to:
Company
Announcements
Office
from:
Bernard
Lavery
date:
29 October 2009
subject:
Chairman's Address and Managing Director's
Presentation AGM 2009
Please find attached for immediate release a copy of the Chairman's Address and the
Managing Director's Presentation being delivered at the Company's AGM at
10:30am this morning.
Yours sincerely
Bernard Lavery
Company Secretary
N
EWCREST
M
INING
L
IMITED
ACN 005
683
625
Chairman's Address 2009 AGM
The year in review July 2008 to 30 June 2009 - was a successful one for our
Company. Despite the challenges and uncertainties of the global financial crisis
Newcrest is now in a stronger, more profitable and more competitive overall position
than when I last addressed shareholders. Your Board is confident that the
achievements of the past year will enable Newcrest to continue to grow and to deliver
competitive returns for investors, on a sustained basis.
During the year all of our mines performed well and in line with expectations.
Importantly, safety performances were again strong, delivering year on year
improvements. They continued to produce gold and copper at close to record levels.
As a result of the decision that we took in 2007 to close out the hedgebook all
production was able to be sold at spot prices. With both the US dollar gold price
continuing to perform very strongly, and the Australian dollar gold price reaching a
record high during the year, and with copper having recovered much of its previous
strong price, Newcrest was able to generate more than A$1 billion of operational
cashflow. It also delivered a record statutory profit.
On the financial front, we were able to enhance the Company's already strong balance
sheet. In February 2009 Newcrest successfully undertook an institutional share
placement which raised A$752 million in new equity. At the same time retail
shareholders were given the opportunity to purchase new shares at the same price as
those that had been offered to institutional investors, taking the total raising to in
excess of A$800 million. At a time when, in the midst of the global financial crisis,
many companies were struggling to maintain liquidity and access to credit had
become a major concern for many businesses Newcrest was able to reduce its gearing
from almost 20 percent to around 2 percent.
Those proceeds were also used to underpin the Company's growth through the
purchase of its fifty percent share of the Morobe Mining Joint Venture in Papua New
Guinea from Harmony Gold.
Importantly the financial strength of the Company, its healthy operating cashflows
and strong balance sheet have given it the financial capability to accelerate its other
new projects, such as at Cadia East and at O'Callaghans at Telfer, and to add strength
to its five year outlook.
Growth will remain a key element of Newcrest's strategy. Properly executed it can
provide an increase in both inventory and production, and importantly an increase in
strategic options. As I have indicated in previous years growth through exploration is
a key plank of Newcrest's strategy. Growth through M&A will be pursued on an
opportunistic basis where clear value to Newcrest and potential for future growth can
be identified.
During the year exploration around the Company's minesites and at its emerging
projects resulted in reserves of gold and copper, nett of depletions for production,
increasing by seven and thirteen percent respectively. Mineral Resources also grew
strongly and now exceed 80 million ounces of gold and 14 million tonnes of copper.
Both the Namosi project in Fiji and the O'Callaghan's tungsten deposit at Telfer
emerged, through the efforts of our explorers, as deposits of likely future significance
for the Company.
At the Hidden Valley mine and the nearby Wafi Golpu exploration project in Papua
New Guinea we saw the clear benefits of Newcrest's new willingness to take on
merger and acquisition activities as first gold was produced from Hidden Valley and
the exploration potential of both regions became more evident.
We are confident that the Company's financial strength, in combination with the
proven ability of its geologists and mining engineers to identify and deliver new
growth projects, will contribute significant improvements to Newcrest's already
impressive production base and importantly provide an even more extensive platform
for future growth.
Key to the Company's success is its ability to maintain its position as a low cost
producer. This will ensure that in any price scenario for gold and copper Newcrest's
mines should remain profitable when other gold producers are not. This is a critical
competitive advantage that we must work hard to maintain. It also ensures that in
times of good commodity prices good financial margins will deliver superior returns
to shareholders. Newcrest will continue to use innovation and technology in the
discovery, development and the efficient operation of its mines. This is clearly in
evidence at the newly commissioned Ridgeway Deeps block cave and in the planning
for the development of the adjacent Cadia East ore body where the use of industry
leading technologies in underground bulk mining methods will underpin Newcrest's
future cost competiveness.
From a safety perspective, those new technologies should also enable further
improvements in safety performance as automation and remote operation enable high
energy mining environments to be managed and operated without direct risk or
exposure of our employees.
Your Board is always focussed on the underlying imperative that the Company must
generate wealth and through that grow value and returns for all shareholders. With the
stronger cashflows that have been generated we have increased the full year dividend
by 50 percent from 10 to 15 cents, unfranked. The capacity to pay dividends, and
where possible to increase them, must be balanced with the need for the Company to
fund its emerging projects and ensure its future growth. During the past year, capital
growth in Newcrest shares has been strong with the price improving from just over
A$20 at last year's annual general meeting to around A$35 currently. These returns
place your Company among the better performers in the ASX top 100 over the past
year.
In December last year Vince Gauci was appointed as a Director of the Company. His
appointment marks the completion of the process of Board renewal which began in
2006 together with the re-building of the executive management team and the
strengthening of the balance sheet.
