Newcrest Mining returns to form, announces profit
Newcrest Mining is back in the saddle, announcing Monday it has finally returned to profit. The Australian gold mining giant, who has endured two straight years of multi-billion dollar losses, raked in US$403 million for 2014 compared to the $2.22 billion loss in the previous year.
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The company said stronger cash flow and deep cost cuts at its gold mines across the board enabled it to pay down debt faster than expected. The miner also announced it would begin reporting its earnings in U.S. dollars—a current trend among companies in the mining industry.
"Newcrest remains focused on further strengthening its balance sheet through safely maximizing cash flow from operations and capital discipline," said Chief Executive Stephen Biswas. He said the result was accompanied by a "substantial reduction in our US dollar denominated debt."
According to MarketWatch, Newcrest used much of its spare cash to repay loans, reducing its U.S.-dollar denominated net debt by US$819 million. When its debt is converted to Australian dollars--the currency in which Newcrest reports its balance sheet--the reduction is a slimmer A$174 million to A$3.76 billion, due to that currency's sharp fall.
“Our priority remains reducing our debt as we go forward,” but the board would consider restarting dividends when the balance sheet is in better shape, Chief Executive Sandeep Biswas said.
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“We are stepping closer to that,” he said. “I do want to return to paying a dividend, but it has to be at the right time.”
In 2010, Newcrest acquired Lihir at the top of the market for an astonishing $10.5 billion. Two years later, gold prices plummeted and Newcrest was forced to take a $6.5 billion write-down that included a $3 billion hit to Lihir.
Since then, the company has steadily picked itself up, improving on almost every measure while lifting both gold and copper production alongside a reduction in costs.
Newcrest is targeting gold production at 2.4 million ounces to 2.6 million ounces in the 12 months through June 2016.
View the full press release here.
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