To emphasise that capital raising for strong mining companies, particularly in the gold sector, is becoming less of a problem than late last year, Australia's top gold miner, Newcrest Mining Ltd (NCM.AX), has raised A$750 million ($472 million) in a share placement to major institutions. Indeed this is around 50 percent more than the company had originally targeted due to particularly strong institutional demand. The money is being raised to repay debt and for new mine development. Altogether a total of 27.8 million shares were sold at A$27 each, 13 percent below the last traded price.
Newcrest on Monday also reported preliminary unaudited financial results for the six months to December 31 which showed a good increase in sales and profits over the same period a year earlier. Underlying profit after tax rose from A$207.9 million to Newcrest's expectations of a range of $235 to $245 million for the half year.
Statutory profit, which includes a net expense of $87.6 million related to the company's closing out its hedge book, is expected to be in the order of $147 to $157 million compared with a loss of $8.1 million a year ago when after tax charges on dehedging and foreign exchange amounted to $216 million.
Overall revenue was 15 percent higher at $1294.2 million with a higher A$ gold price achieved more than offsetting lower byproduct copper prices.Costs were up though by around 18 percent due to the general cost pressures then affecting mining worldwide and exacerbated by the impact of the Varanus Island gas explosion which adversely affected power costs. With the company already seeing an easing of costs, in particular related to oil prices, there is a good chance that these will fall back in 2009. Newcrest also hopes to recoup some of its higher fuel costs resulting from the Varanus Island incident (amounting to some 30.6 million) from its insurers.Net debt at the end of the period was $669.3 million, but most of this will be more than covered by the recent capital raising. The debt level had increased by $378.2 million in the half year due to drawdowns to fund the acquisition of the Morobe Mining Joint Venture.Overall, with the gold price looking relatively strong at the moment, Newcrest looks well placed to benefit strongly in 2009, particularly if cost pressures decrease as expected and the gold price holds up.
The preliminary results noted above are subject to finalisation and external audit so final figures, which should be announced on February 13th may differ from the guidance figures announced at this time.