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PRESS RELEASE: S&P Rates Newcrest Mining Ltd. 'BBB+'; Outlook Stable



19/10/2011 4:56PM





The following is a press release from Standard & Poor's:

MELBOURNE (Standard & Poor's) Oct. 19, 2011--Standard & Poor's Ratings
Services said today that it had assigned its 'BBB+' issuer credit rating on
Newcrest Mining Ltd., the largest gold mining company in Australia and
fifth-largest globally based on production. The outlook is stable.

"The rating reflects our view of Newcrest's positive growth prospects, which
are supported by the company's substantial reserves, low cost position,
conservative financial policies, and strong cash flow protection metrics,"
said Standard & Poor's credit analyst Brenda Wardlaw.

Somewhat offsetting these strengths is the company's limited product
diversification resulting from its reliance on gold and copper, which
experience volatile and somewhat correlated prices. Further, more than 88% of
Newcrest's production is currently sourced from four operations. While almost
50% of production is from operations in Australia, its mines in Papua New
Guinea (PNG), Indonesia, and West Africa expose the company to country risk.
In addition, Newcrest has a significant development project pipeline, which
increases short-term risk, despite the company's track record in project
delivery.

The stable rating outlook reflects our view that Newcrest's moderate financial
policies and steady production should sustain strong and stable cash flows. In
the near term, continuing high gold prices should further underpin the cash
flows. The company's low cost position and adequate liquidity also add to
rating stability. We expect the company's strong internal cash flows will
partially fund its sizable capital expenditure and exploration programs over
the next two years, while maintaining a liquidity buffer to mitigate exposure
to volatile prices. We also expect Newcrest to maintain adjusted debt to
EBITDA less than 2x and FFO/debt of more than 50%, under our current
assumption of gold prices remaining in the US$1,100 to US$900 range through
our 2013 forecast period.

Negative rating pressure could emerge if Newcrest adopted a more aggressive
strategy, such as a significant debt-funded acquisition. In addition, if
problems with the execution of the company's sizable development program
coincided with an unexpected decline in gold and copper prices, causing
debt/EBITDA to rise above 2.0x or FFO/debt to fall below 50%, the rating could
be lowered. A significant increase in production from higher risk countries
could also place downward rating pressure. In our view, there is limited
potential for a higher rating given the significant capital-expenditure
program underway, as well as inherent operating and political risks, and
volatile gold prices.