Newcrest Mining — H1 FY2015 Earnings Presentation
36 slides from Newcrest Mining's earnings presentation, Feb 13, 2015
Slide 1: 2015 Half Year Financial Results
2015 Half Year Financial Results 13 February 2015 Sandeep Biswas Gerard Bond Managing Director and CEO Finance Director and CFO
Slide 2: Disclaimer: Forward Looking Statements
Disclaimer Forward Looking Statements These materials include forward looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “continue”, and “gu
Slide 3: Disclaimer: Competent Person's Statement
Disclaimer Competent Person’s Statement The information in this presentation that relates to Exploration Targets, Exploration Results, Mineral Resources and Ore Reserves and other scientific and technical information, is based on information compiled by Mr C. Moorhead. Mr Moorhead is the Executive G
Slide 4: Safety
Safety Lost Time Injury Frequency Rate per million hours 0.65 0.36 0.29 • Fatality at Hidden Valley December 2014 FY13 FY14 H1 FY15 • Strengthened focus on major hazards and Significant Total Recordable Injury Frequency Rate Potential Incidents per million hours • Environmental incident rates 3.6 3.
Slide 5: Executive Summary
Executive Summary 1 • Statutory profit and Underlying profit of A$200M • Free cash flow of A$268M • A$257M (US$220M) of debt repaid and debt maturity profile extended • Gold production down 6% half-on-half to 1.1Moz • Copper production up 19% half-on-half to 50.3kt 1 • EBITDA margin steady at 36% 1
Slide 6: Industry leading All-In Sustaining Cost margin and reserve life
Industry leading All-In Sustaining Cost margin and reserve life US$ 600 Newcrest 500 H1 FY15 Barrick Indicative Goldcorp 400 AISC1 Newcrest margin Kinross 300 per ounce Newmont 200 AngloGold 100 Gold Fields Note: Bubble size represents relative size of gold reserves 0 0 5 10 15 20 25 30 35 40 Indica
Slide 7: EDGE – comprehensive, company-wide improvement program
EDGE – comprehensive, company-wide improvement program • Edge is pursuing sustained cash flow uplift • Execution of initiatives with rigorous performance Key focus areas management underway over past 9 months • Transformation engages the whole organisation: • 900+ initiatives Safety and Cash Profita
Slide 8: Lihir – underlying issues being addressed
Lihir – underlying issues being addressed All In Sustaining Cost Operational overview per ounce • Gold grade down 15% to 2.35g/t (from 2.76g/t in December 2013 half) in A$ AISC US$ AISC line with expectations • Gold production down 18% to 315koz compared to December 2013 half • Continuation of unpla
Slide 9: Flexible plant that enables us to optimise recovery and throughput
Flexible plant that enables us to optimise recovery and throughput Crushing Levers discussed at investor day 2014 to maximise cash generation ability from the autoclaves: Grinding Direct Indirect – Blending the level of sulphur in feed feed feed – Balancing flotation to direct feed Flotation – Balan
Slide 10: Lihir – New operating strategy
Lihir – New operating strategy Prior operating strategy Challenging set thinking New operating strategy Old strategy: Shift in approach: New strategy: Maximise gold recovery in Moving from managing the Maximise gold production autoclaves autoclave feed sulphur throughput in autoclaves concentration
Slide 11: Lihir – Optimising oxygen capacity
Lihir – Optimising oxygen capacity February 2015 – Taking autoclaves 1,2 & 3 off line to install modern oxygen flow meters (autoclaves 2&3 also having regular maintenance impacting February production) – New flow meters increase capacity and flexibility in the autoclave circuit – Increases direct fe
Slide 12: Lihir plant uptime: Improving shutdown planning and execution
