primary ventilation fans commencing during the current period. The Feasibility Study is nearing completion and expected to be released with the September 2022 quarterly results [8] .

Cadia Expansion Project

The two-stage plant expansion as part of the Cadia Expansion Project is on track for completion by the end of September 2022, with key activities well progressed, including the development of Panel Cave 2-3 and improvements to enhance gold and copper recovery. Mill throughput rates are also expected to start ramping up towards 35Mtpa in the December 2022 quarter [8] [,] [23] .

Red Chris

Red Chris is a joint venture between Newcrest (70%) and Imperial Metals Corporation (30%). Newcrest acquired its interest in, and operatorship of, Red Chris on 15 August 2019.

In October 2021, the Newcrest Board approved the Red Chris Block Cave PFS to the Feasibility Stage. The PFS confirmed Newcrest's original investment thesis of unlocking the underground portion of this Tier 1 deposit by leveraging Newcrest's industry-leading block caving expertise and developing the asset to become a mainstay of Newcrest's portfolio for decades to come.

Newcrest continued to progress development of the exploration decline during the period, and installation of the surface infrastructure relating to the decline is substantially complete.

/zigman2/quotes/200289815/delayed
CA : Canada: Toronto
$ 17.86
+0.62 +3.60%
Volume: 10,614
Nov. 29, 2022 12:12p
P/E Ratio
13.66
Dividend Yield
0.00%
Market Cap
$15.74 billion
Rev. per Employee
N/A
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