Australia's largest gold miner Newcrest back to profit

Australia's largest gold miner Newcrest back to profit

Telfer mine's processing plant. (Image courtesy of Newcrest)

Australia’s largest gold producer Newcrest Mining (ASX:NCM) announced Monday it has finally returned to profit, following a series of multi-billion dollar losses in the past two years.

The company made a net profit of $546 million in the year to June, a turnaround on the $2.2 billion loss made when compared to 2014 due to massive asset impairments related to its Lihir mine, in Papua New Guinea.

Newcrest's underlying profit, which excludes one-off items, was better than analysts had expected, and 19% higher than the $432 million underlying profit recorded in the previous financial year.

The firm also said it wouldn’t sell its Telfer mine, which has been in its portfolio for over 35 years, but would instead invest more to extend the life of the Australian operation.

The result was an improvement on almost every measure, with a lift in both gold and copper production alongside a reduction in costs.

But long suffering shareholders will have to wait at least until next year before they see any dividends.

Like most of its peers, the gold miner has been hit hard by weak bullion prices. Management suspended dividends in 2013 after the Newcrest’s net debt climbed and recorded the biggest annual loss in its history. Around the same time, the miner stopped trading at the Toronto Stock Exchange. A year later, the Sydney-based company was fined for breaching rules on disclosing market-sensitive information.

The company stock closed 49 cents — 4.5% — higher at $11.44.