BMO Capital Markets Global Metals & Mining Conference 25-27 February 2013, Florida USA
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BMO Capital Markets Global Metals & Mining Conference 25-27 February 2013, Florida USA Greg Robinson Managing Director and Chief Executive Officer
Disclaimer Forward Looking Statements These materials include forward looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “continue”, and “guidance”, or other similar words and may include, without limitation, statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs. Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the company’s actual results, performance and achievements to differ materially from any future results, performance or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licenses and permits and diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which the company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation. Forward looking statements are based on the company and its management’s good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the company’s business and operations in the future. The company does not give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the company’s business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the company or management or beyond the company’s control. Although the company attempts and has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in forward looking statements, there may be other factors that could cause actual results, performance, achievements or events not to be as anticipated, estimated or intended, and many events are beyond the reasonable control of the company. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Forward looking statements in these materials speak only at the date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information the company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based. Ore Reserves and Mineral Resources Reporting Requirements As an Australian company with securities listed on the Australian Securities Exchange (“ASX”), Newcrest is subject to Australian disclosure requirements and standards, including the requirements of the Corporations Act and the ASX. Investors should note that it is a requirement of the ASX listing rules that the reporting of ore reserves and mineral resources in Australia comply with the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”) and that Newcrest’s ore reserve and mineral resource estimates comply with the JORC Code. As a company listed on the Toronto Stock Exchange (“TSX”), Newcrest is subject to certain Canadian disclosure requirements and standards, including the requirements of National Instrument 43-101 - Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators (“NI 43-101”). In accordance with NI 43-101, Newcrest reports its ore reserves and mineral resources estimates in compliance with the JORC Code, along with a reconciliation to the material differences between the JORC Code and the applicable definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM Definition Standards). In relation to the December 2012 Resources and Reserves Statement, the reconciliation is set out in Newcrest’s Canadian News Release dated 8 February 2013, and is available at www.sedar.com and at Newcrest’s website www.newcrest.com.au. Except as otherwise noted in that document, there are no material differences between the definitions of Measured, Indicated and Inferred Mineral Resources, and Proven and Probable Reserves, under the CIM Definition Standards and the equivalent or corresponding definitions in the JORC Code. Competent Person’s Statement The information in this presentation that relates to Exploration Results and other scientific and technical information is based on information compiled by C. Moorhead, EGM Minerals for Newcrest who is a Fellow of The Australasian Institute of Mining and Metallurgy, and a full-time employee of Newcrest. Mr Moorhead has sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the JORC Code and is a Qualified Person within the meaning of NI 43-101. Mr Moorhead consents to and has approved the inclusion in this presentation of the matters based on this information in the form and context in which it appears including sampling, analytical and test data underlying the results. For details of exploration reports refer to the Newcrest website at www.newcrest.com.au. Non-IFRS Financial Information This presentation uses Non-IFRS financial information including Underlying Profit, EBITDA and EBIT. Underlying Profit is presented to assist in the assessment of the relative performance of the Group. EBITDA and EBIT are used to measure segment performance and have been extracted from the Segment Information disclosed in the ASX Appendix 4D. Non-IFRS information has not been subject to review by Newcrest’s external auditor. 2
Newcrest Mining Newcrest in a snapshot Bonikro • 4th largest global gold producer1 • 6 production assets in 4 countries, primarily Australia and Asia Pacific • Gold production 2.3 – 2.5Moz2 Gosowong Manus Is • Copper production 75 – 85kt2 Lihir Is Tandai • Reserve life of 38 years Wafi-Golpu Hidden Valley • Workforce 19,000+ Newcrest strategy Telfer Namosi JV • Long life, low cost, moderate growth • Australia, SE Asia focus Cadia Valley • Unhedged, low gearing, dividend growth Gold Equivalent Resource • Focus on early stage resources +50Moz 20-50Moz • People & technical capability focus 0-20Moz • Management incentives ROCE, reserve growth, and cost position 3 1 By market capitalisation 2 FY13 production guidance.
