Time to buy in, page-33

IH, I made a few posts regarding this in late April / early May. Copied here:

In 2013/14 Newcrest lost $2.23 bn. Although they returned a profit of $200m in the next 6 months, their nett debt had increased to $4.29bn, and in Feb 2015 Newcrest said it was considering "alternate ownership options" for Telfer. In order to attract a buyer they reduced the cash costs of producing an ounce of gold from $1103 to $867. The mine, however, had reached the stage of its life where $200m had to be spent cutting back the sides of the pit in order to get at more ore. After returning a $545m profit in 2015/15 Newcrest decided to retain its Telfer mine. Newcrest's debt level is still a concern for them, as is the age of the Telfer mine. If exploration results go well, both Newcrest and Rio Tinto are going to have a very close look at Antipa (if you get my drift).
Apparently Newcrest did this for strategic reasons. Love to know what their strategy was. Sunday, December 6, 2015 Antipa Minerals Ltd (ASX: AZY) has swallowed up ground that used to belong to Newcrest Mining Limited in Western Australia. In January 2015 Newcrest Mining relinquished mining leases M45/247 and M45/248. These are located approximately 40 kilometres north of the Telfer Gold mine and mineral processing facility, and within Antipa Minerals’ North Telfer project area. Antipa subsequently applied for amalgamation of this ground within its existing exploration licenses, which have now been granted. “The company is in the process of concluding its technical review and validation of the historic data and expects to be in a position to update the market shortly,” Antipa Minerals said in its ASX announcement. The North Telfer project covers approximately 1,300 square kilometres of granted mineral exploration licences adjoining its current Citadel project landholding and extending south to within 20km and 30km of Newcrest’s Telfer Gold-Copper-Silver mine and O’Callaghans Tungsten and base metal deposit respectively.
Newcrest's strategy was pretty clearly laid out in their 2014 AGM: "It was of course disappointing to impair and write down again, the carrying value of our assets, particularly Lihir. The book value of Lihir is now just under $5.4 billion and reflects after tax write-downs of $3.6 billion and $2.1 billion in each of the last two years. In considering the gearing level, (NETT DEBT $4.29 BILLION) remember that it reflects that the company is emerging from a period of major capital investment in Cadia East and the Lihir plant upgrade, both of which support future growth. Over $4 billion dollars of capital has been invested in these projects. We consider that our focus on cash generation and paying down debt is the right approach in the current environment. It is aimed at placing the company in a position to return to paying dividends when appropriate. It will also give us flexibility to consider future potential growth options like the exciting Golpu project in Papua New Guinea. Looking ahead, the gold price, short term, remains volatile as it appears to be affected by sentiment about the state of the US and European economies and geopolitical unrest. There are three main drivers of value for Newcrest: Ramping up Cadia, turning around Lihir and the potential development of Golpu. Our short term goal is to continue to generate cash so as to pay down debt, return to paying dividends and enable profitable growth." Telfer received little mention at the AGM except "Safety targets were generally met but our year was marred by the tragic death of a contractor working at Telfer. This accident has had a profound impact on our workforce at Telfer and around the Group." "At Telfer our focus is on driving down costs, improving productivity and exploring medium term options to extend mine life." It appears Newcrest were $4.29 BN in nett debt, and Telfer was an aging mine that was on the nose following a workers death. In Jan 2015 Newcrest relinquished mining leases M45/247 and M45/248, and in Feb 2015 said it was considering "alternate ownership options" for Telfer. And here we are twiddling our thumbs talking about $100m/$200m Market Caps, and whether Rio Tinto and/or Newcrest might take us over if the exploration results go well. Did we pay any money to Newcrest for the mining leases, or did they just relinquish them? If they just relinquished them, were they forced to relinquish them, or as part of their cost-cutting did they choose not to renew them? Interesting sidenote is how seriously Slater and Gordon regards market disclosure: Newcrest at the 2014 AGM announced "Since the end of the financial year, on 22 July 2014, Slater & Gordon commenced a class action in the Federal Court of Australia against Newcrest. The class action relates to Newcrest’s market disclosure prior to its 7 June 2013 market release."