Newcrest Mining Limited is engaged in exploration, mining & development of gold & gold-copper concentrate in Australia, Indonesia, Papua and New Guinea. Its projects include Cadia Valley, Telfer & Lihir, among others.
Gold miners face major write-downs and a drop in the size of their reserves due to a sharp fall in the price of bullion this year, which has reduced the value of those reserves and undermined their economic viability.
Gold started 2013 at around $1,600/oz, but is now just above $1,200.
Barrick Gold (ABX) last assumed a price of $1,500/oz and Newmont Mining (NEM) $1,400/oz price; Barrick, Newcrest Mining (NCMGY) and other miners have already taken billions of dollars in write-downs this year.
Kinross Gold (KGC) might be less affected going forward, as its latest reserves assume $1,200/oz.
Newcrest Mining (NCMGF.PK) filed a statement with the ASX Friday morning saying it will be taking writedowns of $5B-$6B for the financial year. The gold miner will also be closing its Brisbane office and reducing capex by 33%. Newcrest's stock, which had already lost more than $1B in market value in the past two days, is plunging this morning on the news, down 11.2% in early trade on the ASX.
Australian miners are trading higher today, regaining much of what they lost in the previous session after metal futures rose overnight in London: BHP Billiton (BHP +1.7%), Rio Tinto RIO +1.5%), Fortescue Metals Group (FSUMY.OB +1.6%), and Newcrest Mining Ltd. AU:NCM +1.92% (NCMGY.PK +2.2%).
Newcrest Mining (NCMGY.PK +1.6%) moves higher even as the Aussie gold miner cuts production guidance due to sharply higher costs and equipment shortages. The company is noteworthy for, among other things, not hedging any of its production.
Australia's Newcrest Mining (NCMGY.PK) will buy New Guinea-based Lihir Gold (LIHR) in a sweetened A$9.2B ($8.5B) bid, creating the world's fifth-largest gold producer. Lihir can "continue existing discussions with third parties" until June 8. (PR)