broker's update

From JP Morgan 17-Feb-14 Overweight
Newcrest's result came in below the broker but there were various one-off impacts and otherwise no real surprises. Cash flow was weaker than expected but the broker still expects this to improve. The broker was not surprised 9moz of reserves at Lihir/Telfer were reclassified back to resources given the high cost base of these assets, and Cadia Valley reserves were increased by 1moz.

Overweight and $12 target retained.

From UBS 17-Feb-14 Neutral
Interim profit of $207m was in line with the broker's forecasts. The annual resource/reserve update showed higher costs were lifting cut-off grades, leading to an 11% decrease in reserves. Gold price assumptions were unchanged.

UBS maintains a Neutral view on valuation but recognises the stock offers substantial leverage because of its high costs and gearing. Still, for the broker there are many unanswered questions. Production forecasts beyond FY14 for Lihir are very unclear, in the broker's view, and this mine accounts for 37% of reserves and 35% of output.

The Neutral rating is retained as is the $10.80 price target.