Recent highlights • A$3.5B in major brownfield projects delivered – Cadia East (A$2.4B) 8% above budget – Lihir MOPU (A$1.4B) 8% above budget – Wafi Golpu, the next longer term growth project • Capital expenditure to decline – Projects commissioned, capital spend declining, production and cashflow growing – Stripping at Telfer and Bonikro winding down by June 2013 • Growth in Reserves and Resources – Reserves: gold 10% increase, copper 43% increase – Resources: gold 8% increase, copper 5% increase • Corporate bonds issued and bank facilities renewed • New Enterprise Agreements in place for Cadia & Telfer employees (4 years) 4
Half year financial results • Profit & cash flow – Profit1 of A$320M – Cash flow from operations of A$225M – EBITDA margin of 41%; EBIT margin of 26% • Significant investment in growth – Capital expenditure of A$1,038M – Exploration expenditure of A$84M • Balance sheet remains strong – Capex and gearing have peaked – Gearing of 16.9%2 - expect reduction from this level – Undrawn debt facilities of US$1,405M – Interim dividend maintained at 12cps (unfranked) 1 Profit after tax and non-controlling interest 5 2 Calculated as net debt to net debt plus equity
Interim dividend maintained Dividend growth Increasing payout ratio 60 1200 FY13 Interim dividend of 12cps 34% including 50 1000 (unfranked) special dividend Statutory Profit (A$M) 29% 40 800 Dividend (cps) 25% 30 600 20% interim 20 400 16% 15% 11% 12% 10% 9% 10 200 0 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 1H FY13 Interim Dividend Final Dividend Special Dividend FY Statutory Profit Calculated as DPS divided by EPS (underlying) Objective is to grow profit and cashflow, maintain a conservative balance sheet, spend within means, and return cash to shareholders via ordinary, special dividends 6
Financial flexibility with long dated debt Long dated debt repayment profile Peak gearing (US$M) 16.9% 1,200 12.5% 750 750 500 100 25 2015 2017 2020 2021 2022 2041 Jun 12 Dec 12 Private Placement Bilateral Facilities Corporate Bonds US$1,405 million in undrawn facilities at 31 December 2012 Objective is to reduce level of bank debt over next 18 months as major projects ramp up 7
Near term growth from past investment Gold Production 5-year production growth of 35% to 50% • CAGR = 5 to 10% per annum 3.1Moz to • Past investments drive future growth 2.3Moz 3.5Moz 2.29 to – Cadia East = 30 to 40% of 5 year growth Moz 2.5Moz – Lihir = 50 to 70% of 5 year growth – Other growth option studies continue Copper Production 5-year production growth of 20% to 30% • CAGR = 5 to 7% per annum 100kt to • Cadia East ramp-up delivers growth 75kt 110kt 76kt to • Telfer production declines to 25ktpa from FY14 85kt Annual production range: gold bar designates up to low end of range, blue signifies high end of range 8 As provided in August 2012 market guidance
Cadia East project Cadia East Summary • A$2.05 billion brownfield project – Underground panel cave mine – Plant expansion to 26Mtpa capacity • Increases annual production to: – 700 to 800koz gold (from ~ 450koz) – 90kt copper (from ~ 75kt) • Lowest quartile cash costs • Province life of at least 30 years Project Status • First panel cave in commercial production on 1 January 2013, ramping up • Cave performing well • Project cost within 8% above budget • Next phase crusher completes March 2013 Panel cave 1 schematic at 18 February 2013 Drawbell drilled and fired (x54) • Second panel cave development on track Drawbell drilled and ready to fire (x27) 9
Lihir MOPU project Lihir MOPU Summary Project Status • US$1.4 billion brownfield project • Project complete, in operation on 1 February 2013, and ramping up – Process plant expansion • Increases annual production to 1Moz gold • Project cost within 8% above budget • Second quartile cash cost • Second phase plant optimisation and flotation upgrade project underway • Province life of at least 30 years • Target FY15 production at 1.0-1.2 Moz 10
