The National, Tuesday July 30th, 2013
MOODY’S Investors Service yesterday downgraded Newcrest Mining Ltd from Baa2 to Baa3 with a negative outlook.
Newcrest confirms that the ratings outlook is negative.
“This concludes the review for downgrade we initiated on June 7, 2013, following Newcrest’s announcement of its most recent production guidance for FY14 and expectation for around A$5 billion to A$6 billion in asset write-downs.”
Moody vice-president and senior analyst Mathew Moore said: “The downgrade to Baa3 primarily reflects our expectation for weaker operating and financial metrics over the next two to three years, following a series of production disappointments, future guidance reductions and rising cash costs.
He added that “these production disappointments come at a time of increased volatility and sharp declines in gold price, which at previously elevated levels helped insulate some of the company’s past operating issues”.
Lower production levels and inflated costs combined with sharp declines in gold prices have contributed to contracting margins and weakened credit metrics to levels that are no longer consistent with the previous rating level.