Newcrest Mining Falls

The Australian miner posted results for fiscal 2018

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Newcrest Mining Ltd. (ASX:NCM, Financial) fell nearly 3% to close at 19.95 Australian dollars ($14.46) per share on the Australian Stock Exchange after posting fiscal 2018 results on Wednesday.

The company said is operations produced $601 million in free cash flow, a 19% decline from 2017. The Australian miner was able to deleverage its balance sheet so that the net debt amounted to $1 billion at the end of June, which was a 31% decline from the prior year.

Newcrest Mining has about $953 million in cash on hand and short-term securities and nearly $2 billion in borrowings. The interest coverage ratio, which measures a company's ability to pay interest expenses on debt, improved to 18 in 2018 from 13.6 in 2017.

The miner paid $105 million in dividends to shareholders. The stock has a forward annual dividend of about 14 cents, yielding 0.92%.

In June, Newcrest achieved a key milestone at the Cadia East panel cave. It processed 30 million tons of material from the gold deposit, which is one of the country’s largest.

At the Lihir gold deposit in Papua New Guinea, Newcrest Mining reached a mill throughput of 14.3 metric tons of material processed for the production of gold. The mill throughput was an annual record with a volume of 955,000 ounces. Therefore, the asset was a strong generator of free cash flow during the year.

The miner's other assets are Telfer in Western Australia, Gosowong in Indonesia and Bonikro in Ivory Coast.

In total, the company produced 2.346 million ounces of gold, 78,000 tons of copper and 936,000 ounces of silver.

Revenue came in at $3.562 billion, backing a net profit of $459 million. Thanks to higher commodity prices and strong operations, the earnings before interest, taxes, depreciation and amortization margin improved to 44%. It was 40.5% in 2017.

Among its other projects, the company is advancing the Wafi-Golpu metallic project in Papua New Guinea, where it is developing a gold and copper deposit that will be one of the most prolific in the world. The miner is also looking into expanding the life of operations at Cadia and exploring for opportunities in Ecuador.

Newcrest Mining has a market capitalization of $11.24 billion, a price-book ratio of 2.03 and an enterprise value-to-EBITDA ratio of 12.55. The share price is below the 200-, 100- and 50-day simple moving average lines. The 52-week range is $14.21 to $17.84.

The company has 766.49 million shares outstanding, of which 99.3% is float.

The recommendation rating is 2.7 out of 5. The average target price is $12.10.

Disclosure: I have no positions in any securities mentioned in this article.