Wafi Golpu – the next major province Wafi Golpu Summary • US$4.8 billion (100%) greenfield project • Underground panel cave mine • Process plant • Support infrastructure • Annual production • 500-600koz gold • 300-400kt copper • First production around 2019; >30yr mine life • Lowest quartile cash cost Project Status • Technical pre-feasibility completed • Engaging with the government, landowner communities and other stakeholders • Resource development & exploration drilling continues • Optimise project capital and metallurgical parameters • Commence feasibility study once suitable stakeholder arrangements in place 11
Wafi Golpu in the gold sector • Wafi-Golpu Mineral Resource containing 29Moz gold and 9Mt copper1 • Golpu Ore Reserve containing 12.4Moz gold and 5.44Mt copper1 Selected SE Asia porphyry copper-gold deposits1 1.30 Oyu Tolgoi 1.20 248 Moz Golpu 2007 1.10 13 Moz Grasberg 1.00 Golpu 2010 35 Moz 329 Moz 0.90 Ok Tedi 0.80 Golpu 2012 20 Moz Tampakan Cu (wt %) 69 Moz 0.70 94 Moz Northparkes 0.60 12 Moz Namosi 0.50 54 Moz Frieda River Ridgeway Didipio Batu Hijau Cadia Valley 37 Moz 11 Moz 5 Moz 0.40 83 Moz Kingking 125 Moz Dexing 24 Moz 0.30 16 Moz 0.20 0.10 0.00 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 1.10 In production Project Golpu as at 2007 and 2010 Golpu as at 2012 Au (g/t) Sourced from Company Reports and Wood Mackenzie Database (accessed 28/06/2012). 12 Bubble size represents total resource gold-equivalent ounces, based on US$1250/oz gold, US$3.10/lb copper on an in-situ basis 1 100% share
Options for medium term growth Potential for delivery within 5 years Delivery beyond 5 years Lihir tune-up and expansion to ~1.4Moz pa Wafi-Golpu Cadia mine to mill to optimised to 30Mtpa Telfer underground West Dome Deeps Further Bonikro plant expansions Lihir Argillic Ore and Stockpiles Namosi open pit mine Gosowong exploration success O’Callaghans tungsten mine Côte d’Ivoire exploration success • Multiple project options at various stages of evaluation • Conservative approach to capital decisions at this time • Brownfield focus for Exploration 13
Exploration program ~ A$150M in FY13 Bonikro and Côte d’Ivoire: A$25 to 30m • Exploration around Bonikro Mine Tandai, Manus Island and Mt Andewa JVs: A$10 to 15m • Accelerated regional exploration program AFRICA • Grassroots exploration CÔTE D’IVOIRE PHILIPPINES MANKONO Wafi-Golpu and Morobe: A$35 to 40m BOUAFLE Yamoussoukro • Wafi-Golpu project Gosowong: A$20 to 25m • Wafi Transfer Zone discovery exploration • Step out drilling around Toguraci and Kencana • Regional exploration Abidjan BONIKRO • Regional grassroots exploration within the CoW Manus Is JV 100 km PAPUA NEW GUINEA Tandai JV Wafi-Golpu/ Lihir: A$10 to 15m INDONESIA Morobe • Resource and Reserve drilling Mt Andewa JV • Offshore exploration Hidden Valley Telfer: A$20 to 25m • West Dome advanced exploration FIJI AUSTRALIA Namosi: A$5 to 10m • Discovery exploration in Namosi SPL Cadia Valley Operation Exploration objectives: Advanced Project 1000 km • Resource additions < $20/oz Exploration Project • Early stage province capture • Drilling > 50% spend 14 • 13 projects, 36 drill rigs, $150M Indicative spends shown, Newcrest share
PNG, Morobe Mining JV – firming up Wafi Golpu SCHEMATIC SECTION Golpu Project Recent Drilling Looking North West East • Increase in Lift 1 gold and copper WR423 758m @ grades 0.67g/t Au, 1.28% Cu WR440 286m @ • Confirms eastern boundary of Lift 2 5,000 mRL 0.53g/t Au, 1.22% Cu Lift 1 4850 mRL Lift 2 • Mineralisation continuity below Lift 2 • WR429W intersects: Indicated • 658m @ 0.86g/t Au, 1.09% Cu • Including 246m @ 1.68g/t Au, 4100 mRL 1.97% Cu Lift 3 WR429W_3 Inferred 658m @ 0.86g/t Au, 1.09% Cu incl. 3850 mRL 246m @ 1.68g/t Au, 1.97% Cu Exploration 250 m OPEN 20,600 mE 15
Telfer - West Dome Deeps • Drilling targets structural and stratigraphic repeat of Main Dome Telfer Deeps • Parent holes are well advanced and expected to intersect target in the coming quarter SCHEMATIC SECTION WEST DOME MAIN DOME West Dome Main Dome final final pit design pit design Open Pit Extensions 5,000 mRL Exploration Decline SLC Resource(2) (pre mining) Drill hole 3.3Moz Au, in progress 220Kt Cu Lower 4,000 mRL West Dome VSC Resource(1) Limey Unit 1.3Moz Au, Deeps Target 160Kt Cu 500 m 59000 mE 61000 mE 16 1 Newcrest Annual Statement of Mineral Resources & Ore Reserves to December 31, 2012. 2 Newcrest Annual Statement of Mineral Resources & Ore Reserves to June 30, 2008.