The outlook for gold has been strong during the year in review and remains positive.
While demand for gold as a store of value has strengthened during the recent global
uncertainties demand for jewellery has been relatively flat. Against that backdrop
world gold production has also continued to decline and is expected to do so in the
foreseeable future. Demand for copper did fall in line with the global economic
downturn but has now resumed a generally positive outlook in the expectation of a
global recovery, particularly in China. This has been reflected in its improving price.
The current strength of the Australian dollar is an underlying concern for all
exporters, including Newcrest, and will ensure that pressures on margins continue. As
the Australian dollar gold price closes the gap to the US dollar gold price the
Company's Australian dollar sales revenues and earnings will be negatively impacted.
This highlights the need for careful management of the Company's production costs
and the extent of the challenge for Newcrest to remain a low cost producer.
We recognise the competitive nature of the international gold sector and the need for
the Company to invest sensibly in new technologies and in its people. They are key
building blocks for its future. The importance of being ahead of and outperforming
our peers and competitors, year on year, requires that we recruit the best people,
invest in their development and training and retain them to meet the challenges ahead.
We must also ensure that they are appropriately and competitively rewarded. On
behalf of shareholders I would like to take this opportunity to acknowledge and thank
our staff for their strong contribution to Newcrest's success.
During the year, the Board has re-affirmed the Company's strategy of positioning
itself as a large scale, low cost producer with a strong track record of organic growth
through exploration and a significant pipeline of new major projects. Newcrest will
continue to focus on gold, with copper as a by-product, and will maintain a strong
balance sheet conservatively geared as a platform for future growth. We will focus on
the Australasian and Pacific region where we believe our "Australian-ness" also gives
us some competitive advantage. We will continue to ensure that all of the Company's
gold production will be sold at spot prices thereby giving shareholders a full and
transparent exposure to the prevailing gold price.
Your Board believes that the Company is well placed and in a sound position to
continue as a leader in the international gold sector and provide competitive returns
for shareholders in the years ahead.
Newcrest AGM
October 2009
Ian Smith
CEO & Managing Director
2
Disclaimer
Forward Looking Statements
These materials include forward looking statements. Forward looking statements inherently involve subjective judgement and analysis and are
subject to significant uncertainties, risks and contingencies, many of which are outside of the control of, and may be unknown to, the company.
Actual results and developments may vary materially from those expressed in these materials. The types of uncertainties which are relevant to
the company may include, but are not limited to, commodity prices, political uncertainty, changes to the regulatory framework which applies to
the business of the company and general economic conditions. Given these uncertainties, readers are cautioned not to place undue reliance on
such forward looking statements.
Forward looking statements in these materials speak only at the date of issue. Subject to any continuing obligations under applicable law or any
relevant stock exchange listing rules, the company does not in providing this information undertake any obligation to publicly update or revise any
of the forward looking statements or any change in events, conditions or circumstances on which any such statement is based.
Competent Persons Statement
The information in this report that relates to Exploration Results is based on information compiled by C. Moorhead, EGM Minerals for Newcrest
Mining Limited who is a Member of The Australasian Institute of Mining and Metallurgy, and a full-time employee of Newcrest Mining Limited. Mr
Moorhead has sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activity
which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves. Mr Moorhead consents to the inclusion in the report of the matters based on this information in
the form and context in which it appears.
3
Contents
1.
Introduction
2.
Safety Performance
3.
Financials
4.
Next 5 Years
4
Newcrest
Top 10 global gold producer
Top 20 ASX listed company (A$16-17 Billion)
Proven ability to find, build and operate world class gold mines
Multiple growth options
5
Newcrest Operations & Projects
Telfer
(100%)
Gosowong
(82.5%)
Hidden Valley & Wafi/Golpu
(50%)
Cracow
(70%)
Cadia Valley
(100%)
Namosi
(69.94%)
Australia
Indonesia
Fiji
PNG
Mine Sites
3 X Surface Mines
4 X Underground Mines
4 X Major Advanced Exploration Targets
6
30 June 2009 Resource and Reserve estimates are based on Newcrest's production interest.
For details refer to the Newcrest Annual Statement of Mineral Resources and Ore Reserves
