Newcrest’s (ASX: NCM), (TSX: NM) stocks are the ones to watch Monday as the company, Down Under’s No.1 gold producer, is set to report a whooping A$5.6 billion loss, one of the largest ever posted by corporate Australia.
As most gold producers, Newcrest has been hit hard by current bullion prices, the worst drop in 30 years, which has forced the company to cut costs, fire hundreds of employees and close one of its Australian offices, among other belt-tightening measures.
But on top of the gold sector’s current issues, Newcrest is also under scrutiny for allegedly briefings analysts in a “selective” way.
In June, the miner’s shares sank 12% before it disclosed plans to cut up to A$6 billion in asset values, reduce costs and shelve planned expansions and exploration activities.
The suspicious trading prompted an investigation by the Australian market regulator of Newcrest and analysts who cover it, to find out whether the company tipped off certain analysts ahead of the announcement, which subsequently sent the firm’s shares falling another 20%.
According to Aussie laws, tipping falls under insider trading and carries fines or as much as 10 years in jail.
Currently the Australian Securities & Investments Commission is investigating the case, while Newcrest is conducting its own “independent” review.
The Melbourne-based company has consistently denied any wrongdoing, saying in response to a query from the ASX after the June 7 update that it treats its “disclosure obligations seriously and engages with the investment community in a manner consistent with these obligations”.
Newcrest 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.