Lihir plant uptime: Improving shutdown planning and execution Reducing duration: Actual outage Optimising shutdown planning… Increased plant uptime time (hours) Autoclave 1 example Key improvement factors Planned outage time (hours) • Improved kitting & staging preparation • On-the-job handovers • C
Slide 13: Cadia – exceeding expectations
Cadia – exceeding expectations All In Sustaining Cost Performance overview per ounce • Cadia East ramping up in FY15 ahead of schedule A$ AISC US$ AISC • Gold production 4% higher than the corresponding period • Copper production 21% higher than corresponding period • Cadia East Panel Cave 2 achieve
Slide 14: Telfer – strong performance, future options review broadened
Telfer – strong performance, future options review broadened All In Sustaining Cost Performance overview per ounce • Gold production down 2% compared to corresponding period A$ AISC US$ AISC • Copper production was up 14% compared to corresponding period • Next cutback investment continues to be eva
Slide 15: Other operations' half year performance
Other operations’ half year performance compared with corresponding period Bonikro Gosowong Hidden Valley per ounce A$ AISC US$ AISC A$ AISC US$ AISC 2,407 2,472 A$ AISC US$ AISC 1,751 1,799 1,484 1,369 1,627 1,501 1,491 1,331 AISC 1,132 1,010 990 913 1,205 1,102 992 907 897 800 664 682 683 625 FY13
Slide 16: 2015 Half Year Financial Results – Gerard Bond
2015 Half Year Financial Results Gerard Bond Finance Director & CFO
Slide 17: 2015 Half Year financial highlights
2015 Half Year financial highlights Profitability 1 • Statutory profit and Underlying profit of A$200M • AISC spend of A$1.05bn - 12% lower than corresponding period 1 • EBITDA of A$730M 1 • EBITDA margin 36.3% Cash Flow • Cash flow from operating activities of A$566M • Free cash flow of A$268M • Al
Slide 18: Cadia and Telfer performances underpin increased margin
Cadia and Telfer performances underpin increased margin All In Sustaining Cost margin HY15 Performance overview US$/oz • Increased production from higher margin Cadia and Telfer • Lower stripping and sustaining capital spend 1,038 • Company-wide improvement program Edge continues to target 429 474 4
Slide 19: Group underlying profit
Group underlying profit Underlying profit down 3% to A$200M compared to corresponding period • Lower USD commodity prices largely offset by lower AUD FX rate • Increased copper by-products offset by fall in gold production 31 (27) (60) (10) 52 (66) 81 22 (18) (25) 13 207 200 Gold Copper and Silver 1
Slide 20: Cash flow from operations
Cash flow from operations A$338M or 148% higher than corresponding period • Significantly lower payments to suppliers and employees • Voluntary R&D tax adjustment in corresponding period • Marginally lower receipts from customers due to marginally lower sales volume 96 286 (3) (A$M) 566 (41) 228 Ope
Slide 21: Free cash flow
Free cash flow A$497M higher than corresponding period 338 • Improvement driven by increase in operating cash flow • All operations are free cash flow positive • Benefitted from completion of major stripping campaigns and major projects 268 (A$M) 16 38 32 ‐229 73 Dec 2013 Production stripping Sustai
Slide 22: Debt structure – bank facilities further extended in January 2015
Debt structure – bank facilities further extended in January 2015 Maturity profile (assuming longest dated bilateral facilities drawn first) US$M as of 31 December 2014 $1,400 $1,200 Bilateral Loan Facilities ‐ Undrawn Bilateral Loan Facilities ‐ Drawn $1,000 Rule 144A Bonds US Private Placement $80
Slide 23: FY15 foreign exchange sensitivities and oil hedges
FY15 foreign exchange sensitivities1 and oil hedges Foreign Exchange Full Year Site Parameter Movement EBIT Impact Lihir USD/PGK + PGK 0.10 US$ 14M Hidden Valley USD/PGK + PGK 0.10 US$ 4 M Gosowong USD/IDR + IDR 1,000 US$ 5 M Oil hedges entered into for FY 15 Site Fuel Unit Quantity Lihir Gasoil2 ‘0
