Newcrest Mining’s (ASX:NCM), (TSX:NM) shares sank further Friday, dropping 14% and 9.8% in New York at 9:36 am ET (OTCMKTS:NCMGY), to hit a nine-year low after Australia’s top gold producer unveiled plans to cut up to $6 billion in asset values, reduce costs and shelve planned expansions.
The company published Friday a business review report in which it warned it was cutting capital spending for the 2014 financial year to $1bn instead of $1.5bn, nearly halve its exploration spending to $85m, as well as lowering corporate costs.
The firm, since yesterday no longer Australia’s third largest miner behind giants Rio Tinto and BHP Billiton, revealed it would write down $5bn to $6bn in asset values, reflecting lower grade operations that will hike the miner’s gearing to almost double its target rate of 15%.
But Newcrest said it expected production in 2014 to rise close to 4% to 2m-2.3m ounces, after cutting production at its highest cost operations. The miner was previously targeting growth of 5% to 10% a year.
The miner’s shares have slumped nearly two thirds since July 2011, the month chief executive Greg Robinson took over from now Orica chief Ian Smith and when Newcrest’s shares were trading higher than $40.
Newcrest Mining is one of the world’s top five gold mining companies by reserves and market capitalization. The company is engaged in gold and copper exploration, development and mining and has a global workforce of over 19,000.
Although much of its interests are located in Australia, the firm have interests in properties worldwide.