Reserves
42.8 Million Ounces
Resources
80.0 Million Ounces
Gold Resources & Reserves
Cadia
Valley, 55%
Gosowong, 6%
Telfer, 33%
Cracow, 1%
Morobe, 5%
Cadia Valley,
54%
Gosowong, 4%
Telfer, 24%
Cracow, 1%
Marsden, 2%
Morobe, 10%
Namosi, 5%
Based on US$650/oz
Based on US$700/oz
7
Reserves
4.67 Million Tonnes
Resources
14.36 Million Tonnes
Copper Resources & Reserves
Cadia
Valley,
80%
Telfer, 11%
Morobe, 9%
30 June 2009 Resource and Reserve estimates are based on Newcrest's production interest.
For details refer to the Newcrest Annual Statement of Mineral Resources and Ore Reserves
Cadia Valley,
56%
Morobe, 6%
Namosi, 27%
Telfer 6%
Marsden, 5%
Based on US$2.00/Ib
Based on US$1.70/Ib
8
Additional Resources
Contained Metal
O'Callaghans Inferred Resources
0.23
0.46
0.16
0.17
0.39
0.77
0.27
0.29
59
Lead
Zinc
Copper
Tungsten
Trioxide
Lead
(% Pb)
Zinc
(% Zn)
Copper
(% Cu)
Tungsten
Trioxide
(% W03)
Dry
Tonnes
(millions)
Million Tonnes
Grade
30 June 2009 Resource and Reserve estimates are based on Newcrest's production interest.
For details refer to the Newcrest Annual Statement of Mineral Resources and Ore Reserves
Silver 2009 - 44.6 Million Ounces
(based on US$13/oz)
Gosowong, 5%
Cracow, 1%
Morobe JV, 94%
9
1.
Introduction
2.
Safety Performance
3.
Financials
4.
Next 5 Years
Contents
10
Newcrest Safety
1.33
1.10
1.33
0.84
0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
2005 - 06
2006 - 07
2007 - 08
2008 - 09
11.19
10.78
8.44
6.99
0
2
4
6
8
10
12
14
2005 - 06
2006 - 07
2007 - 08
2008 - 09
Lost Time Injury
Frequency Rate
Total Recordable Injury
Frequency Rate
accidents per 1. million work hours
2. ~ 500 people per annum
11
Safety Approach
2006 "Aspirational Target"
2009 "Achievable Target"
Behavioural Engagement
Golden Rules
A simple set of rules covering
Safety Critical Tasks
Systemic Standard Approach
Covers a common approach to Hazards,
Risk Assessment & Assurance
Competent capable people empowered
with authority and accountability
12
Recent Safety Performance
Q4 FY09
Q1 FY10
0.0
0.2
0.4
0.6
0.8
Q4 FY09
Q1 FY10
0.0
2.0
4.0
6.0
8.0
Lost Time Injury Frequency Rate
Total Recordable Injury Frequency Rate
Per million man hours
Per million man hours
0.74
0.22
7.25
6.06
13
1.
Introduction
2.
Safety Performance
3.
Financials
4.
Next 5 Years
Contents
14
Net Debt and Gearing Declined
Record EBITDA and Cash Flow from Operations
Strong Capital and Cash Returns
EBIT and EBITDA Margin
Financial Year Ended 30 June 2009
31
41
0
10
20
30
40
50
EBIT Margin
EBITDA Margin
%
ROCE = EBIT/ Shareholder Equity + Net Debt
ROIC = EBITDA / Shareholder Equity + Net Debt
1,039
1,024
800
900
1,000
1,100
1,200
EBITDA
Operating Cashflow
A$M
0
40
80
120
160
200
Net Debt
Gearing
0
5
10
15
20
84
2
%
A$M
%
17
23
0
5
10
15
20
25
30
ROCE
ROIC
15
0
100
200
300
400
500
600
0%
10%
20%
30%
40%
50%
Global Mid Point US$483/oz
Newcrest Mid Point US$350/oz
Cumulative Production %
Cash Cost US$ per Ounce
Source: GFMS
First Cost Quartile Producer
Gold Industry Costs for Twelve Months ended June 30 2009
16
Group cost reduction over the past 4 quarters
400
500
600
700
Dec 08
Mar 09
Jun 09
Sep 09
400
500
600
700
Dec 08
Mar 09
Jun 09
Sep 09
Gross Cash Costs are prior to stripping and ore inventory adjustments
A$/oz
A$/oz
Gross Unit Cash Costs
22%
Net Unit Cash Costs
22%
576
507
459
450
554
516
476
436
17
Quarterly Cash Cost Comparison
Net Cash Cost at period average exchange rates
Global Gold Industry
Newcrest
US$450
US$470
Mar 09
Jun 09
US$343
US$362
US$364
A$516
A$476
A$436
Mar 09
Jun 09
Sep 09
Net Cash Cost
Global Gold Industry per GFMS
18
1.
Introduction
2.
Safety Performance
3.
Financials
4.
Next 5 Years
Contents
19
Gold production to increase 40% over 5 years
1.63Moz
2.30Moz
FY2009
FY2014
1.81 1.91Moz
5 %
5 %
5 %
5 %
Hidden Valley
Gosowong
Hidden Valley
CVO
Ridgeway Deeps
Cadia East
Hidden Valley
Cadia East
Telfer
Cadia East
5 year Copper production to increase 30% from FY2009.
Total copper to exceed 100,000t pa from FY2013.
Excludes future production from the following internal opportunities :
Wafi/Golpu, O'Callaghans, Namosi, Camp Dome, Gosowong 2
Vertical Stockwork Corridor, West Dome Deeps, Marsden.
20
Guidance 5 Year Capital
0
20
40
60
80
100
120
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
Relative $M
Base Year F
Y
2009
PNG Acquisition &
Ridgeway Deeps
Construction
Construction of Cadia East Project
100 = $1.27 Billion for Capital Expenditure in FY09
Additional Future
Growth Options?
Document Outline
- BF6BDCB0
- 3F9854F1
- MDs Presentation
|
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