Newcrest Mining Annual Report 2003

FY2003 Annual Report · Newcrest Mining

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Newcrest
Moving
Forward

Newcrest Mining Limited
Concise Annual Report 2003

Newcrest is a leader in the exploration, development
and operation of gold and copper mines.
The Company’s knowledge in each facet of mining
continues to deliver growth opportunities and value
to our shareholders. In 2003 Newcrest’s strategy
of focussing on low-cost, long-life mines continued
with the strong performance of Ridgeway and
commencement of construction of the large Telfer
gold/copper mine. Exploration remains at the core
of our corporate strategy.

Cadia Valley
Gosowong
Telfer
Cracow
Ashburton

page 28

Explore

UDR1200 drill rig working on the
Junction Reefs tenements, Cadia

Newcrest Mining Limited
ABN: 20 005 683 625

Notice of Meeting

Notice is hereby given that the 23rd Annual General Meeting will be held at
the Melbourne Exhibition Centre, Clarendon Street, Southbank, Melbourne
on Wednesday 29 October 2003 at 10.00am.

Telfer
Cracow
Boddington

page 18

Develop

Construction underway for foundations
of Ball Mill Train 2, Telfer

Cadia Valley
Gosowong

page 12

Operate

Haul trucks on the central ramp,
Cadia Hill Open Pit

Contents
Operational Performance
Highlights 2002/03
Chairman’s Review
Managing Director and
Chief Executive Officer’s Report
Senior Management
Operations
Development
Mineral Resources and Ore Reserves
Exploration
Our People
Environment
Financial Analysis
Corporate Governance
Directors’ Report
Board of Directors
Discussion and Analysis of the
Financial Statements
Statement of Financial Performance
Statement of Financial Position
Statement of Cash Flows
Notes to the Concise Financial Report
Directors’ Declaration
Independent Audit Report
Shareholder Information
Five Year Summary
Corporate Directory

2
3
4

6
11
12
18
24
28
32
36
38
41
44
46

52
54
55
56
57
68
69
70
72
IBC

Newcrest
Moving Forward

Operational Performance

12 months to
30 June 2003

12 months to
30 June 2002

Gold produced

Copper produced

Gold sales

Gold price realised

Sales revenue

Earnings before significant items, borrowing costs,
tax, depreciation and amortisation

Depreciation and amortisation

Borrowing costs

Significant items – gains/(losses)

Profit/(loss) before tax

Income tax (expense)/benefit

Outside equity interests

(ounces)

(tonnes)

(ounces)

($ per ounce)

($ million)

Net profit/(loss) after tax attributable to members of the Company

($ million)

Capital expenditure (cash flow basis including exploration)

Cash and short-term deposits

Total debt

Earnings per share

Return on capital employed (ROCE) excluding significant items
(EBIT before significant items/average capital employed)

Net debt/net debt plus equity

(All $ are Australian denominated unless specifically stated otherwise.)

($ million)

(cents per share)

(percent)

714,377

67,738

724,584

567

607.2

195.9

(97.6)

(15.0)

37.0

120.3

(29.2)

1.1

92.2

265.3

101.1

485.1

29.6

6.6

29.5

664,626

40,055

646,418

559

479.7

145.2

(101.5)

(10.7)

(105.6)

(72.6)

21.4

(1.8)

(53.0)

305.9

14.4

550.8

(19.2)

3.7

49.9

• Safety performance deteriorated with a fatality occurring on a farm lease

at the Cadia Valley operations

• 714,377 ounces of gold and 67,738 tonnes of copper produced
• Group cash costs further reduced to A$217 per ounce
• Total costs reduced to A$356 per ounce
• Ridgeway performed strongly
• Telfer construction commenced after successful funding
• Full year after tax profit of A$92.2 million
• 5 cent fully franked dividend

For a five year summary see page 72

Newcrest Mining Concise Annual Report 2003

Group NAGIS Cash Cost

$ per ounce

5
9
2

0
9
2

3
5
2

7
1
2

down 14%

350

310

270

230

190

150

Group Gold Production

9
9
9

3
7
7

5
4
6

4
1
7

thousand
ounces

1200

up 11%

1000

800

600

400

Group Cash Margin

$ per ounce

7
1
3

1
2
3

9
9
2

6
4
3

up 16%

400

350

300

250

200

Profit/(Loss) After Tax

8
3

)
0

3
5
(

2
2
9

$ million

100

up $145m

-20

-40

-60

Highlights
2002/03

Ian Johnson,
Chairman

In 2002/03 Newcrest continued to pursue its strategy of low-cost
production through the efficient operation of its existing mines, the
construction of new developments and a strong commitment
to exploration.

Newcrest
Knowledge

Newcrest Mining Concise Annual Report 2003

Chairman’s Review

The past year has been a successful one for Newcrest as it continued with its simple, long-term
strategy of becoming one of the world’s most efficient and low-cost producers of gold and copper.
The focus on low cost remains paramount.

The consolidation of the gold industry in recent years has meant that the cost of growing through
mergers and acquisitions has been high. Any merger and acquisition opportunities that Newcrest
identified would have involved a deterioration of its position on the world-cost curve and were therefore
unacceptable. Consistent with its strategy, Newcrest has focussed on the alternative of growing from
within. This has meant a continued commitment to exploration and the ability to build and operate
efficiently the small and large-scale mines identified through its exploration successes. The strategy
is working well.

Cadia and Telfer are already major goldfields and they will continue to grow. The Cadia opencut and
adjacent Ridgeway underground mines are clear evidence of the development and operating skills of
Newcrest’s people. It is those same people who are now addressing the challenge of building, and then
operating, the new opencut and underground mines at Telfer.

These are big undertakings and your Board is confident they will be successfully completed, together
with the new smaller but higher-grade operations at Cracow in Queensland and Toguraci in Indonesia.

The existing and emerging projects form a robust platform for the continued progress of your Company.
In a year’s time Newcrest can expect to be producing gold and copper at a cost even lower than it is
today and at more than double its present level of production. The cash generated will permit rapid
repayment of debt and provide the capacity to finance future growth. Already exploration has identified
significant further opportunities at both Telfer and Cadia. Realising those opportunities will be a priority,
enabling Newcrest to take advantage of the inherent cost advantage of developments around existing
mine sites.

Underpinning all of this are the people of Newcrest. They are attracted by the opportunity to create
real wealth through the discovery, development and operation of efficient mines. They have been
responsible for the Company’s progress to date and your Board is confident that this will continue.

Ian Johnson
Chairman

Newcrest Mining Concise Annual Report 2003

Newcrest
Moving Forward

Managing Director and
Chief Executive Officer’s Report

For a number of years at Newcrest, we have been relying on
our exploration team to provide the opportunities for growth.
They have delivered two of the best goldmining fields in
Australian history, Cadia and Telfer, and we are now in the
middle of delivering successful projects based on those
exploration achievements.

At the start of 2002/03, the Company faced a number of
challenges. These were to:

• maintain our position as a leader in the industry on safety

performance

• deliver the production and costs that the Feasibility Study
had forecast for the newly commissioned underground
operation at Ridgeway

• complete the final stages of the Telfer Feasibility Study for
formal presentation to the Board for their endorsement

• quickly complete the funding component of the Telfer

Feasibility Study once the Board had agreed to proceed

• make a good start to the Telfer construction once it

commenced

• ensure the Cracow project was progressed to the point

where development could begin

• complete the Toguraci project permit process to allow that

project to proceed

• continue to replace reserves through further exploration

success.

I am pleased to report that, over the year, the majority of
these challenges has been met satisfactorily.

However, our safety program suffered a tragic setback on
24 June when Damian Pusterla was killed while working on a
farm property at our Cadia Valley operations. Damian’s death
came as a terrible shock to all of us at Newcrest, especially
the people at Cadia. We offer our deepest sympathy to
Damian’s wife Julie and her young children, Lauren, Brendan
and Lilly, and hope that they have been able to find some
peace during this sad time.

At the time of the incident, the Company was in the process
of developing new initiatives to maintain our position as a
leader in safety performance within the resources sector.
Damian’s death makes us even more determined to deliver
ongoing improvements in this vital aspect of our business.

Operations

In terms of our operational performance, Ridgeway is now
progressing strongly. It is gratifying to record that it only
remains for the last percentage point of metallurgical recovery
to be pursued for all the parameters of the Feasibility Study to
be achieved. At the average spot price for gold in 2002/03,
Ridgeway returned more than half the money spent in
exploring and developing the mine. Underground drilling is
being conducted to test the continuity of the orebody at
depth, to enable us to determine the potential to extend the
life of the mine. Drilling will continue in the current year.

The Telfer Feasibility Study was completed and indicated
the potential for a mine with an estimated life of more than
20 years and very low costs in the commencement phase.
Telfer could become the largest gold mine in Australia, with
average annual production of over 800,000 ounces of gold
and 30,000 tonnes of copper concentrate for many years.
The project will consist of a substantial open pit, a sub-level
caving operation underground and a new metallurgical plant
capable of recovering both gold and copper. Significant
infrastructure will be required, with the major item being a
new power station fired by gas delivered via a purpose-built
pipeline from the offshore Western Australian gas fields.

In addition, there is an emerging exploration story at Telfer.
Funding has been allocated so that the area to the west
of the planned underground operation can be properly
assessed by drilling and bulk sampling. In due course,
the results of this work will be incorporated into the
Feasibility Study.

The Board approved the project and agreed that it would
be constructed in two stages. The first stage comprises
the open pit mine, the new metallurgical plant and the
infrastructure, at a cost of A$976 million. The second stage
will be the underground mine, which will cost A$215 million.

Long-term contracts covering the planned production well
into the future have been put in place, with Asian smelters
keen to buy the project output. Many of the smelters have
been customers of ours at Cadia, and strengthening of these
relationships by increasing our business through the Telfer
production is a very positive outcome.

Newcrest Mining Concise Annual Report 2003

Newcrest
Knowledge

Tony Palmer,
Managing Director and
Chief Executive Officer

Newcrest
Moving Forward

Managing Director and
Chief Executive Officer’s Report (continued)

The funding of Telfer was crucial if we are to maximise the
returns to our shareholders from this huge project. After
considering many options, it was finally agreed to fund the
project as follows:

• A$250 million of equity

• finance leases for the open pit mining equipment and the

power station

• third-party ownership of the gas pipeline

• debt funding of the remainder of stage one.

Ultimately, it was determined that A$575 million would be
sufficient, and on 17 March we were able to announce that a
consortium of banks had agreed to supply the funds through
a loan note subscription agreement. The announcement of
the debt facility removed any doubt about funding the project,
sparking a strong and sustained performance by the
Company on the stock market.

An important part of the Telfer Feasibility Study was the
implementation strategy, where the plan to develop the mine
was put forward to the Board for consideration. We have
established a good record in bringing on our new mines, with
recent successes at Cadia, Ridgeway and Gosowong, all of
which have performed in line with their feasibility studies. The
Telfer implementation strategy required that all of the major
pieces of equipment required for the project are on site prior
to the cyclone season in the 2003/04 summer. Equipment
such as mills, crushers, power stations and open pit mining
equipment were ordered as early as possible to maximise the
chances of timely delivery.

At the time of writing, almost one-third of the funds required
to build stage one of Telfer had been expended, and up to
three-quarters committed by way of contracts with the various
suppliers and contractors. The indications are that the project
is proceeding in line with the Feasibility Study and, while there
is a huge amount of work remaining, a really strong start has
been made. The atmosphere on site at Telfer is very
business-like and there is a tangible determination to get the
job done on time and within budget.

The Cracow project is also making excellent progress,
with the Feasibility Study completed and agreed with our joint
venture partner, Sedimentary Holdings Ltd. The necessary
arrangements to allow the mining leases to be extended
as required have been put in place with the Aboriginal
stakeholders, satisfactorily completing the permit process.
Construction of the underground mine is planned to
commence in the September quarter, and the first ore
development should be achieved in the current financial year.
Production of gold doré is expected in the second half of the
2004 calendar year.

Permits necessary to allow the mining of the Toguraci
orebody at Gosowong have been received and work on the
project has commenced. Toguraci is just two kilometres from
the Gosowong plant. It is anticipated that gold doré will be
produced by the end of the 2003 calendar year.

One of the most difficult challenges we face is replacing the
reserves that have been mined out and locating new projects
that might offer growth opportunities into the future. I am
pleased to report that we have been successful in replacing
the reserves mined in 2002/03 and, significantly, at places
such as Ridgeway Deeps, Cadia East/Far East, underground
at Telfer, Kencana and Cracow, we have also located
resources that offer opportunities to replace mined reserves
and provide the platform for further growth.

Our greenfields exploration was again solid in 2002/03,
although no new orebodies were located. Good progress
was made at Ashburton and Trotmans Dome near Telfer,
and the Board continues to support this very important
aspect of our work. For greenfields exploration to be
successful, patience and consistent funding from the Board
are required, and we have both of these at Newcrest.

Financial performance

The Company reported an after tax profit of A$92.2 million for
2002/03, which compares to a loss after tax of A$53 million
the previous year. Excluding adjustments relating to hedge
book and exchange rate fluctuations, profit from normal
operations was A$66.3 million (A$20.9 million).

The improved profit mainly resulted from increased sales
volumes and lower costs of production. The achieved gold
price was marginally higher at A$567 per ounce. The
emergence this year of the low-cost Ridgeway mine had a
significant effect on both volumes and costs in comparison
with the previous year’s higher-cost production including from
the now depleted Gosowong mine. Copper production in
2002/03 also increased significantly to nearly 68,000 tonnes
(40,000 tonnes), realising A$192.8 million at spot prices
($126.6 million).

Newcrest Mining Concise Annual Report 2003

Through 2002/03, our environmental performance continued
to improve, as measured by the Australian Mining Industry
Code for Environmental Management annual survey. Not only
did our overall Company performance improve but each of
our operations demonstrated improved performance. The
environmental performance audits this year were certified by
an independent third party, and it was gratifying to receive
verification of our performance. A low level of environmental
incidents was recorded, with a slight drop in numbers
achieved against an increasing level of Company activity,
particularly at Telfer.

Environmental approval for the Telfer project was gained, and
the necessary management plans are being developed and
implemented to ensure that our commitment to a high level
of environmental performance is maintained.

A good relationship with local communities is essential to
our overall business performance. In the Cadia Valley, an
Open Day at the site once again proved successful in
attracting visitors. The operation is focussing on sustaining
the community relationships that have been developed over
the past few years.

At Gosowong, we continue to support local communities
as they re-establish themselves following past unrest. Our
micro-loan facility is designed to provide small amounts
of seed capital for local businesses, with an emphasis on
developing programs that can operate independently of the
mine and be sustainable in the future.

At Cracow, the Company and its joint venture partner,
Sedimentary Holdings Ltd, have signed an Indigenous
Land Use Agreement (ILUA) with the relevant Aboriginal
communities, while at Telfer, the access agreements for the
gas pipeline are in place. These agreements provide
substantial opportunities for local Aboriginal groups. We
have also been involved in supporting a training program for
long-term unemployed Aboriginal people in the Pilbara and
will continue to promote opportunities in this area.

