Newcrest dividend up 14%

LIHIR gold mine owner Newcrest Mining has lifted its dividend by 14% and has a positive outlook for the coming year as the gold price sits near record highs.
Newcrest dividend up 14% Newcrest dividend up 14% Newcrest dividend up 14% Newcrest dividend up 14% Newcrest dividend up 14%

Sandeep Biswas

The company's full-year underlying profit rose by 34% to US$750 million, while statutory profit was 15% higher at $647 million.
 
Revenue rose 5% to $3.9 billion, while EBITDA was up 10% to $1.83 billion.
 
Cashflow from operations dropped 1% to $1.47 billion, while free cashflow before $1.3 billion in merger and acquisition activity was $670 million. 
 
Newcrest chief financial officer Gerard Bond told analysts last week free cashflow for the past six years had been $3.5 billion.
 
The company declared a final fully franked dividend of 17.5c per share, up 14%, taking the full-year dividend to 25c per share.
 
RBC Capital Markets forecast 7.5c, Credit Suisse 10c and UBS 15c.
 
"The dividend surprised us (and consensus), but does sit with the range of the 10-30% free cashflow (Newcrest policy), while cashflows were stronger on better operating cashflows (lower cash tax paid)," RBC analysts said. 
 
Newcrest's average realised gold price for the 2020 financial year was $1530 an ounce, up 21%. Gold recently hit an all-time high of over $2000/oz and is currently about $1950/oz.
 
"At current prices, Newcrest is well-placed to enjoy higher returns," Bond said. The company had its first case of Covid-19 at Lihir last week, which is being managed.
 
It estimates Covid-19 restrictions and prevention measures cost it $40 million.
 
Looking ahead, guidance for FY21 is 1.95-2.15 million ounces of gold, just below the 2.2Moz delivered in FY20, and 135,000-155,000 tonnes of copper.
 
All-in sustaining costs are expected to be $1.8-1.9 billion, not allowed for further COVID-19 interruptions, with capital expenditure of $1.06-1.24 billion and exploration expenditure of $115-125 million.
 
The company continues to be excited by its major growth projects at Havieron in Western Australia and Red Chris in Canada.
 
Newcrest is targeting decline developments at both to start by the end of the year or early next year.
Studies are advanced at Havieron and Newcrest expects to have further information in "coming months".
 
The high-grade Havieron deposit has the potential to extend the life of the Telfer mine, 40km away.
 
"Finding gold is hard and rare so these kind of drilling results are exciting," Newcrest CEO Sandeep Biswas said."We continue to be excited by it."
 
Biswas wouldn't comment on whether the market was undervaluing Havieron, but said he was surprised by the breccia zone, which has returned extensive mineralisation.
 
At Red Chris, Newcrest is looking into a potential block cave, with a study due by the end of September next year.
 
"We hope to have a view reasonably soon of whether this thing has legs or not," Biswas said.

 

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