Newcrest Mining — Q3 FY2020 Earnings Presentation
72 slides from Newcrest Mining's earnings presentation, Apr 30, 2020
Slide 1: Newcrest Mining Limited FY20 Q3 Results, Exploration Update, Fruta del Norte Acquisition & Equity Raising
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Newcrest Mining Limited FY20 Q3 Results, Exploration Update, Acquisition of Fruta del Norte Finance Facilities & Equity Raising Sandeep Biswas Managing Director and Chief Executive Officer Gerard Bond Finance Director and Chief Financial Officer 3
Slide 2: Important Notices and Disclaimer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important Notices and Disclaimer This investor presentation (Presentation) is dated 30 April 2020 and has been prepared by Newcrest Mining Limited (ACN 005 683 625) (Newcrest). By attending an investor presentation or briefing, or accepting, acces
Slide 3: Important Notices and Disclaimer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important Notices and Disclaimer Non-IFRS Financial Information Newcrest results are reported under International Financial Reporting Standards (IFRS). This presentation includes non-IFRS information under ASIC Regulatory Guide 230: ‘Disclosing no
Slide 4: Important Notices and Disclaimer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important Notices and Disclaimer Disclaimer The joint lead managers are acting as joint lead managers and underwriters (Joint Lead Managers) to the Placement. A summary of the key terms of the underwriting agreement between Newcrest and the Joint
Slide 5: Table of Contents
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Table of Contents Page Contents 1. Quarterly Overview 7 2. Exploration Update 16 3. Fruta del Norte Transaction overview 21 4. Equity Raising overview 27 Appendices A. Supporting information 33 B. Key risks 36 C. International offer restrictions 6
Slide 6: Building Newcrest's growth pipeline
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 1 Building Quarterly gold production of 519koz in line with expectations and guidance, Newcrest’s delivering an AISC margin of $742/oz growth 2 pipeline Continuation of impressive exploration results with the discovery of a new high grade zone at
Slide 7: Quarterly Overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES SECTION ONE QUARTERLY OVERVIEW
Slide 8: COVID-19 update
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Employees & People Operations Local Communities Contractors COVID-19 Telfer: FIFO rosters have been No confirmed COVID-19 cases to Newcrest: Established a A$20 update date temporarily amended following the suspension of interstate FIFO milli
Slide 9: Continued Focus on Safety
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Total Recordable Injury Frequency Rate1 (per million hours worked) Continued Focus on Safety Safety Transformation Red Chris integration is progressing well but injury rates are much higher than YTD TRIFR & improvements at most operations the Newc
Slide 10: March 2020 Quarter Highlights
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES March 2020 Quarter Highlights Gold production 519koz AISC margin per ounce of AISC $827/oz $742/oz, up 25% QoQ No interruption to Guidance unchanged – operations from COVID-19 improved performance pandemic from Lihir 10
Slide 11: Cadia: lower production due to planned shuts of both concentrators
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Lower Cadia production in quarter due to planned shuts of both Concentrators 11
Slide 12: Lihir: rectification plan in place to drive improvement
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Rectification Lihir plan in place to drive an improvement in performance 12
Slide 13: Telfer: continued focus on improving performance and costs
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Continued Telfer focus on improving performance and costs 13
Slide 14: On-going improvements at Red Chris
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES On-going Red Chris improvements at Red Chris Production and AISC is reported at Newcrest’s attributable share of 70% 14
Slide 15: Strong financial position
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Leverage Ratio (Net Debt / EBITDA) Gearing Ratio Strong Target less than 2.0x Target less than 25% financial (for trailing 12 months) position 12.2% 11.5% 15.1% 0.8x 0.7x 0.6x 4.9% 0.2x Continue to be comfortably within 30 Jun 2018 31 Dec 2018 30
Slide 16: Exploration Update
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES SECTION TWO EXPLORATION UPDATE
Slide 17: Red Chris: new high grade zone intersected
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Red Chris New high grade zone intersected The information in this slide that relates to exploration results at Red Chris has been extracted from the Newcrest release titled “Quarterly Exploration Report” dated 30 April 2020. 1g/t Au, 2 g/t Au, 1 g
Slide 18: Red Chris: two high grade zones
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Red Chris Two high grade zones • Drilling has returned some of the best Au / Cu porphyry results within the Golden Triangle • RC 611: 628m @ 1.7g/t Au and 0.91% Cu intersected in • Including 282m @ 3.3g/t Au and 1.7% Cu the East Zone Continuing to