Operating costs have been falling steadily over several
years. In 2002/03, the cash costs of production were down
to A$217 per ounce and the full costs of production were
down to A$356 per ounce. At these levels, our major
mining operations sit well within the lowest quartile of world
production costs. Cash flow from operations for the year
was A$199 million, which is A$108.7 million higher than last
year, reflecting the successful commissioning of the
Ridgeway mine.

Work continued during the year to simplify the hedge book.
New hedging was undertaken to protect the large capital
commitment to Telfer and, in accordance with policy, all of
this was in the form of simple forwards. The mark-to-market
of the hedge book improved from a negative A$754 million
at the beginning of 2002/03 to a positive $84 million at year’s
end. This improvement was due mainly to the rise in the
Australian/US exchange rate. Further simplification of the
remnant hedge book will continue as opportunities arise.

The Statement of Financial Position shows a strengthening
in the Company’s asset base but also reflects an increasing
trend in Accounting Standards to bring onto the Statement
unrealised derivative transactions and other provisions not
previously brought to account.

Earnings per share improved significantly to 29.6 cents and
the Company’s return on average capital employed rose to
6.6 percent from 3.7 percent. This improvement is pleasing
but needs to increase further before it is acceptable.
Dividends were held at five cents per share to conserve cash
required to develop Telfer.

Sustainability

The Company has embraced the concept of sustainability
and we are committed to developing long-term beneficial
relationships with our key stakeholders. A highlight of 2002/03
was the release in October 2002 of our first Sustainability
Report. We are proud of our social and environmental
performance and will continue to publish reports in coming
years to keep our stakeholders and others informed about
our activities and initiatives in these areas.

A considerable amount of effort was applied in working
towards our quest to achieve Industry best practice in
safety and health but this is not fully reflected in the 2002/03
performance indicators. The Lost Time Injury Frequency Rate
(LTIFR) rose from 2.2 to 3.0. While this result still compares
favourably to the industry benchmark of 9.0, it is not
acceptable. The broader based Total Recordable Injury
Frequency Rate (TRIFR) also increased, from 16 to 28. We
are developing new initiatives to reverse these trends and
believe ongoing and sustained improvement is achievable.

Newcrest Mining Concise Annual Report 2003 9

Newcrest
Moving Forward

Managing Director and
Chief Executive Officer’s Report (continued)

Objectives for 2003/04

Our people

Newcrest is on the verge of unparalleled growth that,
importantly, is very much organic. With the commissioning
of Telfer in calendar year 2004, we will double our production
while continuing to be at the low end of the gold industry’s
cash-cost curve.

It is very important that all of our management policies
and procedures reflect the Company’s new status in the
resources industry and that the outstanding potential of
projects such as Cadia East/Far East and Telfer Deeps are
understood as quickly as possible.

The Board and management have set the following targets
for the 2003/04 financial year.

1. Involve our entire workforce, senior staff, site management,
direct employees and contractors in a drive towards a
target of zero lost time injuries across the Company.

2. Work hard with our stakeholders in and around our

operating sites to ensure that the Company is seen as a
responsible corporate citizen. The new arrangements in
the Telfer and Cracow areas bring real opportunities to
advance our relationship with Aboriginal communities and
to help improve their quality of life.

3. Continue to ensure that the Company satisfies all its
environmental obligations as a minimum target.

4. Maintain the continuous improvement mentality in
management across every facet of the business.

5. Improve the financial performance of the Company.

Thanks must go to our employees for their efforts throughout
2002/03. The Newcrest team has enhanced its reputation as
discoverers of ore, as developers of projects based on that
exploration success, and as operators of those projects. In
addition, management was able to deliver on permit issues
at Cracow, the Telfer pipeline, and the Environmental Impact
Statements for Telfer and the Toguraci project, clearing the
way for these projects to proceed.

We substantially achieved all we set out to do, and that can
only happen when the management team is motivated and
embraces the task with enthusiasm.

With Telfer coming on stream in the near future, our workforce
will be greatly expanded. We are being careful to hire people
who exhibit real enthusiasm to join with the existing team in
moving the Company forward.

The Board is calling for further effort across the spectrum
of our business activities and most especially in the area of
safety. Nothing less than total commitment to achieving our
targets is acceptable and I am confident that will be
forthcoming.

We are looking forward to another year of improved
performance and achievement at Newcrest.

6. Progress our brownfields exploration at Cadia East, Telfer
Deeps, Cracow and Gosowong to ensure that the new
production levels and cost structures can be at least
maintained.

Tony Palmer
Managing Director and
Chief Executive Officer

7. Continue to provide support and funds for the exploration

group to heighten the chances of a new greenfields
success.

Newcrest Mining Concise Annual Report 2003

Bruce Price, Executive General Manager
Project Development, responsible for
Telfer development, previously built
Gosowong and Ridgeway. Prior to that,
over 10 years with Normandy Mining.

Tony O’Neill, Executive General Manager
Operations and Marketing, responsible for Group
mining operations, previously held senior mining
roles at KCGM and WMC.

Dan Wood, Executive General Manager
Exploration, a geologist with over 36 years’
experience in a diverse range of commodities,
both in Australia and overseas, including
with BHP.

Bernard Lavery, Executive General
Manager Corporate Services, a lawyer
by training with a wide experience in
corporate law, previously with WMC and
Ashton Mining.

Jeff Smith, Executive General Manager Finance,
previously held senior positions at WMC in
accounting, taxation and strategic planning.

Peter Reeve, General Manager Corporate
Affairs, a metallurgist with strong corporate
finance and market experience at JBWere &
Sons and previously corporate experience with
the Shell/Billiton Group and CRA Ltd.

Peter Bird, General Manager Human
Resources, a geologist previously in charge
of investor relations at Normandy Mining and
Newcrest Mining following a period as the
Australian gold analyst at Merrill Lynch.

Senior
Management

Newcrest Mining Concise Annual Report 2003 11

Cadia Valley
Gosowong

Rathy Mahendran,
Mine Projects Engineer, Ridgeway Underground

Newcrest Mining Concise Annual Report 2003

Operations

Centre: Tim Lehany, General Manager, Cadia Valley Operations
Right: David Coates, Geologist, Blast hole logging, Cadia Hill Open Pit

Newcrest’s operational performance was dominated by the strong
year at Ridgeway following its commissioning in March 2002.
Newcrest’s know-how in delivery of new projects and optimisation
of operations underpins the timely returns on capital invested by
the Company.

Marcia Lac,
Metallurgy Technician,
Ore Treatment, Cadia

Brett Vaughan,
underground miner,
fitting a rock bolt into the
boom of an underground
drill prior to installation

Gosowong Ore
Haulage

Newcrest Mining Concise Annual Report 2003 13

Newcrest
Moving Forward

Underground
Ore Conveyor

Cadia Hill
Open Pit

Incline
Conveyor Portal

Ridgeway &
Cadia Mill Sites

Cadia Hill
Waste Rock
Dump

d
a
o
R
s
s
e
c
c
A
dia
a
C

Water
Holding
Dam

Operations

Central NSW

Opencut Gold/Copper Mine

Cadia Hill Production

thousand
6
2
ounces 3

0
0
3

9
5
2

9
9
2

Nominal Treatment Rate 17 million tonnes pa

2003 Gold Production 298,848 ounces

2003 Copper Production 22,714 tonnes

Cash Cost $344 per ounce

400

300

200

100

Cadia Hill
Tailings Storage
Facility

Australia

Total Production Cost $483 per ounce

SCALE: 1cm = 1km

CADIA VALLEY OPERATIONS (CVO)

Cadia Hill Gold/Copper Mine

The Cadia Hill mine produced 298,848 ounces of gold
(258,834 ounces) and 22,714 tonnes of copper (23,229
tonnes) during 2003. Strong focus on ensuring the forecast
mining plan was achieved, resulted in better delivery of
budget ore grade material to the concentrator.

The Cadia Hill Mine plan incorporated the Cadia Extended
mine (previously Cadia Quarry) which was brought into
production during the year.

The cash cost of production at Cadia Hill was $344 per
ounce ($315 per ounce) with total costs of $483 per ounce
($473 per ounce).

Mining in the Cadia Hill pit continued with ore being mined
between the 5565RL level and 5505RL level. The depth of the
pit from original surface level is now 255 metres and will
ultimately be 585 metres.

Mining of the new Cadia Extended satellite pit commenced
on schedule in January and first ore was processed in
February. The transition material in this pit was more complex
than anticipated and posed minor processing issues.

Mining of the Cadia Hill pit North wall cutback commenced
in September with a contract for the initial 3 million tonnes
awarded to a contractor. The work was handed over to Cadia
Hill Mining in February and has progressed according to plan
with 8.7 million tonnes (of the cutback out of a total of
60 million tonnes) mined during the year.

The Cadia Hill mining fleet was expanded to undertake the
planned elevated waste stripping activity (including the North
Wall cutback) over the next three years. Material movement
peaks at 98 million tonnes in the 2003/04 year. The mining
fleet expansion takes the total Cat 793 haul trucks to 25. An
additional diesel-hydraulic face shovel (Liebherr 996) and
large Komatsu WA1200 wheel loader were deployed to meet
the increased truck loading demand. An upgrade of the open
pit drilling fleet was also initiated during the year as part of the
site drive to reduce operating costs.

Mill throughput rates increased materially in the second half
of the year as a result of a deliberate mine-to-mill strategy of
increasing powder factors in ore shots in the open pit. Finer
ore was presented to the semi-autogenous grinding (SAG)
mill and throughput rates in excess of 2,200 tonnes per hour
were achieved.

Efforts to improve recovery in the Cadia Hill concentrator
focussed on directing more material to the concentrate
regrind mill to use more of the mill’s available power for
mineral liberation. System modifications were commissioned
in the second half of the year and an improvement to metal
recoveries was achieved.

Newcrest Mining Concise Annual Report 2003

Ridgeway Underground Mine

Underground
Ore Conveyor

Decline Portal

Incline Conveyor
Portal

Ridgeway Mill

Cadia Hill
Open Pit

Cadia Hill
Waste Rock
Dump

Central NSW

Underground Gold/Copper Mine

Nominal Treatment Rate 5 million tonnes pa

2003 Gold Production 377,539 ounces

2003 Copper Production 45,024 tonnes

Cash Cost $85 per ounce

d
a
o
R
s
s
e
c
c
A
a
i
d
a
C

Total Production Cost $239 per ounce

Australia

SCALE: 1cm = 1km

Ridgeway Production

thousand
ounces

1
5

8
2
1

7
7
3

400

300

200

100

The Ridgeway autogenous grinding (AG) mill was converted
to a SAG operation with the introduction of grinding media in
March. The conversion to a SAG operation was aimed at
utilising the surplus available mill power to reduce grind size
and improve metallurgical recovery at the elevated 5 million
tonnes per annum throughput rate. While at an early stage,
the results appear positive.

A drilling program to further define the Ridgeway orebody
at depth continued through the year with 14.8 kilometres of
diamond drilling completed. The program has the potential
to significantly upgrade the resource tonnage at depth.

Ridgeway Gold/Copper Mine

Ridgeway is the Company’s recently commissioned
underground gold/copper mine in the Cadia Valley and is
adjacent to the Cadia Hill open pit mine. 2002/03 was
Ridgeway’s first year of full operation and metal production of
377,539 ounces of gold (127,665 ounces) and 45,024 tonnes
of copper (16,826 tonnes) was in line with plan.

Ridgeway’s production ramp-up target of 4 million tonnes
per annum was achieved three months after start-up. By
December Ridgeway had reached a production rate of
5 million tonnes per annum and this was sustained for the
remainder of the year.

The cash cost of production was $85 per ounce ($157 per
ounce) with total costs of $239 per ounce ($292 per ounce).
These costs incorporate the revenue from the copper
by-product credits. Benchmarking of operational key
performance indicators demonstrates that Ridgeway is
amongst the most efficient underground mines in the world.

One of the key risks for the Ridgeway project was overcome
when the sub-level cave zone reached the surface in
September 2002 as connection of the cave zone with surface
is essential for the operation of the SLC mining method. The
systems monitoring the progression of the cave zone to the
surface worked very well ensuring effective management of
this risk.

Newcrest Mining Concise Annual Report 2003 15

Newcrest
Moving Forward

Operations (continued)

Initiatives in the Cadia Valley

An extensive archaeological dig funded by CVO was
undertaken prior to work commencing in the Cadia Extended
pit and this work uncovered many artefacts. With mining now
closer to the historic Cornish engine house and chimney (of
State heritage significance), extensive strengthening of the
stone structures was conducted and mining activity restricted
until the strengthening work was complete.

The CVO public open day was held in April in conjunction with
the Australian Gold Council’s National Gold Mine Open Day
and was again a great success with 2,800 people visiting the
site that day. A further 2,000 visitors also attended educational
site tours run for schools and other interest groups during the
year.

Newcrest’s ongoing involvement and support for the local
region continued with more than $250,000 paid to community
programs and sponsorships during the year including $75,000
to Careflight and $35,000 to the Orange Base Hospital for
medical equipment.

A major site business improvement initiative was launched
during the year with all employees involved in business
improvement workshops. The workshops targeted
improvements in the CVO business and were titled
‘CVO Going for Gold’.

Strengthening of the Cadia
Engine House and Chimney
was required under the
modified consent for the
Cadia Extended project

Newcrest Mining Concise Annual Report 2003

Tobobo

Halmahera Island, Indonesia

Gosowong North

Ruwait

Seksekel

Opencut Gold Mine

Gosowong Production

thousand
ounces

5
7
2

7
2
2

2
3
2

8
3

Dongak

Gosowong
Administration Area

2003 Gold Production 37,878 ounces

Gosowong

Cash Cost $520 per ounce

Nominal Treatment Rate 0.3 million tonnes pa

Toguraci

Terminator Fault

Gosowong
Vein Structure

Bora

Total Production Cost $532 per ounce

Kencana

Indonesia

SCALE: 1cm = 0.5km

Australia

400

300

200

100

Community development in the local area continued
throughout the year with projects such as the building or
re-building of schools, funding of student and teacher
learning aids and supply of school furniture continuing.

In the medical area, building and maintenance of hospitals
and medical centres continued in conjunction with the supply
of medicine and medical equipment. PTNHM also assisted
in the establishment of local sustainable businesses and
installed fresh water systems for domestic use.

The Company contributed over US$530,000 to these
community initiatives during the 2003 year and continues to
enjoy strong community support.

Gosowong recorded one lost time injury (LTI) for the period,
ending a run of 2,502,940 man hours without a LTI.

Gosowong Gold Mine (PT Nusa Halmahera Minerals
82.5 percent, PT Aneka Tambang 17.5 percent)

The Gosowong Mine on Halmahera Island in Indonesia
continued operation until April 2003 when milling was
suspended due to low ore stockpiles.

