(Corrects paragraph 3 reference to A$6.229 billion, instead of
* Newcrest warns of A$1.5 bln to A$2.5 bln impairment
* Move related to gold mines in Papua New Guinea, Australia,
* Produced 2.4 million ounces of gold in fiscal 2014
* Newcrest says has no present plans for equity raising
By James Regan
SYDNEY, July 24 Australia's Newcrest Mining Ltd
on Thursday braced shareholders for up to A$2.5 billion
in fiscal 2014 after-tax impairments as it struggles to lower
mining costs while bullion prices show little sign of rising.
The latest charge is in addition to a A$47 million
impairment included in Newcrest's first-half results.
These follow A$6.229 billion in impairments and writedowns
the Australian bourse's largest-listed gold miner took in fiscal
2013, leading to a A$5.78 billion loss for the year.
Newcrest stock fell 6 percent on Thursday to A$10.73, 14
percent below its 2014 peak of $12.50 in early April
UBS maintained its "sell" rating on the stock despite
higher-than expected gold production of 2.4 million ounces in
fiscal 2014, also reported by the company on Thursday.
"We believe it is the simple function of size and liquidity
that keeps Newcrest Mining as the 'go-to' gold stock in
Australia for many investors and not a function of asset
portfolio quality," UBS said in a client note.
Managing Director Sandeep Biswas said a final decision was
yet to be made but the impairment was likely be between A$1.5
billion and $2.5 billion.
Depending on the size, the impairment will lift Newcrest's
net debt by between three and six percent from roughly 29
percent now, he said.
The impairment will not impact cash flow for the miner,
though a reduction in book values of between A$1.5 billion to
A$2.5 billion was under review by the company's board, Biswas
Newcrest's Lihir gold mine, located in a long-dormant
volcano in Papua New Guinea, faces the biggest deterrent to a
turn around for the company despite billions of dollars in
capital outlays over the last several years, Biswas said.
"Lihir's cost perfomance was disappointing relative to the
improvements made at our other sites," Biswas said.
The need for fresh charges -- also related to performance at
mines in Western Australia and Ivory Coast -- were unlikely to
trigger any asset sales to raise cash, Biswas said.
"The first order of business is to see the value of these
assets in our stock price," Biswas said.
Nor would the company turn to an equity raising for fresh
capital, according to Biswas.
"Our focus is to get our all-in sustaining costs down such
that the more margin you have compared to the gold price, the
more buffer you have in times of price volatility," Biswas said.
"And of course you make more money when the price goes up."
Biswas said Newcrest sold its gold for an average A$1,382
($1,300) an ounce in the final quarter, providing a margin of
A$469 ($440) an ounce.
Australia & New Zealand Bank is forecasting an average gold
price of $1,220 an ounce over the current quarter, equating to
A$1,151 based on the current foreign exchange rate.
($1=1.0597 Australian Dollars)
(Reporting by James Regan; Editing by Richard Pullin)