Slide 19: Havieron: drilling continues to expand footprint
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Diagram 1: High-grade arcuate sulphide mineralised zone Diagram 2: High grade mineralised zone Havieron Drilling continues to expand the footprint of mineralisation The information on this slide in relation to Diagram 1 • Drilling demonstrates con
Slide 20: Havieron: high grade option for Telfer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Havieron High grade option for • Located under 420m of cover, 45km east of Telfer • Drilling has returned the best high grade Au / Cu results within the Paterson Province Telfer • Some of the better results include: Continuing to • HAD012: 139.4m
Slide 21: Increased Exposure to Fruta del Norte - Transaction Overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES SECTION THREE INCREASED EXPOSURE TO FRUTA DEL NORTE - TRANSACTION OVERVIEW
Slide 22: Fruta del Norte mine snapshot
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Fruta del Norte is a Tier 1 underground gold mine located in Ecuador Fruta del Fruta del Norte mine is 100% owned by Lundin Gold. Fruta del Norte mine overview1 Norte mine Newcrest has a ~32% interest in Lundin Gold First gold production was a
Slide 23: Transaction overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Increased economic exposure to Fruta del Norte gold production Transaction through acquisition of Lundin Gold’s finance facilities overview Transaction Newcrest has acquired the prepay and stream facilities and an offtake agreement in respect of
Slide 24: Newcrest to have exposure to ~1.9Moz of gold over life of mine
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Newcrest to Newcrest has increased its exposure to Fruta del Norte’s gold production have koz Au 400 exposure to 350 ~1.9Moz of 300 gold over Life Of Mine1,2 250 202 201 196 200 182 147 141 150 138 136 135 133 117 111 100 55 50 10 - FY21 FY22 FY23
Slide 25: Transaction highlights
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key benefits for Newcrest shareholders Transaction Significant cash flow Increases Newcrest’s direct exposure to the cash flows generated by the Tier 1, Fruta highlights from Tier 1 del Norte mine (Newcrest currently holds ~32% of Lundin Gold) A
Slide 26: Fruta del Norte transaction is consistent with Newcrest's stated strategy
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Fruta del Norte transaction is consistent with Newcrest’s stated strategy Our Vision: To be the Miner of Choice Our Pillars SAFETY & PEOPLE OPERATING TECHNOLOGY PROFITABLE SUSTAINABILITY PERFORMANCE & INNOVATION GROWTH ASPIRATIONS Zero fatalities
Slide 27: Equity Raising Overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES SECTION FOUR EQUITY RAISING OVERVIEW
Slide 28: Institutional Placement and Share Purchase Plan
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES A$1.0 billion fully underwritten institutional placement and non-underwritten Institutional share purchase plan to fund growth projects Placement Institutional Placement size Fully underwritten institutional placement to eligible institutional i
Slide 29: Use of equity raising proceeds
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Institutional Placement to fund the Transaction and growth projects Use of equity raising The proceeds from the Institutional Sources of Funds A$M US$M Placement will be used to fund the proceeds purchase of the Fruta del Norte Facilities and fu
Slide 30: Pro forma capitalisation
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Newcrest maintains its strong balance sheet position post Newcrest Transaction pro forma Pro Forma Capitalisation UoM Standalone Transaction1 Pro Forma capitalisation Newcrest Newcrest Basic Shares Outstanding1 #M 769 39 808 Market Capitalisation
Slide 31: Institutional Placement and SPP timetable
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Description Date Institutional 7:00pm (Melbourne time), Record date (for identifying Shareholders eligible to participate in the SPP) Placement Wednesday, 29 April 2020 and SPP Trading halt and announcement of the Institutional Placement and SPP
Slide 32: Find out more: www.newcrest.com
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Find out more: www.newcrest.com Engage with us +61 3 9522 5717 +1 (647) 255 3139 32
Slide 33: Appendix A: Supporting Information
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES APPENDIX A SUPPORTING INFORMATION
Slide 34: Facilities summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES The Facilities comprise three separate agreements with a total book Facilities value of US$552 million, implying a price to book value of ~0.83x1 summary1 A non-revolving subordinated term credit facility with a book value of US$235 million2 (in
Slide 35: Additional key terms of the Facilities
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key terms of the Facilities between Newcrest as Lender to Lundin Gold’s wholly-owned subsidiary, Aurelian Ecuador (the Borrower) Additional key terms of Security and ranking Newcrest, as owner of the Facilities, will rank ahead of holders of ord
Slide 36: Appendix B: Key Risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES APPENDIX B KEY RISKS