Côte d’Ivoire – near mine and regional PLAN VIEW Bonikro District Drilling Côte d’Ivoire AFRICA • Reserve increase at Bonikro of 0.2 million ounces of gold(1) • Success near mine Mankano • Hiré 80m @ 6.4g/t Au from BFRC032 32m @ 1.0g/t Au Timbé / Bouake 99m BFRC041 8m @ 18g/t Au • Dougbafla 32m @ 2.1g/t Au 3 Bouaflé from 205m Dougbafla DEDD001 32m @ 2.1g/t Au Yamoussoukro ORC1215B 19m @ 1.6g/t Au Dougbafla and 12m @ 4.1g/t Au DNDD052 17m @ 1.3g/t Au, 15m @ Oumé Regional Exploration 2.3g/t Au and 9m @ 4.0g/t Au 1 2 Hiré Hire HDD2603C 80m @ 6.4g/t Au • Bouaflé diamond drilling Bonikro Abidjan • 8m @ 18g/t Au from 116m Newcrest Tenement • 32m @ 1.0g/t Au from 140m Greenstone 100 km 17 1 Newcrest Annual Statement of Mineral Resources & Ore Reserves to December 31, 2012. Resource figures quoted on 100% basis.
Long reserve life, concentrated focus Reserve life (years) Number of Mine Provinces 31 42 28 17 17 19 19 7 Newcrest Goldcorp Newmont Barrick Barrick Newmont Goldcorp Newcrest Source: Intierra Source: company filings December 2012, note Newmont data from June 2012 Based on minimum 40% holding. At least one project at mine must be pre-feasibility / concept • Long reserve life in the industry Percentage of Mine Provinces in “Top 30” Mines 43% 29% • Concentration of high quality assets 24% 16% • Brownfield focus continues to deliver upside Newcrest Goldcorp Newmont Barrick Source: Intierra; Top 30 NPV basis from BMO Equity Research at 5% discount rate and street consensus pricing; current as of 8-Jan-2013 18
Main production at the low end of the cost curve Gold industry cash costs USD$/oz 2,000 1st 2nd 3rd 4th 1,800 Quartile Quartile Quartile Quartile 1,600 Hidden Valley 1,400 Major growth projects 1,200 in 1st and 2nd quartile Bonikro 1,000 Telfer 800 Lihir Cadia Valley 600 Gosowong 400 200 Percentile 0 0% 25% 50% 75% 100% Industry Reported Total Cash Cost ($ oz) Source: Thompson-Reuters GFMS ; CY2012 (Q1 to Q3) 19
Productivity challenge: people, innovation & technology Innovation turned into reality The next phase Remote expert Remote Operators Central control rooms Semi-continuous underground mining monitoring Continuous open pit mining systems On-line gold analysers Technical testing site Autoclave efficiency Coarse particle flotation machines Adopting bulk underground at Cadia East Capability training, speed Hard rock mechanical tunnelling Operator training Early waste removal People logistics Cave flow tracking Waste technology improvement Rock cutting 20
Conclusion • Good major projects delivery achieved • Production growth from Cadia and Lihir – Production growth from lower cost operations – Strong free cash flow capacity – Capital spend declining • Operational efficiency focus • Wafi-Golpu the next major province – Feasibility study expected to commence late 2013 • Exploration results continue to generate options • Strong financial position – Reward shareholders 21
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