PERTH (miningweekly.com) – Gold major Newcrest has reported record profit and free cash flow for the financial year ended June, as revenue increased.

The miner on Thursday reported that underlying profit had increased by 55% on the previous financial year, from $750-million to $1.16-billion, with statutory profit up 80%, from $647-million to $1.16-billion.

Revenue for the full year increased by 17%, from $3.9-billion to $4.5-billion, as gold production reached just over two-million ounces, and copper production reached a record 142 724 t.

Revenue from gold sales reached $3.58-billion, with a further $1.1-billion generated from copper sales, and $26-million from silver sales.

Newcrest’s record free cash flow of $1.1-billion was $1.7-billion higher than the prior period, with the prior period also characterised by a net cash outflow of $1.2-billion relating to merger and acquisition growth investments, compared to $21-million outflow in the current period.

“Newcrest has delivered a strong operational and financial performance for the 2021 financial year, producing 2.1-million ounces of gold at an all-in sustaining cost of of $911/oz. Together with the benefit of higher gold and copper prices, this translated into a record statutory and underlying profit of $1.2-billion and a record free cash flow of $1.1-billion,” said MD and CEO Sandeep Biswas.

He noted that Newcrest’s strong financial position enables its investment in attractive growth projects.

“We have significant financial capacity to fund our pipeline of attractive organic growth options, both from the expected cash flow generation over the development period and our strong balance sheet.

“Our dividend policy targets total dividends for a financial year to be in the range of 30% to 60% of that financial year’s free cashflow, with a minimum annual dividend of 15c per share. Given our record free cash flow generation for 2021, strong balance sheet and positive outlook the board has approved a final dividend of 40c per share, which is 129% higher than last year’s final dividend.

“This equates to a record total full year dividend of 55c per share which represents a 41% payout of 2021’s free cashflow and marks our sixth consecutive year of increasing dividends to shareholders.

“In the coming months we look forward to finalising key prefeasibility studies (PFS) for Red Chris, Havieron and Lihir. We are striving to bring Havieron and the Red Chris block cave into production as soon as possible. Phase 14A at Lihir represents further upside from the current mine plan and brings forward our aspiration for Lihir to be a 1-million-ounce-plus annual producer,” said Biswas.

Meanwhile, Newcrest on Thursday also approved a A$120-million early works programme at the Cadia PC1-2, following a positive PFS.

The PFS was aimed to update and define a significant portion of Cadia’s future mine plan with the development of PC1-2 accounting for around 20% of Cadia’s current ore reserves.

The PFS estimated that the project would require a capital spend of some A$1.3-billion, and would have a near 17-year mine life from first production, at an average of 15-million tonnes a year, producing 3.5-million ounces of gold and 660 000 t of copper at an average all-in sustaining cost of A$54/oz.

The study estimated an after-tax internal rate of return of 21.5% and a net present value of A$2-billion.

The approved start of the early works programme would allow critical infrastructure to be established in parallel with the PFS, before the commencement of the main works programme in the second half of calendar 2022.

The early works programme is expected to start in the December 2021 quarter.

First production is expected in 2025, and the timing of PC1-2’s development is expected to ensure that, in conjunction with the already approved PC2-3 project, the total Cadia mine production rate is sustained at around 35-million to 36-million tonnes a year as production from the operational PC1 and PC2 caves begins to decline from 2024.

“The development of the PC1-2 cave is the next step in Cadia’s block caving journey. The study underpins an optimised mine design which we expect will deliver higher gold and copper grades and enable the deferral of capital expenditure in the medium term. We have significant financial headroom to fund the construction of PC1-2, together with our other organic growth options, from our expected cash flow generation over the development period and our strong balance sheet,” said Biswas.

“This project, together with the expansion project currently in progress, is expected to sustain Cadia’s position as one of the largest, lowest cost and long life gold mines in the world. The team at Cadia is passionately committed to building on this world class asset, driving employment and other benefits for the local community and other stakeholders, and maintaining a focus on innovation, continuous improvement and sustainable development.”