MELBOURNE, Australia, July 24, 2014 /CNW/ - Newcrest Mining Limited
(ASX: NCM). The Company is conducting its carrying value review of all
assets as at 30 June 2014 in accordance with its usual policy and
processes, including an assessment of the reasonableness of all
physical, cost and economic assumptions used in these valuations.
As detailed in Newcrest's 2013 Financial Statements, the valuation of
Newcrest's assets is sensitive to changes in these physical, cost and
Areas of particular significance in the carrying value review work
currently being undertaken include:
a review of the operating cost assumptions for Lihir taking into account
recent cost performance following a full year of operation post the
plant expansion and the knowledge being gained from a major review of
operating costs currently underway at the site.
a review of exchange rate assumptions, noting the strength of the
Australian dollar relative to the long term US$0.80 assumption applied
for previous carrying value assessments, particularly in relation to
an assessment of timing, cost and resource utilisation in relation to
The assessment of carrying values remains work in progress and is
incomplete. While no decision has been made, the Board considers it
likely that its review will indicate an impairment of the carrying
value of assets in the range of A$1.5 billion to A$2.5 billion after
tax, primarily in relation to Lihir but also at Telfer and Bonikro.
This is in addition to the A$47 million after tax impairment of West
African exploration assets included in the financial results for the
six months ended 31 December 2013. The Company is scheduled to release
its 2014 financial results on 18 August 2014.
There are other assets within the Newcrest portfolio that the Board
believes have a market value much greater than their carrying value,
including Cadia Valley, Gosowong and Wafi Golpu.
Although an impairment has no impact on cash flow, a reduction in book
values in the range of A$1.5 billion to A$2.5 billion is estimated to
adversely impact gearing by approximately 3% to 6%. Under current
market and operating conditions, the Board remains comfortable with
gearing being at this level in the short to medium term given the near
term cash flow growth outlook of the Group.
The Board remains focussed on applying the free cash flow generated by
the Company to reduce debt and to progressively return to paying
The Company has no present intention to undertake an equity raising.
A copy of the release may be found at www.newcrest.com.au and on www.sedar.com.
SOURCE: Newcrest Mining Limited
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