During 2003 Gosowong produced 37,878 ounces from
low-grade stockpiles at a cash cost of $520 per ounce
($230 per ounce) and total costs of $532 per ounce
($419 per ounce). This increase in costs resulted from the
depletion of high-grade ore from the exhausted Gosowong
mine and the subsequent treatment of lower-grade stockpiled
material. Over the full life of the mine Gosowong produced
772,018 ounces of gold and 812,815 ounces of silver at cash
costs just above $200 per ounce.

Toguraci, a satellite project 2 kilometres west of the original
Gosowong pit, was the subject of extensive negotiations
during 2003 which were aimed at securing approval for the
Toguraci mine to proceed. This approval was granted by the
Indonesian Government in May 2003 and, as the only
approval granted in the country, was a significant
achievement for the operating team.

Mine development at Toguraci, which contains approximately
300,000 ounces of gold, has commenced with preliminary
road access completed and pre-stripping of the mining area
underway. Current plans have first production occurring in
December 2004.

The exploration prospectivity remains high on the Company’s
contract of work with a high level of drilling activity at both
Toguraci and Kencana.

Newcrest Mining Concise Annual Report 2003 17

Telfer

Haul truck in the Telfer
Open Pit

Newcrest Mining Concise Annual Report 2003

Development

L to R: Construction of Primary Crusher Train 2 – Telfer

Following the successful delivery of the Ridgeway project the Newcrest
development team focussed on the massive Telfer redevelopment and
completed a bankable Feasibility Study. Construction is 32 percent
complete and at the year end was within the planned schedule and
budget. Cracow and Toguraci developments were also progressed.

L to R: Construction of
Sag Mill Train 2 Pedestal
and Reclaim Tunnel
Train 2 – Telfer

Newcrest Mining Concise Annual Report 2003 19

Newcrest
Moving Forward

Development

Indian Ocean

Port Hedland

Shay Gap

Marble Bar

to Broome

North-West Western Australia

Project construction underway

Reserve: 18.4 million ounces gold,

690,000 tonnes copper

Resource: 26 million ounces gold,
960,000 tonnes copper

Telfer

Australia

SCALE: 1cm = 75km

Telfer Production

thousand
ounces

7
6
2

8
5

400

300

200

100

y
t
i
l
i

b
s
a
e
F

y
d
u
t
S

Telfer Gold/Copper Project

The Telfer project, located in the East Pilbara region of
Western Australia 450 kilometres inland from Port Hedland,
commenced development during the year and will become
a significant contributor to the Newcrest Group over the next
two decades.

The Feasibility Study, completed in October 2002,
confirmed the viability of the proposed project and Board
approval was granted in October 2002 subject to the
successful funding in place. Financing was completed
in March 2003 and the first stage of the project comprising
the redevelopment of the open pit mining operations and
the construction of a new treatment plant commenced.

With the commissioning of the underground mining
operations in the second stage of the development,
Telfer will have the potential to become the largest gold
mine in Australia with production expected to average
800,000 ounces of gold and 30,000 tonnes of copper
per annum.

The project contains 18.4 million ounces of gold and
690,000 tonnes of copper and will consist of opencut and
underground mines feeding a concentrator with nominal
capacity of 17 million tonnes of ore per annum on hard rock.
The expected mine life is 25 years.

Total capital cost for the project is estimated at $1,191 million,
$976 million for the first stage and $215 million for the second
stage. Stage 1 was 32 percent complete at year end.

During the year the upgrading of the Telfer access road was
completed to ensure project access during the 2002/03 wet
season. The site village was also upgraded to increase room
capacity to 1,200 to allow for site construction activities.
Manufacture of major plant and equipment items with long
lead times was well advanced with the bulk of the open pit
mining equipment delivered to site and deliveries of the major
components for the grinding mills scheduled for the period
July–November 2003.

Construction activities undertaken during the year included:

• Completion of the design definition engineering for the
underground mine and commencement of the detailed
design.

• The construction of the underground haulage shaft

commenced with completion of both the pilot hole and the
shaft collar. By year end, the shaft headframe fabrication
was well underway.

• Commissioning of the majority of the new open pit mining
equipment was completed and mining of open pit waste
commenced.

• Preparation of the earthworks for the concentrator site

was completed and the first concrete foundations poured
in April.

• The manufacture of the gas turbines, gearboxes and

alternators for the 141MW gas-fired power station was well
advanced.

Newcrest Mining Concise Annual Report 2003

• Agreements in principle were reached for the supply of

gas to the project and for the construction and operation
of the Port Hedland to Telfer gas pipeline.

• All native title, heritage and environmental requirements for
both the mine site and the infrastructure corridor, hosting
the gas pipeline, were satisfied.

The majority of senior operations staff positions were filled
and the open pit operating team recruited. At the end of June
operating personnel on site totalled 400 people (including
project support personnel) and the construction workforce
totalled 350 people.

As part of the Telfer project, exploration work has continued
to evaluate the previously identified extensions to the Telfer
Deeps underground reserve. Drilling around the underground
reserve, which contains 4 million ounces of the project’s
18.4 million ounce total reserve, has identified potentially
economic mineralisation in two zones:

• The Western Flank Stockwork (WFS), and

• The Vertical Stockwork Corridor (VSC).

During the year a series of targeted drilling and bulk sampling
programs continued which focussed on defining the potential
gold and copper mineralisation on the western flank of the
planned Telfer Deeps Sub-Level Cave (SLC). Drilling and bulk
sampling activities in the WFS identified two styles of
potentially economic mineralisation:

• Gold and copper mineralisation associated with North

Dipping Veins and surrounded by lower-grade stockwork
domains, and

• Gold and copper mineralisation associated with the Lower

Limey Unit.

A review of the proposed underground Feasibility Study to
consider the impact of the WFS was initiated during the year
with the intention of updating the Feasibility Study for the
underground section of the project by December 2003.

Newcrest Mining Concise Annual Report 2003 21

Newcrest
Moving Forward

Development (continued)

Gladstone

Biloela

Theodore

Bundaberg

Cracow

Roma

Gayndah

Gympie

Central Queensland

Pacific Ocean

Project construction underway

Mine plan: 675,000 ounces gold

Resource: approximately 800,000 ounces gold

Toowoomba

Brisbane

Australia

SCALE: 1cm = 120km

Cracow Gold Project (Newcrest 70 percent, Sedimentary Holdings 30 percent)

During the year the Cracow Project Development Proposal
was presented and approved by both joint venture party
Boards to proceed to project development. The approval
remained subject to execution of the relevant Joint Venture
Agreements and to the establishment of an Indigenous Land
Use Agreement (ILUA) between the joint venture parties and
two indigenous claimant groups.

The Cracow project has a proposed mining plan which
envisages 675,000 ounces of gold to be recovered over a
seven year period at cash costs of around $220 per ounce.
Exploration around the project tenements continues with
results indicating that additional mineralised shoots exist.

The ILUA was negotiated during the first half of the 2002/03
year and registered by the National Native Title Tribunal in
June 2003. Mining Lease Application No. 80089 was granted
for the project subsequent to year end.

Execution of the relevant agreements between the joint
venture participants occurred subsequent to year end
enabling project commencement. The agreements include
the Cracow Mining Joint Venture Agreement, the Cracow
Mining Joint Venture Management Agreement and the
Agreement for Sale and Purchase of Cracow Assets.

Tenders for the surface earthworks, support infrastructure,
first three years’ mining and process engineering have been
received and will enable efficient commencement of the
project construction phase. First production is expected in
December 2004.

Cracow Project Underground Schematic

m
0
0
5
4

Royal
Standard
Workings

m
0
0
0
5

Klondyke
Workings

m
0
0
5
5

Crown Link
Decline

Royal Shoot

Klondyke North

Crown Shoot

Newcrest Mining Concise Annual Report 2003

to Perth

Mandurah

Pinjarra

Boddington
Gold Mine
Project Area

North Bannister

Dwellingup

Boddington

South-west Western Australia

Care and maintenance

Reserve: 10.9 million ounces gold

Resource: 19.7 million ounces gold

Waroona

Australia

SCALE: 1cm = 15km

Boddington Gold/Copper Mine (Newcrest 22.2 percent, Newmont Australia 44.4 percent, Anglogold 33.3 percent)

The BGMJV participants continue to assess the project with
an update of the 2000 Feasibility Study, incorporating various
processing changes, to be assessed during the coming year.

Newcrest will continue to pursue future growth opportunities
such as the Boddington Expansion project, balancing the
risk/reward equation with other potential new projects in order
to optimise returns to shareholders.

Boddington Gold Mine remained on care and maintenance
throughout the year. Assessment of the condition of the
plant and facilities confirmed that care and maintenance
preparations have been effective in maintaining the plant and
facilities in sound condition. Recovery of minor quantities of
residual gold from the processing plant was completed
satisfactorily.

Exploration, targeting mineralisation outside the main
Wandoo resource areas, was maintained throughout the
year with $2.5 million (100 percent) spent.

The Boddington Gold Mine Joint Venture (BGMJV)
participants signed restated project agreements which
enabled the transfer of management of Boddington Gold
Mine from Worsley Alumina Pty Ltd to a management
company which is owned by the Joint Venturers in proportion
to their respective interests in the BGMJV.

Newcrest Mining Concise Annual Report 2003 23

Newcrest
Moving Forward

Mineral Resources and Ore Reserves

Total Mineral Resources at year end, net of mining depletion,
are estimated at 53 million ounces of gold and 3.8 million
tonnes of copper, which is the same resource of gold and
an increase of 0.1 million tonnes of copper compared with
June 2002 (all in situ).

There was a major increase in Mineral Resources at
Ridgeway with the discovery at Ridgeway Deeps of
1.4 million ounces of gold and 170 kilotonnes of copper
contained.

Ore Reserves are estimated at 27.9 million ounces of gold,
representing a modest overall decrease of 0.3 million ounces
after depletion of 0.9 million ounces. Total Ore Reserves for
copper are 1.4 million tonnes, a decrease of 0.04 million
tonnes as compared with June 2002.

There was a major increase in Ore Reserves at Telfer where
the Ore Reserve has been updated to reflect results of the Telfer
Project Feasibility Study that was completed in October 2002.

Mineral Resources and Ore Reserves conform to the
Australasian Code for Reporting of Mineral Resources and
Ore Reserves (The Joint Ore Reserves Committee Code –
JORC). Ore Reserves are a subset of Mineral Resources.
External and internal audits are conducted on completed
estimates. All costs and prices are in Australian dollars unless
stated otherwise. Relevant information on the methods and
parameters used to estimate Mineral Resources and Ore
Reserves are presented in the Newcrest Supplementary
Information Booklet located in the Annual Report section
on the Company’s website at www.newcrest.com.au.

Cadia Hill

Mining commenced at Cadia Extended in January 2003 with
approximately 3 million tonnes depleted from the resource
model to date. Cadia Extended has proved geologically more
complex than anticipated in the transitional zone. This has
resulted in a reduction in the quantity of metal recovered from
the initial phase of mining in the Cadia Extended pit. Mining in
this near surface zone was largely completed by year end
and was progressing into fresher less complex material.

Cadia Stockpiles

Ore stockpiles were depleted by mining reclaim during the
year. In addition, a proportion of the stockpiled low-grade
open pit ore, equivalent to 5 percent of the low-grade stockpile
tonnage, was removed from resources and reserves. This
was due to localised oxidation which would have resulted
in degraded flotation performance of material adjacent to
stockpile edges. Net depletion was 3 million tonnes.

Ridgeway

The discovery of Ridgeway Deeps resulted in a significant
increase to the Ridgeway Mineral Resource below the crusher
level this year. The net increase attributable to this discovery
was 29 million tonnes for 1.4 million ounces of gold and
170 kilotonnes of copper contained. These additional
resource tonnes have been largely classified in the Inferred
category. Drilling is ongoing to further define this resource.

Other material changes to the resource included mining related
depletions (–4.2 million tonnes) and increases due to re-evaluation
of economic parameters (+4.8 million tonnes). Incorporation of
additional drilling above the crusher level also allowed resource
categories to be upgraded in that part of the deposit.

The Cadia Hill Mineral Resource and Ore Reserve have
been depleted by mining activity during the reporting period.
No other material changes have taken place. Net depletion
was 13 million tonnes.

The Ore Reserve estimate has been depleted by normal
mining. Work has commenced to update the Ridgeway Ore
Reserve to incorporate recent changes to the resource model.
This is expected to be completed during the December quarter.

Mill adjusted reconciliation has indicated good performance
of the resource and reserve models.

Cadia Extended

Cadia Quarry is now known as Cadia Extended.

During the year the Cadia Extended Mineral Resource was
updated using the estimation methods previously applied.
This resulted in a small grade reduction for the total resource;
however this change did not affect the Ore Reserve.

Cadia East/Far East

No change has been made to the Mineral Resource estimate
for the conceptual opencut at Cadia East.

Also, no change has been made to the Mineral Resource
estimate for the conceptual SLC underground mine at Cadia
Far East.

Both the Cadia East and Cadia Far East Mineral Resources
are contained within a continuous and massive porphyry style
gold and copper mineralised system.

Newcrest Mining Concise Annual Report 2003

Studies to evaluate mining strategies for the potential
extensions to the Telfer Deeps mineralisation are in progress.
These studies are based on results from bulk sampling and
drilling beneath and to the west of the planned SLC.

Boddington

There have been no revisions to the Boddington resource
estimates and therefore Boddington Expansion Mineral
Resource and Ore Reserve estimates and the Basement
Mineral Resource estimates remain unchanged from those
reported last year.

Exploration has been focussed on the search for a near-mine
high-grade quartz vein both on Boddington Gold Mine
tenements and adjoining joint venture tenements. A number
of encouraging targets remain to be tested.

Gosowong/Toguraci

The Toguraci Ore Reserve has been developed with
allowance made for mining dilution and minimum mining
widths. Experience with mining the Gosowong pit provided
a reference for developing the pit design and corresponding
costs for Toguraci.

Resource definition drilling has commenced on the Kencana
Vein with a resource estimate expected to be completed in
the third quarter of 2003/04.

Cracow

The Crown Mineral Resource and the Royal Mineral Resource
remain unchanged. The provision of decline access will
permit underground resource definition drilling and an update
of these resources during 2003/04.

Exploration has continued on Cracow Joint Venture
tenements and a number of opportunities have been drilled
and brought through to advanced targets.

This system is located immediately adjacent to Cadia Hill and
is separated from that deposit by a major post-mineral thrust
fault. Exploration drilling to date has defined a steeply dipping
tabular body over a strike length in excess of 2 kilometres.
Ongoing exploration is designed to assist management to
understand the full potential of the area so that a feasibility
study can be commenced.

Conceptual mine planning work is ongoing to determine a
preferred development option for the Cadia East system.

