Newcrest profit may surge by 54%
Newcrest profit may surge by 54%
Matt Chambers, Bloomberg/Melbourne
Newcrest Mining Ltd.'s Managing Director Tony Palmer may report a 54 percent increase in first-half profit after the company, Australia's biggest gold miner, started production at a mine in Indonesia and prices rose.
Net income probably rose to A$59 million (US$47 million) in the six months ended Dec. 31, from A$38.4 million a year earlier, according to the median estimate of five analysts surveyed by Bloomberg News. The Melbourne-based company reports tomorrow.
Palmer, 58, has overseen a fourfold rise in Newcrest's stock since joining in December 2001 as he started up gold mines such as Indonesia's Toguraci, the company's fourth-biggest, and the A$1.4 billion Telfer project in Australia, which is expected to double output.
"Tony Palmer's done a good job, look at the share price," Richard Davis, who helps manage $3 billion in mining stocks at Merrill Lynch & Co., Newcrest's biggest shareholder, said in an interview. "Telfer is shaping up to be a very good mine. If you have a quality ore body and quality management, you can make a lot of money."
The price of gold in Australian dollars, which Newcrest uses for most of its sales, rose 6.2 percent in the past year, to close at A$548.45 an ounce on Tuesday. It traded at A$548.34 at 10:08 a.m. Sydney time. The miner increased production in the three months to Dec. 31 by 50 percent from the year before.
Gold prices measured in U.S. dollars rose 23 percent in the past two years to $435.45 an ounce at 10:08 a.m. Sydney time, spurring $13.8 billion of takeover bids and spending on mergers and acquisitions last year, according to Bloomberg data.
Newmont Mining Corp. may seek to buy Newcrest to retain its position as the world's biggest gold miner, Sydney-based Credit Suisse First Boston analysts Michael Slifirski and Julian McCormack said in an Oct. 20 report.
Shares of Newcrest have risen 40 percent in the past year on the Australian Stock Exchange, compared with a 3.5 percent rise in the Philadelphia Stock Exchange Gold and Silver Index, which measures the performance of shares of 12 of the world's biggest gold companies.
"The major gold companies all have replacement problems and in the past they've solved them by acquisition," Palmer said in a Feb. 8 interview.
"The thing we've been concerned about is that somebody would snap up this company before its full value was realized by building Telfer. We can be reasonably certain now that no one can get this company at bargain prices anymore."
Newcrest's full-year net income may rise 87 percent to A$230 million, from A$122.9 million, according to the average of 10 analysts surveyed by Thomson Financial. Profit is expected to rise to A$290.4 million next fiscal year, according to the survey, as Telfer produces at full capacity for 12 months.
Newcrest increased gold output to 251,041 ounces in the three months to Dec. 31, from 167,920 ounces a year earlier, with the February 2004 start of the Toguraci mine in Indonesia.