Newcrest Must Act to Stem Cash Bleed, Credit Suisse Says
By Isabella Steger and David Rogers
Newcrest Mining Ltd.NCM.AU -1.03%, Australia’s biggest gold miner by market value, needs to cut costs more aggressively and sell assets to stem a “cash bleed”, according to analysts at Credit Suisse Group AGCSGN.VX +0.08%.
Newcrest, which saw its share price hit a new decade-low Wednesday after gold prices plummeted to a 20-week low Monday, must boost its liquidity by implementing more cash-saving measures such as “further slashing of exploration and corporate overheads,” wrote Credit Suisse in a note.
Still, those wouldn’t be enough to compensate for Newcrest’s cash shortfall, it saidl.
If Newcrest achieves its production guidance for the year through June 2014 and spot commodity prices hold, cash generation would be 210 million Australian dollars (US$192 million) below Newcrests’s assumptions, the broker said.
Credit Suisse notes that “target asset sales” are also needed, and thinks Newcrest’s Telfer gold mine is destined for orderly closure in five years. Newcrest has already said it will cut jobs at the mine, located in Western Australia’s Pilbara region.
The broker also tips Newcrest’s Bonikro mine in Ivory Coast and Gosowong in Indonesia as assets that could be sold. Bonikro would be an obvious, but immaterial, divestment, it adds.
Newcrest shares ended 1% lower in Sydney on Thursday, against the benchmark S&P/ASX 200 which traded flat.