Telfer

The June 2003 Telfer Mineral Resource Statement is
unchanged from the June 2002 Statement.

The Telfer Open Pit Resource is data constrained and open
both laterally and at depth in Main Dome and West Dome.

The current Telfer Deeps resource is data constrained.
Newcrest has completed bulk sampling above the proposed
SLC to test the Feasibility Study grade estimate of the cave
material. Results from this program are broadly in line with the
Feasibility Study expectation. Recent bulk sampling and drilling
to the west and beneath the current resource indicate potential
for extension of mineralisation. Studies are in progress to
evaluate this material and results continue to confirm the
existence of further potentially economic mineralisation in
these areas.

The Telfer Open Pit and Underground Ore Reserves have
been revised in line with the results of the Telfer Project
Feasibility Study that was completed in October 2002.
This has resulted in an increase in the Telfer Ore Reserve
of 0.5 million ounces of gold and an upgrade in Ore Reserve
classification with a significant proportion of the Open Pit Ore
Reserve now in the Proved Ore Reserve category.

The Telfer Open Pit Ore Reserve is constrained within pit
designs based on optimisation shells generated using the
profit algorithm approach and commodity prices of $500 per
ounce for gold and $1.30 per pound for copper.

The Telfer Deeps mineralisation is amenable to a SLC mining
method and the Ore Reserve was developed from mining
outlines based on a series of break even boundaries for each
production level. In arriving at the Ore Reserve for Telfer Deeps,
the recovered tonnes and grade have been diluted in a manner
consistent with industry practice for similar mining operations.

Newcrest Mining Concise Annual Report 2003 25

Newcrest
Moving Forward

Mineral Resources and Ore Reserves (continued)

Mineral Resources attributable to Newcrest as at 30 June 2003

Measured
Resource

Indicated
Resource

Inferred
Resource

Gold
In situ

Copper Competent
In situ

Person

Dry

Gold Copper
Tonnes Grade Grade
(million) (g/t Au) (% Cu)

Dry

Gold Copper
Tonnes Grade Grade
(million) (g/t Au) (% Cu)

Dry

Gold Copper
Tonnes Grade Grade
(million) (g/t Au) (% Cu)

(million
ounces)

(kilo-
tonnes)

Gold and Copper
Resources

Cadia Hill

Cadia Extended

Cadia Stockpiles

Ridgeway

220

1.2

0.72

0.46

0.44

2.2

3.2

0.16

0.23

0.14

0.72

0.90

0.60

0.40

0.16

0.23

4.1

0.39

0.17

1.9

0.62

1.4

0.59

Ridgeway Stockpiles

0.023

Cadia East

Cadia Far East

Telfer
Open Pit
Underground
Satellites
Stockpiles

170

1.3

0.17

Total Gold and Copper

170

1.3

0.17

Boddington
Basement
Boddington Expansion

0.081
29

Total Gold and Copper

Gosowong Stockpiles

0.09

1.8
0.93

0.93

2.7

0.11

Toguraci

Cracow

Total Gold and Copper

200
46
0.72
3.1

250

0.12
82

1.7
2.8
4.2
0.83

1.9

2.1
0.83

0.83

0.13
0.52
0.06
0.14

0.20

0.12

0.19

300

130

94
11
1.7

0.46

1.3

1.1
2.0
2.6

0.37

0.41

0.12
0.41
0.08

110

1.2

0.15

0.091

0.022
51

0.15

1.7

9.0
0.8

0.8

5.8

0.66

0.15

4.8

0.0024

4.3

5.5

21
4.8
0.24
0.08

0.02
4.4

4.4

0.01

0.30

0.55

420

110

520

0.21

1,100

530

670
290
1.9
4.4

960

180

3,800

3
3
3
3

4
5

1. C.F. Moorhead, 2. J.R. Holliday, 3. G.R. Howard, 4. K.P. Gleeson, 5. S. Williams, 6. G.N. Petersen, 7. J.F. Leckie/P. Creenaune

Rounding, conforming to the JORC Code, may cause some computational discrepancies. The gold and copper grade totals in the resources are
weighted averages.

Information in this report which relates to Mineral Resources is based on and accurately reflects reports prepared by the Competent Person named
beside the information. All these persons are full-time employees of Newcrest Mining Limited or the relevant subsidiary, except K.P. Gleeson, who is a
full-time employee of BGM Management Company Pty Ltd and S. Williams, who is a full-time employee of Newmont Australia Limited, who consent to
the inclusion of material in the form and context in which it appears. This resource report is compiled by J.F. Leckie, Chief Geologist Mining and
Development, Newcrest Mining Limited. All the Competent Persons are Members or Fellows of The Australasian Institute of Mining and Metallurgy
and/or the Australian Institute of Geoscientists and have the relevant experience in relation to the mineralisation being reported on by them to qualify as
Competent Persons as defined in the Australasian Code for Reporting of Mineral Resources and Ore Reserves.

Newcrest has retained Peter Stoker of Hackchester Pty Ltd to act as external auditor for the Newcrest Mineral Resources where Newcrest is the
operator. External audits have been completed or are in progress, and Mr Stoker has stated that he is not aware of any issues which materially affect
the reported Mineral Resources. Mr Stoker is a geologist with over 30 years experience in mine geology, Mineral Resource and Ore Reserve estimation,
feasibility studies, project evaluation and mineral exploration.

Newcrest Mining Concise Annual Report 2003

Ore Reserves attributable to Newcrest as at 30 June 2003

Proved
Reserve

Probable
Reserve

Gold
In situ

Copper Competent
In situ

Person

Dry

Gold Copper
Tonnes Grade Grade
(million) (g/t Au) (% Cu)

Dry

Gold Copper
Tonnes Grade Grade
(million) (g/t Au) (% Cu)

(million
ounces)

(kilo-
tonnes)

Gold and Copper Reserves

Cadia Hill

Cadia Extended

Stockpiles

Total Gold and Copper

Ridgeway

Underground

Stockpiles

Total Gold and Copper

Telfer*

Main Dome

West Dome

Telfer Deeps

170

0.77

0.18

180

0.44

0.75

9.0

0.023

9.0

130

3.1

3.2

3.1

1.3

1.0

0.14

0.17

0.84

0.90

0.84

0.21

0.08

Total Gold and Copper

170

1.3

0.18

Boddington

Expansion

Total Gold and Copper

Gosowong

Stockpiles

Toguraci

Total Gold

Total Gold and Copper

0.94

0.12

0.09

2.7

0.09

2.7

5.3

0.37

0.50

0.20

0.25

0.46

0.24

2.1

0.68

2.1

0.68

120

210

1.5

1.1

2.7

1.6

0.84

0.15

0.08

0.50

0.20

0.13

0.15

4.1

0.20

0.15

4.5

2.8

0.002

2.8

3.0

3.4

2.4

0.01

0.21

0.22

300

350

270

0.21

270

430

200

690

110

1,400

1. C.F. Moorhead, 2. J.R. Holliday, 3. G.R. Howard, 4. K.P. Gleeson, 5. S. Williams, 6. G.N. Petersen, 7. J.F. Leckie/P. Creenaune, 8. M. Staples,
9. A. Pratt

Rounding, conforming to the JORC Code, may cause some computational discrepancies. The gold and copper grade totals in the reserves are
weighted averages.

Information in this report which relates to Ore Reserves is based on and accurately reflects reports prepared by the Competent Person named
beside the information. All these persons are full-time employees of Newcrest Mining Limited or the relevant subsidiary, except K.P. Gleeson, who
is an employee of BGM Management Company Pty Ltd; S. Williams, who is an employee of Newmont Australia Limited and M. Staples, who is an
employee of Australian Mining Consultants Pty Ltd, contracting to Newcrest Mining Limited, who consent to the inclusion of material in the form and
context in which it appears. This reserve report is compiled by D.J. Corp, Manager Business Development, Newcrest Mining Limited. All the Competent
Persons are members of The Australasian Institute of Mining and Metallurgy and/or the Australian Institute of Geoscientists and have the relevant
experience in relation to the mineralisation being reported on by them to qualify as Competent Persons as defined in the Australasian Code for
Reporting of Mineral Resources and Ore Reserves.

Goss Consulting Pty Ltd was engaged to conduct audits on the process used for Ore Reserve estimation for Cadia Hill, Cadia Extended, Ridgeway,
Telfer and Toguraci. Goss Consulting is not aware of any issues with the process used which may materially affect the reported Ore Reserve.

*A small proportion (approximately 5 percent) of the Telfer Open Pit Reserve falls within pit increments which are dependent on the inclusion of Inferred
Resources to meet the economic criteria for production. Newcrest has every expectation that further drilling that is planned will upgrade these Inferred
Resources.

Newcrest Mining Concise Annual Report 2003 27

Cadia Valley
Gosowong
Telfer
Cracow
Ashburton

L to R: Graham Howard, Telfer Geology Manager,
Markus Hope, Resource Definition Geologist and
Phil Moffitt, Superintendent Geologist, Telfer Open Pit

Newcrest Mining Concise Annual Report 2003

Exploration

Left: Nicole Reid, Geological Assistant, and Ben Harper, Geologist,
Newcrest Exploration
Centre: L to R: Ian Tedder, Principal Geologist, Dan Wood, EGM Exploration,
John Holliday, Regional Exploration Manager, South East Australia
Right: Telfer diamond drill core

The ability of Newcrest’s geological team to consistently replace
reserves for the Group and to delineate new discoveries continued
to endorse the Company’s commitment to exploration as a core
business discipline for Newcrest.

Defining mineralisation in
the Telfer Open Pit

L to R: Mitchell Bland, Senior Geologist, Dan Wood,
EGM Exploration, Anton Muryanto, Project Geologist

Newcrest Mining Concise Annual Report 2003 29

Newcrest
Moving Forward

Exploration

Growth in Resources

Copper Reserve
(Mt)

Gold Resource
(Moz)

3.0

2.5

2.0

1.5

1.0

0.5

0.0

2003
Gold - 53 million ounces
Copper - 3.8 million tonnes

Copper Resource
(Mt)

6.0

5.0

4.0

3.0

2.0

1.0

0.0

2003
Gold - 28 million ounces
Copper - 1.4 million tonnes

Growth in Reserves

Gold Reserve
(Moz)

Newcrest maintained its strong ongoing commitment to
exploration on both greenfields and brownfields properties.

Exploration remains core to the Company’s ambition of
creating new wealth for its shareholders and is its preferred
strategy for value-adding growth.

Newcrest’s approach to its exploration activities is to obtain
extensive tenement holdings over large mineralised systems
with the aim of securing long-life mining operations. The
regional exploration approach and the consequent long-term
commitment of resources to these areas also creates the
potential for repeat discoveries.

The success of Newcrest’s exploration strategy is clearly
reflected in Newcrest’s mineral resource base which grew
by more than 50 million ounces of gold and 4 million tonnes
of copper between 1992 and July 2003.

Mine Area Exploration

Cadia District
In the Cadia district, exploration continued to determine the
extent of mineralisation beneath the existing SLC at Ridgeway
and to further define the extent of the Cadia East system.

At Ridgeway definition drilling confirmed the presence of
potentially economic mineralisation and increased the
estimated resource at Ridgeway, after mining depletion in
2002/03, from 3.7 million ounces of gold and 360,000 tonnes
of copper to 4.8 million ounces of gold and 520,000 tonnes
of copper.

Encouragingly, drill hole UR332 which intersected the
Ridgeway Deeps mineralisation obliquely recorded
408 metres at 3.0 grams per tonne of gold and 0.71 percent
copper indicating the potential for better grade mineralisation
to continue at depth.

At Cadia East, which incorporates the Cadia Far East
mineralisation, work focussed on definition of higher-grade
zones suitable for future development.

Drilling to the east of Cadia Far East returned a downhole
intersection of 76 metres grading 0.82 grams per tonne of
gold and 1.2 percent copper indicating the presence of a new
zone of higher-grade mineralisation. Further drilling is planned
to determine the extent of this mineralisation.

In addition to drilling in these areas a number of development
options, which included decline access to the Cadia East
area, were explored with geotechnical studies conducted
along the preferred underground access development route
from the Ridgeway mine.

At the Junction Reefs joint venture area, which is along
strike on the Cadia discovery corridor (Newcrest earning
51 percent), exploration focussed on the search for
Ridgeway-style deposits. Prospects such as Gooley’s North
returned several encouraging intersections and warranted
continuation of the program in this area.

Gosowong (82.5 percent)
At Gosowong a new discovery was made when drilling
1 kilometre south of the Gosowong pit discovered high-grade
gold mineralisation at the Kencana prospect, which is hosted
in a west-north-westerly trending fault zone.

The zone of mineralisation defined to date is approximately
300 metres long, 120 metres down dip with a thickness
ranging from 3 – 23 metres and with gold grades of more
than 100 grams per tonne. The Kencana mineralisation
remains open at depth and along strike. Evidence of
additional high-grade gold mineralisation has also been
discovered at Kencana in the extension of the north-trending
Gosowong vein zone.

Newcrest Mining Concise Annual Report 2003

An initial resource estimate for the Kencana mineralisation is
expected to be completed by early calendar 2004.

At year end several drill rigs were drilling to establish the
extent of the Kencana and Gosowong vein mineralisation.
The search for additional mineralisation at the Toguraci
prospect, where mine development is proceeding, continues.

Telfer District
The substantially improved understanding gained from the
work at Telfer Main Dome and Telfer Deeps, as part of the
Telfer development, was used to assist in the investigation
of various Telfer regional exploration prospects.

A number of previously identified dome structures with
characteristics similar to the Main Dome require additional
and comprehensive evaluation. Exploration presently is
concentrated at Trotmans Dome on the Backdoor prospect,
located approximately 30 kilometres south-east of Telfer. The
Backdoor prospect was first drilled in the late 1990s and
reinterpretation of the drill data has identified a large breccia
zone which is open at depth.

During the year drilling beneath the Backdoor prospect was
aimed at testing the depth extent of the breccia and recent
deep core drilling as part of this program recorded a best
intersection of 21.5 metres at 3.4 grams per tonne of gold in
hole BD22.

The mineralisation occurs in altered breccia. Deep core
drilling will continue.

Greenfields Exploration

Cracow (70 percent)
Exploration during the year at Cracow focussed on the
search for additional mineralised structures rather than
definition drilling of the known shoots. This program resulted
in the discovery of three new gold-mineralised structures –
Sovereign, Empire and Phoenix and takes the total number of
possible new gold shoots in the Cracow field to seven.

Closer-spaced, resource delineation and definition drilling
will be conducted in 2003/04 to broadly delimit the Sovereign,
Empire and Phoenix mineralisation and also establish the size
of the resource previously discovered at Klondyke North.

The search for additional gold-mineralised structures will be
continued in the Klondyke area and elsewhere in the Cracow
goldfield in 2003/04.

Ashburton, W.A. (up to 70 percent)
At Ashburton the search for Carlin-style mineralisation
continued with exploration focussed on the Cheela and
Xanadu areas. These prospects are located about
100 kilometres north-west and 60 kilometres south-east
of Paraburdoo, respectively.

