Bank of America Merrill Lynch Global Metals, Mining & Steel Conference May 2013, Barcelona

Transcription

1 Bank of America Merrill Lynch Global Metals, Mining & Steel Conference May 2013, Barcelona Greg Robinson Managing Director and Chief Executive Officer

2 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 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators ( NI ). In accordance with NI , 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 and at Newcrest s website 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 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 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

3 Newcrest Mining Newcrest in a snapshot 4 th largest global gold producer 1 Bonikro Primarily Australia and Asia Pacific 6 production assets in 4 countries FY13 Gold production Moz 2 Gosowong Manus Is FY13 Copper production 75 85kt 2 Reserve life >30 years Tandai Wafi-Golpu Lihir Is Hidden Valley Gearing 17% 3 Newcrest strategy Telfer Namosi JV Gold Long life, low cost, moderate growth Gold Equivalent Resource +50Moz 20-50Moz 0-20Moz Cadia Valley Australia, SE Asia focus Unhedged, low gearing, dividend growth Focus on early stage resources People & technical capability focus Management incentives = ROCE, reserve growth, and cost position 1 By market capitalisation 2 March 2013 production guidance. 3 Per December 2012 half year financial results. Gearing = Net Debt / (Net Debt + Equity) 3

4 Why Newcrest Find Company built on exploration success Low cost resource capture Long Reserve life (>30 years) Develop Successful delivery of major projects Near term growth from capital already invested Operate High quality, low cost assets drive growth Focus on consistent, predictable delivery Strong balance sheet Positioning for higher free cash flow 4

5 Near term growth from past investment Cadia commercial production from Jan 2013 Highly automated, large tonnage bulk underground mine expected mining cost $6/t Production growth to ~750,000 ounces gold p.a. over next 5 years Lowest cost quartile, 30 year mine life Lihir plant expansion completed Feb year + mine life, second quartile cash cost Production capability of ~1 million ounces p.a. Old plant refurbishment key to improving reliability (> 50% complete) Cadia and Lihir drive > 90% of gold production growth over next 5 years 5

6 Production growth at low end of the cost curve Gold industry cash costs (post by product credits) USD$/oz 2,000 1,800 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile 1,600 Hidden Valley 1,400 1,200 Major growth projects in 1 st and 2 nd quartile 1,000 Telfer Bonikro Gosowong Cadia Valley Lihir Percentile 0 0% 25% 50% 75% 100% Source: Thompson-Reuters GFMS; CY2012 (Q1 to Q3) Future Wafi-Golpu cost position Industry Reported Total Cash Cost ($/oz post by product credit) All-in sustaining cash cost around $1,250 in FY13, expected to be lower in future years 6

7 Declining capital expenditure profile 3,000 A$m (Capex and Cashflow) 2,500 2,000 1,500 1, Wafi Golpu Major projects Minor projects Development Sustaining 0 FY12 FY13 FY14 FY15 FY16 FY17 Cadia East panel cave 1 established and Lihir plant expansion complete FY14 capital remains focused on Cadia and Lihir Studies paused on some longer dated projects Wafi-Golpu capex estimate review, minimal expenditure in FY14 Higher free cashflow anticipated from increased production and declining capital expenditure 7

8 Maintain and grow dividends Dividend growth Increasing payout ratio FY13 Interim dividend of 12cps (unfranked) Grow cashflow, maintain a conservative balance sheet and return cash to shareholders 8

9 Strong balance sheet Long dated debt repayment profile 1 Conservative balance sheet to absorb gold price volatility Long dated debt repayment profile Credit ratings BBB & Baa2, stable outlook Gearing 17% 1 1 Per December 2012 half year financial results. Gearing = Net Debt / (Net Debt + Equity) Maintain conservative balance sheet 9

10 Cadia East panel cave progressing well Cadia East summary A$2.05 billion brownfield project Underground panel cave mine Plant expansion to 26Mtpa capacity Increases annual production to: Around 750koz gold (from ~ 450koz) 90kt copper (from ~ 75kt) Lowest quartile cash costs Province life of at least 30 years Underground development cumulative drawbells fired Sep 12 Qtr Dec 12 Qtr Mar 13 Qtr Cadia East status First panel cave achieved commercial production on 1 January 2013, ramping up Drawbell development ahead of schedule Phase 2 crusher commissioned March 2013 Cave performing well Second panel cave development on track 10

11 Lihir new plant ramping up New autoclave achieved nameplate capacity during March (450 tph) Flotation and refurbishment projects on track Flotation upgrade 5mt (from Q1 FY 2013) NCA refurbishment (November 2013) Electrical & control systems (12 months) Autoclave 1 repaired & back in service Lihir Plant Throughput kt processed 2,003 1,593 1,162 Sep 12 Qtr Dec 12 Qtr Mar 13 Qtr 11

12 Lihir operating strategy Rebasing of cost structure Need to simplify the operation Lower material movement, process stockpile Improve return on investment Lower future capital investment Complete flotation project Complete reliability program Operate process plant to full capacity Long term reliability and stability remain key Continue plant optimisation strategies 12