Slide 24: 2015 Half Year Financial Results – Sandeep Biswas
2015 Half Year Financial Results Sandeep Biswas – Managing Director & Chief Executive Officer
Slide 25: Golpu progressing to feasibility study
Golpu progressing to feasibility study • World class ore body with mineral resources of 9 million tonnes of copper and 20 million ounces of gold1 • Highlights of updated pre-feasibility study stage one2 – Stage one capital expenditure is forecast at US$2.3B – First production targeting 2020 – Approx
Slide 26: Summary
Summary • Strong cost and production performance at Cadia and Telfer for the half • Gold production guidance increased to between 2.3 – 2.5 million ounces • AISC guidance reduced to between 2.3 – 2.5 billion dollars • AISC of A$917 per ounce and AISC margin of A$481 per ounce 3 key focus areas Opera
Slide 27: Questions & answers
Questions & answers
Slide 28: Appendices
Appendices
Slide 29: Underlying Profit Reconciliation
“Underlying Profit” Reconciliation 31 December 2014 31 December 2013 6 months ended A$M A$M Statutory Profit 200 40 Research and development tax claim amendment - 120 Asset impairment (after-tax) - 52 Non-controlling interest impact - (5) Total Significant Items - 167 Underlying profit1 200 207 Non-
Slide 30: 2015 financial year production guidance
2015 financial year production guidance1 Operation Gold Production Operation Copper Production Cadia 610 – 650 koz Cadia Valley ~ 70 kt Lihir 680 – 720 koz Telfer ~ 25 kt Telfer 510 – 560 koz Group 90 – 100 kt Gosowong 300 – 360 koz Operation Silver Production Hidden Valley (50%) 90 – 110 koz Group
Slide 31: 2015 cost and capital guidance
2015 cost and capital guidance1 Gosowong Hidden Bonikro Corporate Cadia Lihir Telfer (100%) Valley (50%) (100%) & Other Group A$M A$M A$M A$M A$M A$M A$M A$M All-In Sustaining Cost (key components) • Operating costs 2 120-140 765-855 430-460 210-225 115-130 80-100 - 1,750-1,900 (post by-product cred
Slide 32: Long-term metal assumptions used for Reserves and Resources estimates
Long-term metal assumptions used for Reserves and Resources estimates Long Term Metal Assumptions Newcrest Managed MMJV Managed Mineral Resources Estimates Gold Price US$ 1,350/oz US$ 1,400/oz Copper Price US$3.40/lb US$3.50/lb Silver Price US$23/oz US$25/oz Ore Reserves Estimates Gold Price US$ 1,2
Slide 33: Estimated second half FY15 profit sensitivities
Estimated second half FY15 profit sensitivities1 FY15 FY15 FY15 EBIT Impact AISC Impact AISC Impact Parameter Base Case Movement A$M A$M A$/oz Gold Price US$1,250 US$10/oz 16.0 0.6 0.2 Copper Price US$2.50/lb US$0.05/lb 6.1 6.1 2.6 Silver Price US$20/oz US$0.50/oz 0.7 0.7 0.3 FX Rate2 AUD1 = USD0.80
Slide 34: Reserves and resources movements
Reserves and resources movements Newcrest Gold Mineral Resource Changes FY14 Key drivers (3) (5) • Telfer - removal of M-Reefs from Main Dome pit optimisation plus sensitivity to exchange rate. (2) • Cadia Hill & Bonikro – application of a more conservative Gold (Moz) 150 140 constraining pit-shells
Slide 35: Peer comparison reserves and reserve life
Peer comparison reserves and reserve life Reserve Life - Gold (Years)1,2 Reserves - Gold (Moz)1,2 32 102 86 22 75 20 66 17 54 49 16 16 15 43 1 Reserves reflect proven and probable gold reserves (contained metal) as at 31 December 2014 for Newcrest and 31 December 2013 for other companies, adjusted f
Slide 36: FY15 Exploration activity
FY15 Exploration activity AFRICA Other Greenfields and Projects: ~A$25M Bonikro and Côte d’Ivoire: A$5M to A$6M CÔTE D’IVOIRE Near-mine resource base and search for new growth opportunities within regional CI. MANKONO BOUAFLE Yamoussoukro PHILIPPINES Gosowong: A$11M to A$15M Abidjan BONIKRO New