Geochemical drilling in the Cheela area has identified several
near-surface gold anomalies in oxidised sediments, extending
over a distance of more than 25 kilometres. Results from
follow-up drilling in the Cheela area were encouraging and
included 40 metres at 1.8 grams per tonne of gold at the
Electric Dingo prospect.

During the year Newcrest completed its obligations in the
Ashburton JV and has now earned its 70 percent interest in
the Electric Dingo prospect.

In the Xanadu area drilling has identified a gold anomaly over
a distance of more than 4 kilometres at the Romulus/Remus
prospect.

Outlook

As in 2002/03, exploration in 2003/04 will be focussed
on a relatively small number of projects both domestically
and offshore with key objectives of reserve replacement
and generation of new exploration targets.

Drilling programs particularly at Ridgeway Deeps, Telfer
Deeps, Cracow and Kencana are expected to provide
positive results.

In addition, exploration opportunities in the Americas for both
gold and copper discoveries will be assessed.

Newcrest Mining Concise Annual Report 2003 31

Lynn Olssen,
Project Geologist, Telfer

Ray Marinovic,
DTMT Safety Advisor, Telfer

David Coates, Geologist,
Cadia Hill Open Pit

Judy Galpin, Geologist,
Cadia Hill Open Pit

Haulage trucks in the
Telfer Open Pit

Michelle Boreham, Graduate Geotechnical
Engineer, Using the electronic tagging system
in the Ridgeway Underground

Newcrest Mining Concise Annual Report 2003

Our people

Left: John Allan, Group Manager, Environment
Centre: Marie-Louise Czech, Payroll Supervisor
Right: Grant Davidson, General Manager, Risk

Newcrest’s commitment to technical excellence, especially in the
fields of exploration, project development and operations ensures
a high level of opportunity for the talented and motivated workforce
employed by it.

Markus Zeimer,
Senior Counsel

Don Runge, General
Manager, Cracow

Paul Griffin, Production
Superintendent,
Concentrators, Cadia

Newcrest Mining Concise Annual Report 2003 33

Newcrest
Moving Forward

Our People

Human Resources

Safety and Health

At 30 June 2003 Newcrest had 932 direct employees
(799 employees) and 1,010 contractors (795 contractors).
The recruitment and continuous development of a high-
quality workforce continues to be a priority for the Company.

Newcrest is committed to providing injury and disease-
free workplaces for its employees and contractors and has
continued in its quest to achieve ‘Industry Best Practice’ in
safety and health.

At Telfer, all senior operations management roles have now
been filled. The recruitment and training of professional and
operational roles is well underway and is aligned with the
construction-to-production mine schedule.

An employee opinion survey was conducted across the
business to provide a measure of the organisational health
of the Company and enable areas of concern from an
employee perspective to be identified. Following the
feedback of results, managers and employees have been
working together to address agreed areas for improvement.

At CVO a series of ‘Leading Change’ workshops were
conducted to facilitate the alignment of employees with
CVO’s vision and values. As with the employee survey,
those workshops also saw the implementation of
improvement actions.

A new performance management system was developed
and implemented and a review of all corporate HR policies
commenced. Those initiatives and those mentioned above,
have all been undertaken with the objective of equipping the
organisation with a workplace culture to effectively meet the
significant period of growth ahead.

Although a considerable amount of effort has been applied
across the Company to achieve these objectives, Newcrest’s
safety and health performance indicators have not fully
reflected this. Management has recognised that to achieve
and sustain the improvements needed to reach ‘Industry
Best Practice’, new and innovative approaches to safety
and health, focussing on leadership and the continued
development of a ‘culture of safety’, are required.

Regrettably, a fatality occurred at one of the Company’s
operations during the year. On 24 June 2003, Damian
Pusterla, an employee of Ted Wilson & Sons (TWS), was
killed by an electric shock when a mobile crane came into
contact with an overhead power line on a pastoral property
owned by Newcrest adjacent to CVO. TWS, a rural
engineering firm, had been engaged to dismantle a shearing
shed on the property which was in the subsidence zone of
the Ridgeway underground mine.

A comprehensive investigation into the causes of this incident
is being undertaken. When the findings are finalised, they will
be communicated across Newcrest and the broader mining
community, with the aim of preventing any further incidents of
a similar nature.

The Group’s overall key safety and health performance
indicators show a slight deterioration in the excellent
performance recorded the previous year:

• Lost Time Injury Frequency Rate (LTIFR) increased from 2.2
to 3.0 LTIs per million exposure hours. While this indicator
still compares favourably to the most recent industry
benchmark (i.e. the Australian Metalliferous Mining Industry
LTIFR of 9.0 for 2001/02) this increase is not acceptable to
Newcrest. The main pressure on this indicator was from the
commencement of project development activities at Telfer.

• Total Recordable Injury Frequency Rate (TRIFR, previously

known as Restricted Duties Injury Frequency Rate)
increased from 16 to 28 RDIs per million exposure hours.
The main reason for this increase was a significantly higher
injury rate at Telfer.

Newcrest Mining Concise Annual Report 2003

LTIFR – Total Group

9
.
5

9
.
3

6
.
4

4
.
2

0
3

TRIFR – Total Group

9
.
7
3

7
.
3
3

2
.
6
1

1
8
2

00*

Site Safety Performance
Site

LTIFR

TRIFR

Cadia

Ridgeway

Gosowong

Telfer Project

Boddington

Exploration

Total Newcrest

This
Year

0.9

1.8

1.3

6.5

0.0

4.0

3.0

Previous
Year

0.9

3.0

0.0

4.4

11.9

5.1

2.2

This
Year

22.6

23.3

11.4

55.9

16.5

27.7

28.1

Previous
Year

19.7

14.2

4.0

28.5

59.4

27.4

15.6

LTIFR
Industry Benchmark
(1999-02 AMMI,
2003 MCA Estimate)

*Data collection commenced
in this year

Lost Time Injury (LTI) – An injury where the person misses one or more full rostered shifts.
LTIFR – Number of LTIs per million hours worked.
Total Recordable Injury (TRI) – Any injury requiring more than first aid treatment.
TRIFR – Number of TRIs per million hours worked.

• The number of Serious Potential Injuries (SPIs) dropped
from 23 in 2001/02 to 15 in 2002/03 which indicates that
focus on management of major hazards across the
Company is having a positive impact.

Significant achievements and activities for 2002/03 were:

The approach for the coming year is to:

• Fully implement safety and health management systems
across all Newcrest operational and project development
sites and measure the effectiveness through detailed safety
and health audits.

• The strong performance of CVO and Exploration.

• Benchmark the Company against ‘World Class’ safety

management with particular focus on safety leadership and
safety culture development.

• Enhance the sharing and learning culture across the

Company, especially in regard to key safety and health
procedures and initiatives, e.g. behaviour modification
programs.

• Implementation of safety and health improvements

identified through the safety and health management
system reviews performed in 2001/02 at Cadia, Ridgeway
and for the Exploration Group.

• Combination of the safety and health management
systems following the amalgamation of Cadia and
Ridgeway into CVO.

• Significant organisation cultural development at CVO, with
a strong focus on people, communication and critical
behaviours providing the basis to improve the safety record
through involvement of people in the enhancement of the
culture of safety.

• Implementation of safety and health management systems
for the Telfer project phase, with particular emphasis on
contractor management, compliance monitoring and
communication.

Newcrest Mining Concise Annual Report 2003 35

John Ford,
Environmental Technician,
collecting water samples
to test water quality in
Cadiangullong Creek

Newcrest Mining Concise Annual Report 2003

Environment

• In keeping with our commitment under the AMI Code for

Environmental Management, Newcrest completed its third
Code Implementation Survey during the year. This survey
measures the success of individual operations in
implementing the various principles of the Code. Each of
our operations showed significant improvement over the
scores obtained in the 2001 survey. The results for each
site (and the Group consolidated score) are shown in the
table below.

Operation

Cadia Hill

Gosowong

Ridgeway

Newcrest

Implementation
(2002)
(percent)

Implementation
(2001)
(percent)

• The Telfer project received regulatory environmental
approval during the year. Two impact assessment
documents were prepared, one for the mine and borefield
extensions and the other for the power supply and
infrastructure corridor. Both elements of the project
received approval from the Western Australian authorities
in October 2002.

Newcrest has continued to enhance its environmental
performance by identifying areas of key risk and ensuring
that resources are prioritised in these areas. This improved
performance was recognised by an independent third party
assessment of our Australian Mining Industry (AMI) Code
implementation survey which saw a 12 percent increase in
our overall score. This places Newcrest at the upper end
of results achieved in the mining industry. The focus in the
year ahead will be on identifying opportunities to maintain
this improvement.

Newcrest continues to promote the concept of sustainability,
embracing a balance between economic prosperity,
environmental quality and social responsibility. This process
culminated in the release of our first public Sustainability
Report in 2002. This report can be viewed on the Company’s
website at www.newcrest.com.au.

Highlights of the year’s activities include:

• The number of reported environmental incidents fell slightly
compared with the previous year (15 in 2003 compared
with 16 in 2002). This was an excellent performance given
the increase in construction activity at Telfer. A number
of the incidents related to small hydrocarbon spills
(<100 litres) and additional effort in the coming year
will focus on an improved performance in this area.

• A major initiative was the release of our first Sustainability
Report in October 2002. The report was in two parts – a
short summary report in hardcopy which highlighted key
achievements and issues and a more extensive electronic
report, with access to a wide range of supporting
documents. We plan to follow a similar approach in 2003,
with the aim of increasing the amount of data available in
the electronic version of the report.

Newcrest Mining Concise Annual Report 2003 37

Newcrest
Moving Forward

Financial Analysis

The Group reported an after tax profit from ordinary activities
of $92.2 million which compares to a loss after tax from
ordinary activities for the previous year of $53.0 million.
The current year result includes significant items resulting
in a pre-tax profit of $37.0 million ($25.9 million after tax)
compared with significant losses in the previous year relating
to provisions totalling $105.6 million ($73.9 million after tax).
These items are discussed in more detail below. Excluding
these significant items, the Group recorded a profit after tax
from ordinary activities of $66.3 million ($20.9 million).

Operating Results

Summarised Operating Results are:

Total Revenues

Results

Geographical
Segments

2003
A$M

2002
A$M

2003
A$M

Cadia Valley Operations

579.1

332.3

149.0

Gosowong

Other Mines

23.6

134.3

0.7

15.1

2.2

–

2002
A$M

50.1

32.5

4.4

Total sales were 724,584 ounces (646,418 ounces). The
increase of 78,166 ounces was a result of:

– increase from the full year of production at Ridgeway

257,847 ounces;

– increased throughput at Cadia Hill 46,301 ounces;

– suspension of operations at Boddington (26,824 ounces);

and

– decrease due to completion of processing high-grade ore

at Gosowong (199,158 ounces).

The achieved gold price for the year was $567 per ounce
($559 per ounce). The achieved gold price excludes foreign
exchange contracts and gold contracts that settled against
the previous year’s provision for surplus US dollar and gold
hedge contracts and further losses recognised in relation
to the provision for restructuring of hedge contracts.

The following table provides a breakdown of the achieved
gold price between the contribution from the gold hedge
book and foreign currency hedge book.

Group revenue and
expenses

Total revenue and
results before tax

Tax

Outside equity interest

Profit after tax before
significant items

Significant items (tax-effected)

Profit after tax

9.8

1.4

(67.9)

(54.0)

613.2

483.1

83.3

33.0

(18.1)

(10.3)

1.1

(1.8)

66.3

25.9

92.2

20.9

(73.9)

(53.0)

Notes:
1. Segment sales revenue and segment results by mine location include
gold and copper sales at spot prices. Mine results do not include
allocation of hedging and interest costs.

2. Group revenue and expenses included contribution from hedging,
exploration expenditure, corporate costs and other revenue and
expenditure items.

Operating Revenue

Total revenue for the year was $613.2 million, an increase of
27 percent on the previous year due to higher sales volumes
and a higher achieved gold price.

The increase in gold revenue and copper by-product credits
was due to a full maiden year of production from Ridgeway
of 377,539 ounces (127,665 ounces). Ridgeway was officially
opened on 19 April 2002 and is now fully commissioned and
operating above name plate capacity.

Newcrest Mining Concise Annual Report 2003

Gold Book

FX Book Achieved
Outcome Outcome Gold Price
($/oz)

($/oz)

2002/03

2001/02

605

667

(38)

(108)

567

559

Spot
Gold
($/oz)

565

548

The $62 per ounce reduction in the gold book outcome
from 2001/02 is due to the settlement of sold call option
contracts at strike prices between $500–520 per ounce.

The improvement in the exchange losses of $70 per ounce
resulted from a decrease in the exchange losses on the
US dollar foreign currency contracts to $27.5 million
($69.8 million). During the year, US dollar currency contracts
delivered to Newcrest, Australian dollars at the rate of
0.74 cents which, when compared to the prevailing Australian
and US dollar exchange rate on maturity of the contracts,
resulted in exchange losses totalling $27.5 million. The
improvement is due to appreciation of the Australian
and US dollar exchange rates from the previous year and
the decrease in the volume of US dollar contracts as the
achieved gold price calculation excludes those contracts
that were identified as surplus in the previous year. If these
contracts were included, the adjusted outcome from the
FX book would have been negative $95 per ounce resulting
in an adjusted achieved gold price of $510 per ounce.

Copper production has become an increasing source of
income to the Group following commissioning of Ridgeway
in April 2002. Total spot by-product revenue from the sale of
copper and silver increased by $66.6 million to $192.8 million
as copper production for the year was 67,738 tonnes (40,055
tonnes). The achieved copper price for the period was $1.28
per pound ($1.27 per pound).

Operating Costs

The Company has been successful in driving costs down and
thereby increasing the profit margin on each ounce of gold
produced. Since 1997/98 cost of sales, before depreciation
and amortisation charges, have fallen by 47 percent while
cost of sales including depreciation and amortisation charges
has fallen by 31 percent. The table below shows the trend
over the last six years.

Other Major Costs

• $26.8 million of exploration costs were expensed in the year.

• Borrowing costs increased due to the completion of the
Ridgeway project. Borrowing costs associated with this
project, which were previously capitalised, are now being
expensed.

• Net foreign exchange losses of $13 million arose from the
effect of the appreciation of the Australian dollar on foreign
currency concentrate receipts and translation of overseas
subsidiary results.

• Other expenses of $3.7 million mainly comprise Gosowong

and Boddington care and maintenance costs.

Significant Items

The Group result includes significant items totalling a net
profit before tax of $37.0 million. This net gain consists of the
following items:

• $7.2 million realised gain from the write-back of the surplus
foreign currency contract provision made in the previous
year relating to contracts that matured and settled in this
financial year. $16.8 million write-back of the provision
made in the previous year for foreign currency contracts
that are still to be settled in 2003/04 representing the
revaluation of this provision at the year end exchange rate.