Slide 37: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES This section discusses some of the key risks associated with any investment in Newcrest, which may affect the value of Newcrest shares. The risks set out below are not listed in order of importance and do not constitute an exhaustive list of all r
Slide 38: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description Foreign exchange rates Given the geographic spread of Newcrest's operations, earnings and cash flows are exposed to multiple currencies, including a portion of spend at each operation being denominated in the local curre
Slide 39: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description • affect Newcrest’s future operating activities and financial results through changes to proposed project developments; and • result in changes in the estimation of the recoverable amount of Newcrest’s assets when assess
Slide 40: Key risks
Risk Description NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES These risks have become more prevalent in recent years, and in particular there has been an increasing social and political focus on: Key risks • the revenue derived by governments and other stakeholders from mining activities, wh
Slide 41: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description There can be no certainty as to what changes might be made to relevant law or policy in the jurisdictions where the Group has current or potential future interests, or the impact that any such changes may have on Newcres
Slide 42: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Risk Description be no assurance that this will be the case and future acquisitions, relocation benefits and legal and related Key risks costs may be material, which may impact Newcrest’s ability to effectively operate in relevant geographic areas
Slide 43: Key risks: financial risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES FINANCIAL RISKS Key risks Risk Description Newcrest has a range of debt facilities with external financiers including unsecured committed bilateral bank debt facilities and corporate unsecured senior notes (or ‘bonds’). Newcrest has structured the
Slide 44: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description Newcrest is exposed to counterparties defaulting on their payment obligations which may adversely affect Newcrest’s financial condition and performance. Newcrest limits its counterparty credit risk in a variety of ways.
Slide 45: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description Significant judgments and assumptions are required in making estimates of fair value. This is particularly relevant in the assessment of long-life assets. The CGU valuations are subject to variability in key assumptions
Slide 46: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description increased significantly as a result of a variety of factors, including increases in capital requirements, environmental considerations, economic conditions, remote locations, and the complexity and depth of ore bodies. M
Slide 47: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description Competition to replace reserves Newcrest evaluates potential acquisition and development opportunities for mineral deposits, exploration or development properties and operating mines. Newcrest's decision to acquire or de
Slide 48: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description No assurance can be given that the Mineral Resources or Ore Reserves referred to in this document will be recovered at the quality or yield presented or that downgrades of reserves and resources will not occur, and there
Slide 49: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description New acquisitions Newcrest's ability to make successful acquisitions and any difficulties or time delays in achieving successful integration of any such acquisitions could have an adverse effect on its business, operating
Slide 50: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description The state of New South Wales remains impacted by a severe drought. Cadia has implemented significant water saving efficiency measures and continues to pursue further water saving initiatives in the plant and optimisation
Slide 51: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description No assurances can be given that unanticipated adverse geotechnical, geothermal and hydrogeological conditions will not occur in the future or that such events will be detected in advance. Geotechnical Operational failure
Slide 52: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description In a number of jurisdictions where Newcrest has mining and related interests, there are also local requirements, contractual obligations and expectations regarding the extent to which local and national Failure to attrac
Slide 53: Key risks: governance and compliance
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks GOVERNANCE AND COMPLIANCE RISKS Risk Description Corporate culture and Newcrest’s reputation and licence to operate is dependent upon ongoing responsible, lawful and ethical business conduct business conduct. Failure to do so can result
