MELBOURNE Feb 14 Newcrest Mining Ltd, Australia's biggest gold miner, reported a 36 percent drop in first-half underlying profit on Friday, hit by the gold price slump, which also forced it to cut its reserves and resources estimates.
Newcrest is emerging from a tough 12 months when gold prices plunged 28 percent, it suffered problems at some mines, took $6 billion in writedowns, and is now focused on reining in costs and slowing expansion projects to boost cash flow.
"Subject to market and operating conditions, Newcrest expects free cash flow to be higher in the second half of the 2014 financial year than the six months ended 31 December 2013," the company said.
Underlying profit slid to A$207 million ($186 million) for the six months to Dec 31 from A$320 million a year earlier, however that was better than analysts' consensus forecast around A$166 million.
As expected by the market, it declared no interim dividend, due to the slump in profit and a rise in its gearing level from 17 percent to 30.5 percent.
With the drop in bullion prices which has made lower grades of ore uneconomical to produce, Newcrest followed top global producer Barrick Gold Corp in recalculating its reserves and resources in the ground.
It cut its ore reserves estimate by 11 percent to 78 milion ounces and cut its resources estimate by 7 percent to 150 million ounces, largely impacting its Lihir mine in Papua New Guinea and Telfer mine in Western Australia.
($1 = 1.1133 Australian dollars) (Reporting by Sonali Paul; Editing by Richard Pullin)