• $24.7 million unrealised gain from the restatement of the

US$80 million borrowing.

• $11.7 million expense recognised during the year from the
ongoing treatment of previous year hedging restructures.

Excluding these significant items, the Group recorded
a profit after tax from ordinary activities of $66.3 million
($20.9 million).

Statement of Financial Position

A major change impacting the Statement of Financial
Position was the introduction of revised accounting standard
AASB 1012 ‘Foreign Currency Translation’, effective from
1 July 2002. From this date unrealised gains or losses on
revaluation of foreign currency contracts will be recognised in
the Statement of Financial Position. For Newcrest, the impact
on the Company’s accounts is to increase assets and
liabilities by approximately $89.6 million. The foreign currency
contracts will be translated at the spot exchange rate at each
subsequent reporting period until maturity of the contracts.

Achieved gold price ($ per ounce)

590

623

616

623

559

567

1997/98 1998/99 1999/00 2000/01 2001/02 2002/03

Less cost of sales before
depreciation and amortisation
charges ($ per ounce)

Cash margin ($ per ounce)

Less depreciation and amortisation
charges ($ per ounce)

Total margin

421

169

354

269

121

148

299

317

138

179

302

321

144

177

260

299

154

145

221

346

135

209

Newcrest Mining Concise Annual Report 2003 39

Newcrest
Moving Forward

Financial Analysis (continued)

Telfer Financing

In March 2003 the Consolidated Entity raised A$575 million
through a Multi-Currency Loan Note Subscription Agreement.
Drawings are to be made in Australian and US dollars and
interest is payable on a floating rate basis. The loan facility
is scheduled to be fully repaid by June 2009 with the first
repayment in December 2005 coinciding with the expected
completion and commissioning of the Telfer underground
operation. As at 30 June 2003, no drawings had been made
under this loan facility.

Measures of Financial Performance

Other key measures of financial performance that
demonstrate improvement in the Company’s position are:

2003

2002

Basic earnings per share (cents)

29.6

(19.2)

Return on average capital employed* (percent)

6.6

Return on members equity* (percent)

Net debt/net debt plus equity (percent)

10.6

30.3

3.7

7.9

49.9

* Return used in the calculations represents earnings before interest and

tax (excluding significant items).

The Statement of Financial Position at 30 June 2003 has seen
total assets increase by $463 million to $1,839 million with the
increase mainly attributable to Telfer feasibility and
construction expenditure and recording unrealised losses on
foreign exchange contracts. Total liabilities have increased by
$117.6 million reflecting the foreign currency exchange
contracts liability and an increase in creditors associated with
the Telfer development. This was partly offset by scheduled
gold loan repayments and finance lease repayments.

Contributed equity increased by $256 million mainly due to
the equity placement of 31.7 million shares raising a net
$212.9 million.

The Statement of Financial Position has been substantially
strengthened by the equity raising and debt repayments in
the financial year. The net debt to net debt plus equity ratio
has decreased from 50 percent to 30 percent.

Cash Flows

Cash flows from operations were $199.0 million, an increase
of $108.7 million from the previous period mainly due to the
higher production and lower per unit costs.

Cash flows from investing activities of a net $265.4 million
included $199.6 million associated with the Telfer feasibility
and construction.

Repayments of borrowings in the year were $87.0 million.

Cash flows from operations were not sufficient to meet the
capital and exploration program and scheduled loan
repayments. Therefore, the following additional funds were
required to meet the above commitments: share placement
generated $212.9 million and $37.3 million was received from
the share purchase plan.

Newcrest Mining Concise Annual Report 2003

Corporate Governance

Although not required to do so until its 2004 Annual Report,
the Company has elected to report against the ASX
Corporate Governance Council Principles of Good Corporate
Governance and Best Practice Recommendations, for the
period ended 30 June 2003.

The Board considers that the Company is in compliance in
all substantial respects with the Principles and Best Practice
Recommendations.

Set out below is an overview of the Company’s corporate
governance practices including those matters required to be
addressed in the annual report by the Principles and Best
Practice Recommendations. Additional information is
available on the Company’s website.

Board Role

On behalf of the shareholders, the Board:

• sets the Company’s strategic goals and objectives.

• oversees the management and performance of the

Company’s business.

• determines broad issues of policy.

• sets an appropriate framework of corporate governance for

management.

These and other functions of the Board, and by exception the
functions of management, have been formalised through the
adoption of a formal Board Charter.

Board Composition

Newcrest’s Board currently comprises six Directors, five of
whom are Non-Executive including the Chairman of Directors,
and one of whom is the Managing Director. Details of each
Director’s skills, experience and relevant expertise are set out
on page 47 of this Annual Report.

Adopting the definition suggested in the ASX Best Practice
Recommendations, the Board has determined that all Non-
Executive Directors, including the Chairman, are independent
and free of any relationship which might conflict with the
interests of the Company. In doing so the Board formed the
view that the materiality thresholds set out in the ASX
definition would be breached only if a Director received, as
a consultant to the Company, fees exceeding $250,000 per
annum or was a principal or partner of a professional adviser
that billed more than $3 million per annum during the last
three years, or was a director or officer of a supplier or
customer that held contracts with the Company for value
exceeding 10 percent of Newcrest’s annual revenue.
Although Mr Davis acted in the role of interim Chief Executive
Officer for a period of four months during 2000 and
Mr Johnson also acted in the role of Executive Chairman for

a period of three months during 2001, pending in each case
the appointment of a new Managing Director, the Board
considers that the interim nature and shortness of each of
those appointments has not compromised the independence
of those Directors. The Board will monitor the independence
of each Director and the appropriateness of the thresholds of
independence that it has set, on an ongoing basis, to ensure
that they remain appropriate to the Company’s
circumstances.

The Board regularly reviews its membership to ensure
that it provides the range of business skills and expertise
demanded by the Company’s operations.

When a Board position becomes vacant or additional
Directors are required, candidates are identified with the
assistance of professional advice and are considered,
at first instance, by the Nomination, Governance and Ethics
Committee of the Board, and finally by the full Board.
Directors are selected for their specialist skills and business
backgrounds in order to create appropriate skill balance on
the Board. In the case of the appointment or resignation of
the Managing Director, decisions are made only by the full
Board, with professional advice sought, as required. All Board
appointments are subject to shareholder approval. As a
general rule, a Non-Executive Director who has served on
the Board for 12 or more years will not seek re-election.

All Directors of the Newcrest Board are required, as a matter
of Board Policy, to own a minimum of 3,000 shares in the
Company. In addition, all Non-Executive Directors are
required to direct at least 10 percent of their Director’s
fees to purchase shares in the Company (at market prices)
through the Non-Executive Directors’ Share Plan, which was
approved by shareholders at the Company’s 1999 Annual
General Meeting. Directors’ shareholdings are subject to the
Company’s Share Trading Policy which restricts the times
when a Director can purchase or sell Company stock and
also prohibits short-term trading.

Board Function

The Board meets monthly and at such other times as the
business of the Company requires. Each year at least one
Board Meeting is held at one of the Company’s mine sites.

At each regular meeting the Board reviews the performance
of the Company, with particular emphasis on safety and
environmental matters. As well as considering any major
strategic or investment decisions, the Board reviews in detail
principal aspects of the Company’s operations and
performance. This process involves receiving detailed
presentations from management about key components of
the Company’s business.

Newcrest Mining Concise Annual Report 2003 41

Newcrest
Moving Forward

Corporate Governance (continued)

The Board periodically reviews the Company’s strategic
direction and each year, together with senior management,
conducts a structured strategic review of the Company’s
activities and its future direction.

To enhance the Board’s capacity to monitor the full range
of the Company’s operations and to increase Directors’
exposure to them, a number of Board Committees have been
put in place.

The Committees can, where necessary, also provide a forum
for more detailed consideration of issues of special importance.

The current Committee structure is:

Audit Committee

Ensures compliance with all accounting and financial
reporting obligations of the Group and reviews internal
financial controls, the role of the internal and external auditors,
including the independence of the external auditors and the
Company’s risk management activities.

Compensation Committee

Deals with all matters relating to the Company’s remuneration
policy, executive and employee remuneration levels and
remuneration matters generally.

Finance Committee

Formulates and monitors policies and procedures for treasury
practices and considers the Company’s funding
requirements.

Nomination, Governance and Ethics Committee

Considers candidates for the Board, reviews corporate
governance and compliance processes and monitors the
ethical standards of the Company.

Safety, Health and Environment Committee

Ensures that the Company has in place appropriate policies
and monitors the Company’s practices in the areas of safety,
health and environmental management.

Each Committee is comprised of selected Non-Executive
Directors, one of whom acts as Committee Chairman.
Memberships and attendance at meetings are detailed in the
Directors’ Report on page 45. Each Committee acts pursuant
to a formal charter also approved by the Board. All Board
Committee deliberations are reported to the Board at the
earliest opportunity and, where necessary, recommendations
of a Committee are submitted to the Board for a decision.

The Managing Director, although not formally a Committee
Member, is invited to attend Committee meetings. Other
Board members are also invited to attend if they wish to do so.

Directors of the Company have direct access to the Company’s
senior managers. The Board has adopted a formal policy
which ensures that Directors also have access to independent
external advisers where necessary. All Directors are
encouraged to visit the Company’s operating sites annually.

The Board has in place a formal process for evaluating
its own performance. Through a combination of a written
evaluation and interview process with each Director
individually, as well as a collective Board review of the
outcomes of that process, individual Director and Board
performance are measured in key areas and opportunities
identified where performance can be improved. The
Company also receives each year a confidential market
report of Board and Company performance and standing,
relative to a peer group.

Board Remuneration

Total annual remuneration paid to all Non-Executive Directors
may not exceed the maximum amount authorised by the
shareholders in a general meeting (currently $800,000). Also
each Non-Executive Director enters into a deed with the
Company which provides that, upon retirement, that Director
will be eligible to receive a retirement benefit. For Directors
appointed prior to 2003 that benefit is an amount equivalent
to the fees paid to a Director during their preceding three
years. The Board has already determined that the practice of
providing retirement benefits will be discontinued in the case
of any new Director and is currently reviewing the situation for
existing Directors.

Remuneration of the Non-Executive Directors is fixed, rather
than variable, and is determined with regard to the need to
maintain Board membership of an appropriate calibre and
remuneration trends in the marketplace. Remuneration levels
and trends are assessed with the assistance of professional
independent remuneration consultants. The Board has
adopted a policy that each Director must personally hold a
minimum of 3,000 shares in the Company. In addition to the
minimum shareholding, each Director is required to
participate in the Non-Executive Directors’ Share Plan
pursuant to which at least 10 percent of each Director’s
annual remuneration must be used to buy shares in the
Company, on market. Both of these measures strongly align
Directors’ personal interests with shareholders’ interests.

From time to time individual Directors may be asked by
the Board to devote extra time or undertake extra duties,
usually involving their specialist skills or knowledge, to
assist the Board monitor, review or direct key aspects of the
business. As any Director who undertakes such extra duties
does so only at the request and direction of the Board,
rather than management, no conflict of interest or loss of
independence arises.

Newcrest Mining Concise Annual Report 2003

Executive Remuneration

The Board has in place a formal Remuneration Policy which
defines and directs the Company’s remuneration practices for
management. The Policy recognises the different levels of
contribution within management to the short-term and long-
term success of the Company. A key element of the
Remuneration Policy is the principle of reward for
performance with a significant proportion of each senior
manager’s remuneration placed ‘at risk’ to both personal and
Company performance. Every employee undergoes a formal
performance appraisal each year which is used, in part, to
determine that employee’s remuneration in the year ahead.

The ‘at risk’ component of management remuneration is
made up of a short-term incentive plan and a long-term
incentive plan. Under the short-term incentive plan a
component of a senior manager’s cash remuneration is only
deliverable upon certain pre-determined personal
performance criteria being satisfied. The long-term incentive
component is comprised of options issued under the
Executive Option Plan which was approved by shareholders
at the Annual General Meeting in 1996. The plan incorporates
the use of performance hurdles and progressive vesting
mechanisms, both of which are reflective of contemporary
remuneration practices and which align a proportion of
management’s remuneration with the level of returns to
shareholders.

The Board has established with the Managing Director
appropriate and specific personal and corporate performance
objectives for the short and long term. The performance of
the Managing Director is formally assessed against these
objectives annually. The assessment is used to determine, in
part, the level of ‘at risk’ remuneration paid to the Managing
Director.

The extent to which ‘at risk’ remuneration is delivered to
senior management or to the Managing Director varies,
dependent upon amongst other factors, the performance of
the Company’s share price and overall shareholder returns,
measured against its peer group of listed Australian gold
companies. The Board is reviewing the future structure and
operation of the ‘at risk’ component of management
remuneration.

Risk Management and Compliance

The Board recognises that risk management and compliance
are among its key responsibilities and are fundamental to
the sound management of the business. The Company has
a formal Risk Policy approved by the Board and a
comprehensive reporting system which seeks to identify,
at the earliest opportunity, any significant business risks.

The Company also has in place specific reporting and control
mechanisms to manage significant risks and a formal
compliance program to monitor compliance levels across a
range of key areas. An internal audit function, which reviews
and reports to the Board on the effectiveness of those
mechanisms, is also maintained.

These reporting and control mechanisms underpin written
certifications given by the Managing Director and Chief
Financial Officer to the Board each half year that the
Company’s financial reports fairly reflect its financial condition
and operational results and are in accordance with relevant
accounting standards.

Ethics

The Board has adopted a formal Code of Ethics which all
Newcrest Directors, employees and contractors are required
to observe and which is published in internal Company
publications.

The Company also has a comprehensive range of corporate
policies which detail the framework for acceptable corporate
behaviour. These set out procedures that employees are
required to follow. The Company policies are reviewed
periodically.

Communication with Stakeholders

The Board recognises the importance of keeping the market
fully informed of the Company’s activities and of
communicating openly and clearly with all stakeholders.
A formal Continuous Disclosure Policy is in place to ensure
that information which might be relevant to the market is
brought forward. Company information considered to be
material is announced immediately through the Australian
Stock Exchange. Key presentations given by Company
personnel to investors and institutions are also lodged with
the Australian Stock Exchange. Every effort is made to ensure
that communications are clear and complete and that they
address shareholders’ needs for information. All key
communications are placed immediately on the Company
website and, where necessary, are mailed directly to all
shareholders.

The Company has adopted the practice of alternating the
location of its Annual General Meeting to facilitate the
maximum possible attendance by shareholders. At each
meeting the Company’s auditors are available to answer
questions relating to the auditing of the Company’s financial
statements.

Newcrest Mining Concise Annual Report 2003 43

Newcrest
Moving Forward

Directors’ Report

The Directors present their report together with the financial
report of Newcrest Mining Limited (‘the Company’) and of the
Consolidated Entity, being the Company and its controlled
entities, for the year ended 30 June 2003 and the auditor’s
report thereon.