Slide 54: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description The notes to Newcrest’s Financial Statements for the half year ending 31 December 2019 (excluding the note relating to the Indonesian Income Tax Matters following divestment of Newcrest’s interest in Gosowong) provide de
Slide 55: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the COVID-19 pandemic on Newcrest’s business (or on the operations of other businesses on which it relies), and there is
Slide 56: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description There are numerous occupational health and safety risks associated with mining and metallurgical processes such as travel to and from operations, the operation of heavy and complex machinery in challenging geographic loc
Slide 57: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description be managed (by the use of tailings storage facilities or, in the case of Lihir and as proposed at Wafi- Golpu, deep sea tailing placement) and waste rock (to be managed in waste rock dumps or in the case of Lihir, permit
Slide 58: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description During the COVID-19 pandemic it may be necessary for some of our operations to be placed into temporary care and maintenance if workforce safety and/or potential supply constraints are not appropriately managed. As part
Slide 59: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description in relation to the use of hazardous substances in processing activities and the use of deep sea tailings placement. Adverse publicity generated by non-government-organisations or others relating to extractive industries
Slide 60: Key risks: risks relating to the Transaction
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Risks relating to the Transaction Risk Description Key risks Newcrest undertook a due diligence process in respect of the acquisition from Orion Resource Partners (Orion) and The Blackstone Group (Blackstone) of Orion Co-V Pte Ltd and Gryphus Pte
Slide 61: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Risk Description Newcrest obtained representations and warranties from the Orion and Blackstone sellers in relation to the Targets and the Facilities. Despite making reasonable efforts, such representations and warranties Key risks Newcrest obtain
Slide 62: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Risk Description payment obligations, the Lundin Gold borrower could nonetheless have insufficient funds to make The Fruta del Norte mine is payments under the Facilities when due and/or anticipated payments or deliveries under the Facil
Slide 63: Key risks: general investment risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks General investment risks Risk Description Investment in shares There are general risks associated with investments in equity capital such as Newcrest shares. The trading price of Newcrest shares may fluctuate with movements in equity cap
Slide 64: Appendix C: International Offer Restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES APPENDIX C INTERNATIONAL OFFER RESTRICTIONS
Slide 65: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions This document does not constitute an offer of new fully paid ordinary shares (“New Shares”) of Newcrest Mining Limited (the “Company”) in any jurisdiction in which it would be unlawful. In particular, this document
Slide 66: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Statutory rights of action for damages and rescission (continued) The following is a summary of the statutory rights of rescission or to damages, or both, available to purchasers in Ontario. In Ontario, every purchaser of the New Shares purchased
Slide 67: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Guernsey The New Shares may only be offered or sold in or from within the Bailiwick of Guernsey either (i) by persons licensed to do so under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (as amended) (the "POI Law"); or (ii) to pe
Slide 68: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Norway This document has not been approved by, or registered with, any Norwegian securities regulator under the Norwegian Securities Trading Act of 29 June 2007. Accordingly, this document shall not be deemed to constitute an offer to the public i
Slide 69: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES United Arab Emirates This document does not constitute a public offer of securities in the United Arab Emirates and the New Shares may not be offered or sold, directly or indirectly, to the public in the UAE. Neither this document nor the New Shar
Slide 70: Appendix D: Underwriting Agreement
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES APPENDIX D UNDERWRITING AGREEMENT
Slide 71: Underwriting Agreement overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Newcrest has entered into an underwriting agreement with the Joint Lead Managers (Underwriting Agreement), pursuant to which the Joint Lead Managers are acting as joint lead managers, underwriters and bookrunners of the Institutional Placement. Un
Slide 72: Underwriting Agreement overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • any representation or warranty given by Newcrest under the Underwriting Agreement is or becomes incorrect, untrue or misleading; • any information supplied by or on behalf of Newcrest to the Joint Lead Managers for the purposes of the Institutio