Australian gold producer Newcrest posts record full-year loss of $5.78 bn

Australia's biggest gold producer Newcrest Mining, is looking to cut costs after booking a record full-year loss of A$6.2 billion ($5.78 billion) largely due to write-downs totalling A$6.229 billion.

The Melbourne-based miner today posted a net loss of A$5.78 billion for the year ended June 2013, compared with a profit of A$1.12 billion a year earlier.

The company blamed the loss and asset impairment to a volatile market climate, including a sharp deterioration in gold prices, a strong Australian dollar and increasing costs.

Gold price has fallen 23 per cent from last year's high of $1,792 an ounce to $1,332 an ounce last week in London.

The company posted operating cash flow of A$707 million, down 59 per cent from A$1.726 billion a year earlier, while sales was A$3.775 billion, down 15 per cent compared to A$4.416 billion last year.

As at 30 June 2013, Newcrest had net debt of A$4.1 billion, which is A$1.9 billion higher than its net debt position last year.

About $3.6 billion of its A$6.229 billion write-downs is related to Lihir mines in PNG which Newcrest acquired in 2010.

Approximately $2.2 billion of impairment is on account of higher cost assets namely Telfer gold-copper mines in Western Australia, Hidden Valley gold and silver mine jointly operated by Newcrest and South Africa's Harmony Gold Mining Co, and the 90-per cent owned Bonikro gold mine in Ivory Coast.

As part of its cost-cutting measures, Newcrest has scrapped plans of paying dividend, may axe around 250 jobs and close its Brisbane office. The company expects to achieve a 20-per cent reduction in corporate spending next year.

The company plans to remove its secondary listing on the Toronto Stock Exchange this quarter. ''The anticipated benefits have not been realized to date and it isn't expected that maintaining the listing will deliver significant future value for the company,'' Newcrest said in a statement.

Newcrest has decided to cut its capital expenditure plans and significantly reduce exploration expenses besides adopting cost-cutting measures across all operations, and reducing expenses on corporate office and support functions.

The capital expenditure has been slashed by a third to $1 billion from $1.5 billion..

Exploration expenses will be cut from its current level of $160 million to around $85 million.

The company expects its gearing to go up from an earlier declared target of below 15 per cent to 21 per cent at 30 June due to decline in gold prices, which will further go up to 28-30 per cent as a result of$5 to $6 billion in asset write-downs.

For the 2014 financial year, Newcrest estimates gold production to be 2 to 2.3 million ounces, while copper production is expected to be 75 to 85 thousand tonnes.

The company's market value has eroded by a third to $9.5 billion from $30 billion in 2010.

Newcrest is one of the world's top five gold mining companies, engaged in production and exploration activities. It has operations in Australia, the Pacific Region, Asia and Africa.