Review of Operations

Information on the operations of the Group during the
year and the results of those operations are set out in the
Annual Report.

Directors

The Directors of the Company at any time during or since
the end of the financial year are:

Ian R. Johnson, Non-Executive Chairman
Anthony J. Palmer, Managing Director and Chief
Executive Officer
R. Bryan Davis, Non-Executive Director
Ronald C. Milne, Non-Executive Director
Ian A. Renard, Non-Executive Director
Nora L. Scheinkestel, Non-Executive Director

Appointment and Retirement of Directors

All Directors held their position as a Director throughout the
entire year and up to the date of this Report. Details of the
Directors’ qualifications, experience and special
responsibilities appear in the table on page 47.

Principal Activities

The principal activities of the Consolidated Entity during the
year were exploration, development, mining and the sale of
gold and gold/copper concentrate. There were no significant
changes in those activities during the year.

Consolidated Result

The profit of the Consolidated Entity for the year ended
30 June 2003 after income tax and outside equity interest
amounted to $92,147,000 (2002 loss: $53,033,000).

Dividends

The following dividends of the Consolidated Entity have been
paid, declared or recommended since the end of the
preceding year:

• Final fully franked dividend for 30 June 2002 of 5 cents per
share, amounting to $15,931,000 was paid on 18 October
2002.

• Final fully franked dividend for 30 June 2003 of 5 cents
per share, amounting to approximately $16,346,000 has
been declared and will be paid on 17 October 2003 to
shareholders registered by close of business on
26 September 2003 (refer Note 6).

Environmental Regulation

The operations of the Consolidated Entity in Australia are
subject to environmental regulation under the laws of the
Commonwealth and the States in which those operations
are conducted. The operation in Indonesia is subject to
environmental regulation under the laws of the Republic of
Indonesia and the Province in which it operates. It is the
policy of the Consolidated Entity to comply with all relevant
environmental regulations in all countries in which it operates.

Each mining operation is subject to particular environmental
regulation specific to the activities undertaken at that site as
part of the licence or approval for that operation. There is also
a broad range of industry specific environmental laws which
apply to all mining operations and other operations of the
Consolidated Entity. The environmental laws and regulations
generally address the potential impact of the Consolidated
Entity’s activities in relation to water and air quality, noise,
surface disturbance and the impact upon flora and fauna.

The Consolidated Entity has a uniform internal reporting
system across all sites. All environmental events, including
breaches of any regulation or law, are ranked according to
their actual or potential environmental consequence. Five
levels of incidents are recognised (based on Australian
Standard AS4360): I (insignificant), II (minor), III (moderate),
IV (major) and V (catastrophic). Data on Category I incidents
are only collected at a site level and are not reported in
aggregate for the Consolidated Entity.

The number of events reported in each category during the
year are shown in the accompanying table. In all cases
environmental authorities were notified of those events where
required and remedial action undertaken.

Category

2003 – No. of incidents

2002 – No. of incidents

III

–

The Managing Director reports to the Board at all meetings
on all environmental and health and safety incidents. The
Board also has a Safety, Health and Environment Committee
which reviews the environmental and safety performance of
the Consolidated Entity. The Directors are not aware of any
environmental matter which would have a materially adverse
impact on the overall business of the Consolidated Entity.

Newcrest Mining Concise Annual Report 2003

Significant Changes in the State of Affairs

Significant changes in the state of affairs of the Consolidated
Entity that occurred during the financial year were as follows:

• Sales revenue increased 27 percent due to a full maiden
year of production from Ridgeway resulting in 377,539
ounces produced (2002: 127,665 ounces). The Ridgeway
mine was officially opened on 19 April 2002, is now fully
commissioned and is operating above name plate capacity.

• In the previous year surplus foreign currency contracts in

excess of anticipated net US dollar receipts were provided
which resulted in a provision of $76,300,000. During the year,
the appreciation of the Australian dollar resulted in a write-
back to profit on this provision of $23,951,000 (refer Note 5).

• Capital raising in the year comprised an equity placement
with financial institutions which resulted in 31,700,000
shares being issued, raising a net $212,846,000. A share
purchase plan also raised an additional $37,283,000 in
consideration for the issue of 7,014,041 shares.

• In March 2003 the Consolidated Entity raised

A$575,000,000 through a Multi-Currency Loan Note
Subscription Agreement with six banks. Drawings can be
made in Australian and US dollars, and interest is payable
on a floating rate basis. The loan is scheduled to be fully
repaid by December 2009. As at 30 June 2003, no
drawings had been made under this loan facility.

Subsequent Events

• The Company has an unhedged US$80,000,000 loan. With
the appreciation of the Australian dollar, this borrowing has
been revalued at the end of the financial year resulting
in an unrealised foreign exchange gain of $24,681,000
(refer Note 5).

There are no other matters or circumstances which have
arisen since 30 June 2003 that have significantly affected or
may significantly affect the operations of the Consolidated
Entity, the results of those operations or the state of affairs
of the Consolidated Entity in subsequent financial years.

• The mark to market of derivative financial instruments at
30 June 2003 was positive $84,800,000 (2002: negative
$781,900,000). Including gold loan swap contracts the
mark to market position was $38,700,000 (2002: negative
$875,463,000).

• During the year, formal approval was given to redevelop the
Telfer Mine. The approved Feasibility Study indicated that
the open pit production will be achieved after budgeted
expenditure of $976,000,000. The final development phase
of the underground mine will be funded from internally
generated cash flows at a cost of a further $215,000,000.
These expenditures will take the total carrying value of the
Telfer project, inclusive of pre-feasibility expenditure, to
$1,360,000,000. Expenditure incurred and accrued in the
year was $338,900,000.

Likely Developments and Expected Results

Disclosure of information regarding likely developments in
the operations of the Consolidated Entity and the expected
results of those operations in future financial years has not
been included in this Report because disclosure of the
information would be likely to result in unreasonable prejudice
to the Consolidated Entity.

Directors’ Meetings

The number of Directors’ meetings (including meetings of
Committees of Directors) and number of meetings attended
by each of the Directors of the Company during the financial
year are:

Director

I. R. Johnson
A. J. Palmer
N. L. Scheinkestel
R. B. Davis
R. C. Milne
I. A. Renard

Directors’
Meetings

Audit
Committee
Meetings

Compensation
Committee
Meetings

Finance
Committee
Meetings

Nomination,
Governance &
Ethics Committee
Meetings

Safety, Health &
Environment
Committee
Meetings

13
13
12
13
13
13

13
13
13
13
13
13

–
–
–
4
4
4

3
–
3
3
3
3

–
–
6
–
5
6

–
–
6
–
6
6

4
–
4
–
–
–

–
–
–
3
3
–

Column A – Indicates the number of meetings attended.
Column B – Indicates the number of meetings held whilst a Director.
Column C – Indicates the number of meetings held whilst a member.

The details of the functions and memberships of the Committees of the Board are presented in the Statement of Corporate
Governance.

Newcrest Mining Concise Annual Report 2003 45

Ian R. Johnson,
Non-Executive Chairman

Anthony J. Palmer,
Managing Director and
Chief Executive Officer

R. Bryan Davis,
Non-Executive Director

Ronald C. Milne,
Non-Executive Director

Ian A. Renard,
Non-Executive Director

Nora L. Scheinkestel,
Non-Executive Director

Newcrest Mining Concise Annual Report 2003

Information on Directors

Ian R. Johnson
Non-Executive Chairman

Qualifications, Experience and Special Responsibilities

Other Directorships

Bachelor of Science (Hons) from the University of New England.
Former Chief Executive Officer of Newcrest Mining Limited. Former
Group Executive of CRA Limited. Fellow of AusIMM and a Fellow of
the Australian Institute of Company Directors. Appointed to the
Board on 2 September 1998 and elected Chairman on 28 October
1998. A member of the Compensation and Nomination, Governance
and Ethics Committees.

Director of Leighton Holdings
Limited and John Holland
Group Pty Ltd

Anthony J. Palmer
Managing Director and
Chief Executive Officer

Bachelor of Engineering (Hons) from the University of NSW.
Former General Manager with WMC Ltd including responsibility for
Olympic Dam project. Former Managing Director of Normandy
Mining Ltd. and Danae Resources. Commenced as CEO and MD
of Newcrest on 1 December 2001. Member of AusIMM.

Director of Australian Mines
& Metals Association Inc

R. Bryan Davis
Non-Executive Director

Bachelor of Science Technology (Mining) from the University of
NSW. Former Executive Director of Pasminco Limited. Fellow of
AusIMM and a member of the Australian Institute of Company
Directors. Appointed to the Board in March 1998. A member of the
Audit, Compensation and Safety, Health and Environment
Committees.

Chairman of Indophil
Resources N.L. Director of
Coal & Allied Industries Ltd

Ronald C. Milne
Non-Executive Director

Member of Certified Practising Accountants Australia. Appointed
to the Board in November 1995 with a management career
extending through the manufacturing, merchant banking and oil
exploration industries. A member of the Audit, Compensation,
Finance and Safety, Health and Environment Committees.

Director of Brambles
Industries Limited, Brambles
Industries PLC, J. Capital Pty
Ltd and OPSM Protector
Limited

Ian A. Renard
Non-Executive Director

Bachelor of Arts and Master of Laws Degrees from the University
of Melbourne. Consultant of Allens Arthur Robinson. Fellow of the
Australian Institute of Company Directors. Appointed to the Board in
May 1998. A member of the Audit, Compensation and Finance
Committees.

Nora L. Scheinkestel
Non-Executive Director

Bachelor of Laws (Hons) and PhD from the University of
Melbourne. A member of the Australian Institute of Company
Directors. Appointed to the Board in August 2000 with a
management background in international banking and project
finance. An Associate Professor at the Melbourne Business School
at the University of Melbourne. A member of the Compensation,
Nomination, Governance and Ethics and Finance Committees.

Deputy Chancellor of the
University of Melbourne.
Director of CSL Limited,
Hurstmead Pastoral
Company Pty Ltd and Hillview
Quarries Pty Ltd. Chairman of
Melbourne Theatre Company

Director of PaperlinX Ltd and
Hydro Tasmania. Chairman
of South East Water Ltd

Newcrest Mining Concise Annual Report 2003 47

Newcrest
Moving Forward

Directors’ Report (continued)

Directors’ and Senior Executives’ Emoluments

The Compensation Committee, consisting of the Non-
Executive Directors, is responsible for making
recommendations to the Board on remuneration policies
and practices generally and specifically on remuneration
packages and other terms of employment applicable to
Executive Directors, Senior Executives and Non-Executive
Directors of the Company. The broad remuneration policy
objective is to ensure remuneration packages properly reflect
employees’ duties and responsibilities and that remuneration
is competitive in attracting, retaining and motivating people of
the highest quality.

Executive remuneration and other terms of employment are
reviewed annually by the Compensation Committee having
regard to performance against goals set at the start of the
year, relevant comparative information and independent
expert advice. As well as a base salary, remuneration
packages include superannuation, resignation and retirement
entitlements, performance related bonuses and fringe
benefits. Executives are also eligible to participate in the
Company’s Share Option Plans. The ability to exercise
options is conditional on the Consolidated Entity achieving
certain performance hurdles.

Directors of the Company

Name

Non-Executive Chairman
I. R. Johnson
Managing Director
A. J. Palmer
Non-Executive Director
R. B. Davis
Non-Executive Director
R. C. Milne
I. A. Renard
Non-Executive Director
N. L. Scheinkestel Non-Executive Director

Directors’
Base Fee/
Salary
$

206,250
720,000
92,500
92,500
92,500
92,500

Super-
annuation
Contri-
butions
$

17,551
–
7,875
8,058
7,875
7,875

Remuneration and other terms of employment for the
Managing Director and certain Senior Executives are
formalised in service agreements.

Remuneration of Non-Executive Directors is determined by
the Board within the maximum amount approved by the
shareholders from time to time. Non-Executive Directors do
not receive any performance related remuneration and are
not entitled to participate in the Company’s Share Option
Plans but are required to hold a minimum amount of shares
and participate in the compulsory Non-Executive Director
Share Plan. Non-Executive Directors are entitled to retirement
benefits in accordance with a shareholder approved deed.

Executives are officers who are involved in, concerned in,
or who take part in the management of the affairs of the
Company and/or related bodies corporate.

Details of the nature and amount of each element of the
emoluments of each Director of the Company and each of
the Senior Executives of the Company and the Consolidated
Entity receiving the highest emoluments are set out in the
following tables.

Retirement(iii)

Other

Benefit
Services Provisions
$

–
–

15,000(ii)
5,000(i)

–
–

52,052
–
38,902
30,698
19,398
80,917

Other(2)

Benefits
$

Incentive
Payments
$

–
20,681
–
–
–
–

–
130,000
–
–
–
–

Options(1)

Total
$

–

275,853
140,636 1,011,317
154,277
136,256
119,773
181,292

–
–
–
–

(i) Comprises a payment of $5,000 for duties performed as Chairman of the Superannuation Policy Committee.
(ii) Mr Davis received $15,000 for consultancy services conducted at the request of the Board of the Company on normal commercial terms and

conditions.

(iii) Upon retirement, Non-Executive Directors are entitled to be paid retirement benefits, being a lump sum payment equal to the sum of the fees

received by the Director for the previous three years immediately before retirement. The amounts disclosed in Director’s remuneration represent the
provision recorded in the current year to maintain the Director’s full entitlement on the above terms. These retirement benefits have been fully
provided for.

Newcrest Mining Concise Annual Report 2003

Senior Executives of the Company and Consolidated Entity

Base Salary
(including
Superannuation)
$

Other

Incentive
Services Payments
$

Site,
Housing
& Rental
Options(1) Allowances
$

Other
Benefits(2)

Total
$

Executive General Manager Finance
Executive General Manager
Project Development
General Manager Gosowong Mine
Executive General Manager Exploration
Executive General Manager
Corporate Services
Executive General Manager Operations
and Marketing

585,000

180,000(3)

81,800

–

21,817

26,392

895,009

416,150
235,177
387,600

376,400

384,204

–
–
–

–

127,200
58,775
39,520

40,669
30,617
40,669

28,679
256,897
–

27,538
6,205
3,185

640,236
587,671
470,974

38,380

40,669

19,500

34,019

–

5,151

460,600

5,151

442,874

Name

J. Smith
B. Price

J. Blake
D. Wood
B. Lavery

T. O’Neill

The following Executives are also disclosed as they fall within the top five remuneration category because of termination
payments:

Name

Base
Salary
$

Other

Incentive
Benefits(2) Payments
$

Termination
Options(1) Payments
$

Leave
Entitle-
ments
$

Total
$

7,645
G. Scanlan
G. Monkhouse Former General Manager Human Resources 197,524

Former Executive General Manager Finance

99
2,422

–
–

27,650
19,355

1,402,607
451,181

227,982 1,665,983
792,770
122,288

(1) Fair Value of Options

The Company has adopted the fair value measurement provisions of ASIC guidelines 03-202 ‘Valuing Options for Directors and Executives’ and
ED 108 ‘Share-based Payment’ prospectively, for all options granted to Directors and relevant Executives, which have not vested as at 1 July 2002.
The fair value of such grants is being amortised and disclosed as part of Director and Executive emoluments on a straight-line basis over the
vesting period. No adjustments have been or will be made to reverse amounts previously disclosed in relation to options that never vest
(i.e., forfeitures). Prior to 1 July 2002, the Company disclosed the fair value of option grants but did not allocate those values over the vesting
period. Rather, the full fair value of the grant was disclosed as an emolument in the year of grant. As a result, included in the amounts disclosed
above as option grant emoluments in relation to the 2003 financial year, are amounts related to options that vested during or over the 2003 financial
year, which were granted in previous financial periods and were therefore disclosed as part of emoluments in the previous year as well. This is a
one-off result of transitioning to allocation of such amounts to emoluments over the vesting period rather than disclosure of the full amount as
emoluments in the year of the grant.

