Australia’s biggest gold miner Newcrest Mining has unveiled a new policy for rewarding shareholders after posting a 22 per cent jump in underlying profit.
Newcrest recorded an underlying profit of $394 million, and EBITDA of $1.4 billion for the 2016-17 financial year in its results released on Monday morning.
Newcrest Mining’s managing director and CEO Sandeep Biswas. Photo: Carla Gottgens
The company declared a final dividend of US7.5 cents per share (70 per cent franked) – for a full year dividend of US15 cents – and outlined a policy under which the company’s dividend payout would be at least 10-30 per cent of that financial year’s free cash flow.
In a statement to the ASX, Newcrest said that under the new policy, the dividend would be “no less than US 15 cents per share on a full year basis”.
But the underlying profit came in below the consensus forecasts of analysts. According to Bloomberg, the consensus average was for an underlying profit of about $451 million.
Newcrest said its profit came from gold production of 2.38 million ounces, at a “Group All-In Sustaining Cost” of $787 per ounce.
The gold producer recorded free cash flow of $739 million, and reduced net debt by 29 per cent to $1.5 billion.
The company’s managing director, Sandeep Biswas, said the company had met its production guidance four years in a row.
“Financial year 2017 was marked by a significant improvement in our safety performance and a number of operational achievements, particularly at Lihir and Cadia. Lihir achieved record annual mill throughput and gold production and Cadia completed establishment of the Panel Cave 2 footprint,” he said.
“All operations contributed to the free cash flow generation of the Group, which has been applied to both further reducing net debt and strengthening the balance sheet as well as increasing dividends to shareholders,” he said.
Breaking down its results by assets, Newcrest said Cadia generated more than 543,000 ounces of gold in the first nine months of the financial year, before a seismic event hit in mid-April. This gold production was up 11 per cent on the prior corresponding period. The copper and gold mine in New South Wales generated EBITDA of $599 million in the first nine months of the financial year, a $134 million rise on the prior corresponding period.
The Lihir gold mine, in Papua New Guinea, generated free cash flow of $353 million (before tax), which the company described as a record. It attributed this result to a rise in “mill throughput, record annual gold production, an increase in the gold price, and no net increase in underlying cash costs notwithstanding the higher volumes”.
Newcrest’s final dividend will be paid on 27 October, 2017, with the record date for entitlement 21 September.
Newcrest said its dividend policy struck a financial balance. “Newcrest looks to pay ordinary dividends that are sustainable over time having regard to its financial policy, profitability, balance sheet strength and reinvestment options in the business. Going forward Newcrest is targeting a total dividend payout of at least 10-30 per cent of free cash flow generated for that financial year, with the dividend being no less than US 15 cents per share on a full year basis.”