Newcrest unveils A$659m H2 profits

NEWCREST Mining, owner of the Lihir gold mine and one of the Papua New Guinea’s most-active mining companies, was one of the only star performers on the Australian Stock Exchange last Friday following announcement of a big lift in its after tax profits.
Newcrest announced that after-tax profits for the six months to December had risen by 50% from A$438 million to a record A$659 million.
On a day when resource stocks were generally down and the ASX200 index shed 25.7 points to 2,568.1, Newcrest shares rose A$0.57 or 1.7% to A$34.10 after hitting a high of A$34.68.
On a turnover of over five million shares worth A$172 million last Friday, it was the fifth most-traded stock by value.
Analysts said Newcrest, which has significant mining operations in Australia, PNG and Indonesia, was likely to post a record net profit of more than A$1 billion during the 2011-12 financial year.
Newcrest chief executive Greg Robinson told analysts and the media last Friday that he expected gold prices to remain strong in the coming year and to rise to a new record high of US$2,500 an ounce.
 It would trade in a range of US$1,500 to US$2,000 an ounce, he said.
Total sales of copper and gold during the six-month period amounted to A$2.3 billion, up 19% from the A$1.97 billion in the same period last year.
Analysts noted that while Newcrest shares had risen by 1.7% last Friday, most of the rest of the resources sector was “struggling”.
Newcrest shares were trading at A$34.40, up 96 cents or 2.87%.
The company said exploration spending during the period totalled A$66 million with 44 drilling rigs operations with the single biggest chunk of exploration spending targeted its Lihir, Wafi-Golpu and Manus sites in PNG.
The Newcrest approach to PNG has been extremely positive and in strong contrast to the previous management of Lihir Gold, particularly since its takeover of Lihir in August last year.
The company’s joint venture with South Africa’s Harmony Gold expected to complete its pre-feasibility study on the Wafi-Golpu copper-gold operation by June, with the million-ounce expansion of Lihir Gold to be completed by December.
Newcrest had indicated it planned to bring Wafi-Golpu into production by 2017 with production of more than 600,000 ounces of gold and more than 300,000 tonnes of copper annually planned over a five-year ramp-up period.