Newcrest Mining says it’s looking to boost 2009-10 gold production by as much as 17% after reporting solid 2009 earnings.
The company said yesterday it is looking for annual gold production to climb to between 1.81 million ounces and 1.91 million ounces in the current year.
The company said this would be done with lower capital and operating costs, which should mean higher margins.
The shares rose 50 cents to $29.65.
That should produce higher earnings on the result reported yesterday which showed net profit to $248.1 million ($134.3 million in 2008).
The result compares with a $291.3 million average from analysts.
The expected boost to production is part of the 10% increase Newcrest is aiming for over the next five years to 2013 with new projects in Papua New Guinea and Fiji.
“Continued strong operating cash flow was driven by higher realized gold prices,” the company said in the statement.
The company declared an unfranked final dividend of 15 cents a share. That was up 50% from the final payout for the 2008 year.
"Cashflow from operations was slightly higher at $1,024.1 million – exceeding $1 billion for the second consecutive year," the company said in the statement.
"Sales revenue increased 7% to $2,530.8 million (2008: $2,363.1 million) driven principally by a 28% increase in the realised gold price and an 11% increase in copper sales volumes.
"This was partially offset by a 26% decline in the realised copper price and a 7% decline in gold sales volumes.
"Strong operational performance and the successful equity raisings in February and March 2009 further strengthened Newcrest’s financial position.
“Gearing declined from 16% at 31 December 2008 to 2% at 30 June 2009. Net debt was $84.1 million (2008:$291.1 million).
"Gold production declined 8% in line with guidance; copper production increased 3%, exceeding guidance.
"The decrease was primarily due to lower copper prices and higher site costs in the first half of the financial year outstripping the increase in gold revenue and higher copper sales. The impact of the hedge close-out represented an accounting loss of $235.0 million after tax in the current year versus a $359.6 million accounting loss in the previous year.
"Higher gold production at Telfer was offset by lower planned production at Cadia Valley. Group full year costs were in line with guidance.
"Significant progress was made on two major development projects, with first gold production at Hidden Valley, PNG and initial ore production from Ridgeway Deeps, at Cadia, NSW.
"Successfully completed the earn-in on the Namosi JV in Fiji for a 65% stake. Newcrest has also accepted an offer from joint venture partner Nittetsu to transfer an additional 4.94% interest, subject to Fiji Government approval.
"Group Mineral Resources up by 13% to 80.0 million ounces gold and 56% to 14.36 million tonnes copper.
"Group Ore Reserves up by 7% to 42.8 million ounces gold and 13% to 4.67 million tonnes copper."
Mining services group, Boart Longyear is looking to raise $US635 million ($A756 million) in fresh capital falling into the red in the first half of the 2009 year as sales to the recessed resources fell sharply.
So deeply have sales fallen that the company is now forecasting 50% drop in 2009 revenues and a sharp drop in earnings from 2008’s record year.
Full year revenue is expected to fall by about 50% on the $US1.83 billion achieved in 2008 after it had previously forecast a fall of between 35% and 45%.
The company said the cash raised from the sale will reduce net debt by 78% from June 30 levels.
Boart turned to a loss of $US5.4 million, in the six months ended June 30, down from a profit a year earlier of $US111.7 million , the company said in a statement to the ASX yesterday.
The result saw the company cut staff and costs in the six months as the mining sector slashed spending on services.
And, the company says it doesn’t expect a “significant pickup” in orders until the end of 2009 before a gradual recovery in 2010.
“Current commodity prices — gold, copper and iron ore — if maintained, are above the levels required to justify increased drilling activity,” Boart said.
“This, together with increasing resource sector capital raisings should support additional exploration spending.
"Revenue growth in 2010 of approximately 15% is a reasonable expectation assuming continued global economic recovery, no significant declines in commodity prices and continued improvement in the financing markets.
"Boart Longyear’s operating leverage is significant and management estimates that if pricing remains stable, approximately 30% of incremental revenue in 2010 will convert to EBITDA.
"Assuming these revenue and operating leverage expectations are achieved, we believe that our 2010 adjusted EBITDA margin should increase to levels approximating recent historical mid-cycle performance as demonstrated in 2005."
Boart will sell the new stock at 27 Australian cents a piece, a heft 39% discount to the last traded price on August 14 (last Friday).
The stock will be so