13 Focus on operating cashflow at other assets High cost mine, produce only cash profitable ounces Telfer Producing to plan of ~ 500koz No new capital in current price and cost environment High margin mine, focus on extending reserve life Gosowong Re-established access to higher grade ore Expected 2013 production around koz Hidden Valley Actions to improve production and cost structure Primary crusher installation May 2013 Targeting 20-30% cost reduction over next 12 months 3 rd quartile cash cost, steady production Bonikro Possible expansion delayed for 2 years Stripping investments continue, providing margins hold 13

14 Wafi-Golpu project Big and high grade Resource of 29mozs Au and 9mt Cu 1 Technical prefeasibility completed 2012 Production objective 600koz Au & 300kt Cu 1 Initial capex $4.8B 1 Lowest cost quartile 20+ years life Start up in 2019 Work before moving to feasibility stage Community and Government agreements Reducing start up capital significantly Mine, processing and infrastructure design Metal recovery improvement Improve ore body knowledge Nambonga m WR460 in progress porphyry ^ partial result reported exploration upside Lift 3 Lift 1 Lift 2 exploration upside Golpu 2 SCHEMATIC SECTION Looking North WR452W_1^ 0.35g/t Au, 1.19% Cu incl. 0.52g/t Au, 2.01% Cu WR459^ 0.54g/t Au, 1.35% Cu incl. 0.92g/t Au, 3.22% Cu WR g/t Au, 0.97% Cu incl. 0.97g/t Au, 2.14% Cu WR444W_1 0.78g/t Au, 0.93% Cu Incl. 2.32g/t Au, 2.41% Cu 1 Figures shown on 100% basis Newcrest share is 50% 2 Block model for gold represented 14

15 Exploration Gosowong $25m pa on near mine and regional targets Wafi-Golpu and Morobe Exploration $20m drilling Wafi Golpu region New targets close to Golpu AFRICA CÔTE D IVOIRE 1 BOUAKE BOUAFLE 2 Yamoussoukro BONIKRO 2 Abidjan 100 km TANDAI JV GOSOWONG 6 MANUS IS JV WAFI-GOLPU INDONESIA 11 /MOROBE EXPL JV PAPUA NEW GUINEA 1 LIHIR MT ANDEWA JV HIDDEN VALLEY Bonikro and Côte d Ivoire Exploration $10m regional drilling, results promising Telfer $20m drilling deep targets below West Dome 5 TELFER AUSTRALIA 2 FIJI NAMOSI JV Namosi $5m on near mine and regional targets CADIA VALLEY 1000 km Operation Advanced Project Exploration Project 1 Number denotes operating drill rigs Spend focused on brownfields programs (Telfer & Gosowong) and Wafi-Golpu 15

16 Price & cost pressure= delay capital, attack costs Industry cash costs 2,000 Relative cost impacted by exchange rates Cash Cost US$/oz (net of byproduct credit) 1,750 1,500 1,250 1, Average Cash Cost 2006 US$317/oz 2012 US$738/oz Australia 2012 US$857/oz H Cumulative Production (Percent) Source: Thomson Reuters GFMS Gold Mine Economics Service Source: Thomson Reuters GFMS, Bloomberg Costs have followed higher commodity prices (labour, energy, commodity inputs) Industry trend - declining grades and labour productivity Exchange rates drive regional differences Await firmer direction for larger capital decisions Stop high cost ounces, lower business activity, productivity remains key 16

17 Gold price and money supply Western economies have loosened monetary policy Global money supply and gold price Fundamentals still support a strong gold price Currency devaluation Negative real interest rates Inflation, political and economic uncertainty Physical gold buyers strong Fundamentals remain for a strong medium term gold price 17

18 Insulating against gold price volatility Strong Balance Sheet Long dated debt maturity profile Low gearing to absorb gold price volatility Credit ratings BBB & Baa2, stable outlook Protect Margins Production growth from low cost operations Simplified off-site activity and reduced headcount Re-negotiating costs and activity with key suppliers Heavy emphasis on productivity & technology Prioritise Growth Options Postponed or slowed some long dated studies Reviewed exploration program Retain sight of cheap resource capture Free Cashflow Focus Focus on delivering return on past investments Stopping all capital investment in higher cost ounces Reviewing open pit material movements 18

19 Productivity challenge: people, innovation & technology Innovation turned into reality The next phase Remote Operators Remote expert monitoring Central control rooms Semi-continuous underground mining Continuous open pit mining systems On-line gold analysers Technical testing site Adopting bulk underground at Cadia East Autoclave efficiency Coarse particle flotation machines Capability training, speed Hard rock mechanical tunnelling Operator training Early waste removal People logistics Cave flow tracking Waste technology improvement Rock cutting 19

20 Summary Deliver Lihirand Cadiaramp up Reduce Wafi-Golpu start up capital Reduce business activities and costs Focus capital expenditure on low cost ounces Maximize free cash flow Increase dividends, subject to profitability Maintain strong balance sheet 20