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.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.