Newcrest Mining Shares Delivers Record Profit (ASX:NCM)

Newcrest Mining Shares Delivers Record Profit (ASX:NCM)

The Newcrest Mining Ltd [ASX:NCM] shares are up today after the company released their full-year results.

Newcrest is one of the world’s largest gold miners with operations in NSW, Western Australia, Papua New Guinea, and Canada.

Newcrest delivers record profit, higher dividend for FY21

For FY21, Newcrest Mining produced 2.1 million ounces of gold and achieved record copper production of 142,724 tonnes.

All in sustaining costs (AISC) came in at $911 an ounce, which translated into a record AISC margin of $876 an ounce, or 49%.

Newcrest’s Managing Director and Chief Executive Officer, Sandeep Biswas, had this to say:

Newcrest has delivered a strong operational and financial performance for the 2021 financial year […]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.

Statutory profit was up 80% from last year, while underlying profit grew by 55% in the same period. Free cash flow increased by a whopping 278%.

All this added up to the company declaring a final fully franked dividend of 40 US cents a share to be paid on 30 September. This is a 129% increase from last year’s final dividend, and the sixth year in a row the company has increased dividends.

Total dividend for the year stands at 55 US cents a share, which equates to a 41% payout from FY21’s free cash flow.

As a side note, the company also set the goal in May of reaching net-zero carbon emissions by 2050. This is on top of their pledge announced June 2019 to reduce greenhouse gas emissions by 30% by 2030.

What could happen next?

For FY22, Newcrest expects to produce between 1.8–2 million ounces of gold and between 125,000–130,000 of tonnes of copper. That is, of course, as long as COVID doesn’t derail those plans.

While these were great results, the share price didn’t move much after the announcement (it’s up around 1% at time of writing).

Still, debt levels at highs, central banks flooding the economy with money, low interest rates, and rising inflation make a really good case for holding some gold.

Australia could be set to become the ‘epicentre’ of the next gold bull run. Check out some of the reasons why here.

Best,

 Selva Freigedo

PS: Our publication The Daily Reckoning is a fantastic place to start your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here.