As expected Newcrest Mining boosted full year profit by a big margin in the wake of the last year’s takeover of Lihir Gold and its 1 million ounces a year of production.
As a result Newcrest yesterday reported a 63% jump in net profit for the year to June 30.
Net profit rose to $908 million for the 12 months to June 30, from $557 million a year earlier, the company told the ASX yesterday.
But the market wasn’t impressed, the shares easing 0.8% or 30c to $40.40 after world gold prices eased on Friday.
The result was released before the market opened and the shares opened at $41.20, which was the day’s high.
They cut their losses in the higher afternoon trading, but still ended in the red.
The shares weakness came in a market that jumped 2.6%, so it was a weak performance.
That was despite an effective doubling in the full year payout to 50c a share from the 25c a share paid in 2010.
That was achieved by the company announcing the payment of a special dividend of 20 cents a share, on top of a final dividend of 20c. The interim was 10c a share.
Revenue increased 46% to $4.102 billion, thanks to the Lihir buy and the impact of higher prices for gold and copper, although that benefit was tempered by the strong Australian dollar, especially in the second half of the year.
The company said its "underlying profit rose to $1.06 billion" for the year to June 2011 from $776 million a year earlier, compared with analysts’ forecasts around $1.07 billion.
The company also forecast that gold production this financial year would be between 2.775 million and 2.925 million ounces, up from the 2.527 million ounces mined in the year to June 30.
Copper production of 75,631 tonnes was in line with annual guidance, Newcrest said.
It said it expects to produce 2.775-2.925 million ounces of gold in the year ahead, up from 2.53 million ounces in the 2011 financial year, with cash costs expected to be roughly line with 2011.
Newcrest said that in the current year it would step up capital spending and exploration spending.
Capital expenditure will increase from $1.89 billion to $2-2.2 billion in 2012 associated with the completion of the Cadia Valley mine and Lihir plan expansion.
Exploration expenditure is expected to increase to $160-$170 million compared to $126 million in 2011.
Not helping market sentiment was talk of the company shifting its focus from its Telfer gold mine in WA to others in the group, and complaints about rising costs in Australia and Papua New Guinea.
In a separate statement the company revealed a substantial increase in its reserves and resources positions after the Lihir deal
"Group Mineral Resources are estimated at 147.5 million ounces of gold and 19.91 million tonnes of copper. This represents a post merger year on year increase of 11.8 million ounces of gold (9%) and 2.66 million tonnes of copper (15%), directors told the ASX.
"Silver Mineral Resources are estimated at 118.3 million ounces.
"The result was driven by additions at Lihir (7.5 million ounces of gold), Wafi-Golpu (5.3 million ounces of gold and 2.1 million tonnes of copper) and Namosi (0.5 million ounces of gold and 0.46 million tonnes of copper).
"Additional brownfields growth came from Telfer West Dome (0.8 million ounces of gold), Telfer Vertical Stockwork Corridor (0.5 million ounces of gold) and Bonikro (0.5 million ounces of gold).
"Group Ore Reserves, after mining depletion, are estimated at 80.0 million ounces of gold and 8.36 million tonnes of copper.
"This represents a post merger year-on-year increase of 2.4 million ounces of gold (3%) and 0.48 million tonnes of copper (6%). Silver Ore Reserves are estimated at 62.7 million ounces.
"This result was driven by additions at Lihir (2.2 million ounces of gold) and Cadia East (1.3 million ounces of gold and 0.22 million tonnes of copper).
"Maiden Ore Reserves were also declared for Big Cadia (0.4 million ounces of gold and 0.12 million tonnes of copper) and Telfer Vertical Stockwork Corridor (0.7 million ounces of gold and 0.08 million tonnes of copper). Other contributions were Telfer West Dome (0.7 million ounces of gold), and at Bonikro (0.4 million ounces of gold)," the company said.
