Australia's only large domestically-owned gold producer, Newcrest Mining Ltd (ASX: NCM; New York ADR: NWCNY), showed the benefit of $A-denominated gold returns by returning an underlying profit for the six months to December of $A241.6 million ($US158.4 M) - up 16% on the corresponding 2007 last half. The statutory profit for the half year was $A154 M ($US101 M) compared to a statutory loss of $A8.1 M ($US5.3 M) in the corresponding period.

Newcrest said today that its growth in profit and cash flow was driven by higher realized gold prices that more than compensated for the lower achieved copper price and increased input costs.

The company pointed out that continued pressure on input costs in the December half, with a depreciation of the then $A=$US exchange rate had an unfavourable impact.

However, the company expects input costs to decline over the next 12 months as the benefit of falling costs has a lagged effect.

The institutional raising of $A750 M ($US491.6 M) this month was expected to bring gearing from December end of 16% down to between 5-10% by June 30 this year. Also in the cash-in pipeline is a proposal for individual Newcrest shareholders to subscribe to $A4,995 ($US3,274) worth of shares without incurring brokerage or transaction costs, an offer that opens next Monday and was set to close on March 6.

There had been a big spend by the company last year, including the initial 30.1% interest in the Morobe mining joint venture in Papua New Guinea's Wau Valley region with South Africa's Harmony Gold; construction of the Ridgeway Deeps in New South Wales' Cadia Valley and the Hidden Valley (Morobe JV) project - both scheduled to commission in mid 2009.

Gold sales for the December half totalled $A955.7 M ($US626.5 M), copper sales $A328.8 M ($US215.5 M) and silver sales $A9.7 M ($US6.4 M). Gold produced was 868,562 oz, down 4% on the December 2007 half, and copper sales were 42.782t (down 2.8%). Total mine costs of sale were $A633.1 M ($US 414M).

Newcrest's managing director Ian Smith said Newcrest is in a strong position in these weak economic times, with low gearing, a strong project and exploration-growth pipeline and a good outlook for the gold price.

The recently completed institutional equity placement will reduce the company's gearing level and put Newcrest in a prime position to capitalise on future internal and external opportunities as they arise, he said.

Already some analysts are talking about profit growth for Newcrest, given its exposure to the spot gold price and the fact the price today at $US940/ounce represented $A1,434/oz.