Newcrest Mining posted an expected drop in earnings for the year to June 30 as it was caught in the pincers of rising costs, lower output and gold and copper prices that weakened in the final months of the financial year.
The country’s biggest gold miner revealed as well that it would pay a dividend of 20 US cents per share, making a total for the year to June of 27.5 US cents per share, down from the 32 US cents paid for 2020-21.
Gold production for the year fell 7% from 2020-21 while copper production dropped a disappointing 22%.
But Newcrest revealed ambitious guidance targets for the coming 2022-23 financial year with it projecting gold output in the wide range of 2.1 million to 2.4 million ounces (which if achieved would be a 20% rise).
Copper production for the new year is projected to be in the range of 153,000 to 155,000 tonnes, which is achieved at the top of the range would be an equally ambitious rise of more than 25%.
Newcrest reported on Friday a statutory and underlying profit of $US872 million ($A1.26 billion) for the June 30 year, down from $US1.16 billion a year earlier.
CEO Sandeep Biswas, said in Friday’s ASX statement “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,” he said.
As revealed in the company’s June quarter and financial year production and sales statement, Newcrest’s copper production fell short of guidance in 2021-22 and the previous year’s actual output.
Gold produced totalled 1.956 million ounces in 2021-22, down 7% from 2.093 million ounces the year before (and just within guidance of 1.925 million and 2.025 million ounces)
Copper produced fell 22% to just over 120,000 tonnes from 142,000 tonnes previously and missed guidance of 125,000 to 130,000 tonnes.
Revenue fell $US369 million or 8% to $US4.2 billion for the year, thanks to weaker copper performance and lower revenue from gold in particular.
Newcrest said it had $US2.4 billion in cash and committed undrawn bank facilities on its balance sheet at the end of June.
On costs for the coming year, Newcrest said its new guidance for 2022-23 was based on approximately 6-8% of inflationary impacts to operating costs, 12 months of costs relating to the rich Brucejack mine in Canada and 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,” he said.