(2) Other benefits mainly comprise travel, parking, insurance and applicable fringe benefits tax payable on benefits.
(3) $180,000 was paid to a related party of Mr Smith for consultancy services provided by him for the period 8 July 2002 to 30 September 2002 in

fulfilling the duties of the Executive General Manager Finance role on an interim basis. Mr Smith was appointed to the position on a full time basis
from 1 October 2002.

Senior Management Share Options

‘Share Options’ in the case of the Company refers to those
options granted to senior management, including the
Executive Director, pursuant to the Newcrest Executive Option
Plan. No person entitled to exercise any of the options had or
has any right, by virtue of the options, to participate in any
share issue of any other body corporate.

The Newcrest Executive Option Plan provides for the
allocation of five year options with performance hurdles and
exercise conditions. Under the Plan, options may not be
exercised until after the second anniversary of the grant date
and can only be exercised to a maximum of 25 percent of the
options granted in each subsequent year to the exercise
date, subject always to the performance hurdles being

satisfied. Where the previous year’s maximum entitlement
was not exercised, accumulated entitlements to that
anniversary date may be exercised. The exercise price at
which these options are issued is based on the weighted
average of the prices at which the Company’s shares were
traded on the Australian Stock Exchange during the one
week period previous to issue date.

Details of options issued under the Newcrest Executive
Option Plan and the balance exercisable under the Newcrest
Executive Option Plan and Employee Share Option Plan at
balance date are detailed in Note 21 to the full financial
statements (contained in the 2003 Supplementary Information
Booklet).

Newcrest Mining Concise Annual Report 2003 49

Newcrest
Moving Forward

Directors’ Report (continued)

Share Options Granted to Executive Directors and Most Highly Remunerated Officers

During or since the end of the financial year, the Company granted options over unissued ordinary shares to the following
Executive Directors and Executive Officers as part of their remuneration:

Number of
Options
Granted

Exercise
Price
$

Expiry
Date

Discounted(1)
Valuation
$

Executive Director
A. Palmer Managing Director and Chief Executive Officer

Other Executive Officers
J. Smith
J. Blake
B. Price
D. Wood
T. O’Neill
B. Lavery Executive General Manager Corporate Services

Executive General Manager Finance
General Manager Gosowong Mine
Executive General Manager Project Development
Executive General Manager Exploration
Executive General Manager Operations and Marketing

250,000

–
90,000
100,000
100,000
100,000
100,000

6.62

–
6.62
6.62
6.62
6.62
6.62

6 Feb 2008

–
6 Feb 2008
6 Feb 2008
6 Feb 2008
6 Feb 2008
6 Feb 2008

2.06

–
1.65
1.65
1.65
1.65
1.65

All options granted to Executive Officers during the financial year were granted under the Newcrest Executive Option Plan.
No options have been granted since the end of the financial year.

(1) Refer below to section ‘Share Options – Valuation Methodology’ for details on how the share options have been valued. The discounted valuation

basis has been adopted and used in determining option values in Directors’ and Senior Executives’ remuneration.

Share Options – Performance Hurdles

Share Options – Valuation Methodology

Share options granted in the financial year to Executive
Officers and Senior Management comprised a quantity of
Tranche A options, which are subject to the following
performance hurdle:

‘50 percent of options granted vesting upon the Total
Shareholder Return (‘TSR’) growth of Newcrest Mining
Limited (‘Newcrest’) meeting the TSR growth of the
median of companies in the ASX 100 and increasing
proportionately to 100 percent of options granted vesting
upon the TSR growth of Newcrest meeting or exceeding
the TSR growth of the 75th percentile of companies in the
ASX 100.’

250,000 share options were granted to the Managing Director
and Chief Executive Officer which comprised two Tranches of
125,000 share options each. Tranche B is subject to the
following performance hurdle:

‘The successful development and construction, under
Mr Palmer’s supervision, of the Telfer Open Pit Mine
operation and the commissioning of that operation at an
annual rate of 17 million tonnes per annum in the timeframe
and within the budget approved by the Board for that
development .’

Tranche C is subject to the following performance hurdle:
‘The successful development and construction, under
Mr Palmer’s supervision, of the Telfer Underground Mine
operation and the commissioning of that operation at an
annual rate of 4 million tonnes per annum in the timeframe
and within the budget approved by the Board for that
development .’

The Directors’ assessment of the fair value of options
granted, for the purpose of reporting emoluments of Directors
and Executive Officers is based upon independent advice.

The methodology used in valuing the options was as follows:
• The options were valued on the date of grant based on the

relevant market parameters applying at that time.

• The options were first valued as if they were unrestricted,
freely tradable options using an option pricing model
which combines both Black-Scholes and binomial
methodologies. It is on this basis that the Board determines
this element of remuneration levels.

• To take into account the performance hurdles and forfeiture
conditions attached to the options, a discount factor based
on the probability estimate that the options will vest, was
then applied to arrive at a final option valuation. This is the
best estimate available of the cost to the Company for
awarding the options.

On the basis of this methodology, the various tranches of
options granted on 6 February 2003 have been valued as
follows:

Tranche A Options

Tranche B Options

Tranche C Options

$1.65 per option

$2.06 per option

These are the values adopted in determining fair value from
options awarded to the Managing Director and Senior
Executives.

Newcrest Mining Concise Annual Report 2003

Share Options Granted

A total of 2,400,000 options were granted in February 2003. These options have a total valuation of $4,062,500.

Shares Issued on the Exercise of Options

During the year an aggregate of 1,214,350 options were exercised, resulting in the issue of 1,214,350 ordinary shares of the
Company at an aggregate consideration of $3,673,000.

Directors’ Interests

The relevant interest of each Director in the share capital of the Company, as notified by the Directors to the Australian Stock
Exchange in accordance with Section 235(1) of the Corporations Act 2001, at the date of this Report, is as follows:

I. R. Johnson
A. J. Palmer
R. B. Davis
R.C. Milne
I. A. Renard
N. L. Scheinkestel

Chief Entity or Related
Body Corporate

Newcrest Mining Limited
Newcrest Mining Limited
Newcrest Mining Limited
Newcrest Mining Limited
Newcrest Mining Limited
Newcrest Mining Limited

The Newcrest Non-Executive Directors’ Share Plan
was approved by shareholders on 28 October 1999.
The Board adopted a policy which requires Non-Executive
Directors to receive at least 10 percent of their annual
remuneration by way of on-market acquired shares in the
Company. Shares acquired by a Non-Executive Director
under the Plan may not be sold for a period of three years
after they are acquired, except if the Director retires from
the Board or if the Board permits earlier sale.

Indemnification and Insurance of Directors
and Officers

Pursuant to Article 103 of its Constitution, the Company
insures and indemnifies its Directors and Officers, against
liabilities to another person (other than the Company or a
related body corporate) that may arise from their position
as Directors and Officers of the Company and its controlled
entities, except where the liability arises out of conduct
involving a lack of good faith.

Number of
Ordinary Shares

Nature of
Interest

30,515
11,010
13,597
7,503
14,805
68,326

Direct and Indirect
Direct
Direct and Indirect
Direct
Direct
Direct and Indirect

Number of
Options Over
Ordinary Shares

–
750,000
–
–
–
–

The contract of insurance prohibits disclosure of the amount
of the premium and the nature of the liability insured against.
Each Director named on page 44 of this Report has paid the
insurance premium in respect of cover which may apply in
relation to liabilities of the type referred to in Section 199B of
the Corporations Act 2001.

Rounding of Amounts

The Company is of a kind referred to in Class Order 98/0100
issued by the Australian Securities and Investments
Commission dated 10 July 1998 and in accordance with
that Class Order, amounts in the financial report have been
rounded to the nearest thousand dollars, unless otherwise
stated.

Signed in accordance with a resolution of the Directors.

Each Director named on page 44 of this Report and the
Secretary, has entered into a Deed of Indemnity with the
Company on these terms.

Ian R. Johnson
Chairman

Insurance Premiums

Since the end of the previous financial year the Company has
paid an insurance premium in respect of a contract insuring
against liability of Directors and Officers in accordance with
the Company’s Constitution and the Corporations Act 2001.

Anthony J. Palmer
Managing Director and Chief Executive Officer

29 August 2003, Melbourne

Newcrest Mining Concise Annual Report 2003 51

Newcrest
Moving Forward

Discussion and Analysis
of the Financial Statements

This discussion and analysis is provided to assist readers
in understanding the concise financial report. The concise
financial report has been derived from the full 2003 Financial
Report of Newcrest Mining Limited.

• Net foreign exchange losses of $13,001,000 arose from the
effect of the appreciation of the Australian dollar on foreign
currency concentrate receipts and translation of overseas
subsidiary results.

The Newcrest Mining Limited Consolidated Entity consists
of Newcrest Mining Limited and its controlled entities. The
principal activities of the Newcrest Mining Limited
Consolidated Entity during the financial year comprised
exploration, development, mining and the sale of gold and
gold/copper concentrate.

Statement of Financial Performance

Net profit after tax attributable to shareholders for the year
was $92,147,000 (2002: loss of $53,033,000).

Major factors impacting the result for the current year are:

• The increase in gold revenue and copper by-product credits
was due to a full maiden year of production from Ridgeway
of 377,539 ounces (2002: 127,665 ounces). The Ridgeway
mine was officially opened on 19 April 2002, is now fully
commissioned and operating above name plate capacity.

• Total sales were 724,584 ounces (2002: 646,418 ounces).

This increase of 78,166 ounces was a result of:
– increase from the full year of production at Ridgeway

(257,847 ounces);

– increased throughput at Cadia Hill (46,301 ounces);
– suspension of operations at Boddington (26,824 ounces);

and

– decrease due to completion of processing high grade ore

at Gosowong (199,158 ounces).

• Per unit mine costs were lower than the previous year

with cash costs of $217 per ounce ($253 per ounce) and
production costs of $356 per ounce ($414 per ounce). The
reduction in cash costs per ounce was due to the full year
of production from Ridgeway and the resulting additional
copper by-product revenue. Copper production for the year
was 67,738 tonnes (2002: 40,055 tonnes). The achieved
copper price for the period was $1.28 per pound (2002:
$1.27 per pound).

• Corporate administration expenditure increased from the
previous year due to resignation benefits payments from
restructuring senior positions in the organisation.

• Borrowing costs increased due to the completion of the
Ridgeway project. Borrowing costs associated with this
project, which were previously capitalised, are now being
expensed.

• Other expenses mainly comprise Gosowong and

Boddington care and maintenance.

• Surplus foreign currency contracts in excess of anticipated
net US dollar receipts were provided for in the previous
year resulting in a provision of A$76,300,000. During the
year, the appreciation of the Australian dollar resulted in a
write-back to profit on this provision of $23,951,000.

• The Company has an unhedged US$80,000,000

borrowing. With the appreciation of the Australian dollar,
this borrowing has been revalued at the end of the financial
year resulting in an unrealised foreign exchange gain of
$24,681,000.

• Ongoing treatment of previous year hedging restructures

involving gold, copper and gold lease rate contracts
resulted in an expense of $11,681,000. $1,025,000 million
has been released to operating revenue in the period
resulting in a net increase to the provision of $10,656,000.

Statement of Financial Position

Assets
Current assets have increased by $75,998,000 to
$237,952,000 due to the increase in cash from equity raisings
partly offset by a decrease in trade debtors from timing of
receipts from concentrate debtors.

Total non-current assets have increased by $387,029,000 to
$1,601,064,000 mainly due to capital and feasibility
expenditure on the Telfer project.

Liabilities
Current liabilities have increased by $83,067,000 to
$316,602,000 primarily due to the increase in creditors
relating to the Telfer project and US$16 million relating to the
US dollar borrowing becoming due and payable in the next
financial year.

Non-current liabilities at $637,387,000 have increased by
$34,495,000 due to the requirement to record foreign
exchange contract liabilities on balance sheet and increase
in the deferred tax liability resulting from the current year profit.
This has been partly offset by repayments of borrowings.

Newcrest Mining Concise Annual Report 2003

Equity
The increase in equity of $345,465,000 was due mainly to:

• Capital raising in the year comprised an equity placement
with financial institutions which resulted in 31,700,000
shares being issued, raising a net $212,846,000. A share
purchase plan also raised $37,283,000, exercise of options
$3,673,000 and dividend reinvestment plan $2,179,000.

• Net profit of $92,147,000.

Statement of Cash Flows

Group cash balances for the year have increased from
$14,365,000 to $101,065,000 mainly reflecting higher cash
flows from operating activities and debt and equity raisings to
meet cash flows from investing activities.

Cash Flows from Operating Activities
Cash flows from operating activities at $199,007,000 are
$108,683,000 higher than 2002 due mainly to increase in
sales receipts and by-product credits arising from increased
production and lower per unit costs of production.

Cash Flows from Investing Activities
Net cash used in investing activities amounted to
$265,349,000. Major areas of expenditure include:

• Telfer Project of $199,721,000.

• Exploration and evaluation expenditure of $33,340,000.

• Cadia Valley Operations expenditure of $28,321,000.

Cash Flows from Financing Activities
Capital expenditure programs were largely financed by capital
raisings. Major movements in the cash flows from financing
activities include:

• Repayment of borrowings consisted of:

– $58,262,000 gold loan facility
– $10,415,000 finance lease principal
– $14,153,000 foreign exchange contracts on the US dollar

borrowings.

– $4,178,000 collateral loan.

• Capital raising in the year comprised an equity placement
with financial institutions, which resulted in 31,700,000
shares being issued, raising a net $212,846,000. A share
purchase plan also raised an additional $37,283,000 and
$3,673,000 was raised from the exercise of options.

Newcrest Mining Concise Annual Report 2003 53

Newcrest
Moving Forward

Statement of Financial Performance

For the year ended 30 June 2003

Note

Sales revenue

Cost of sales

Gross profit

Other revenues from ordinary activities

Exploration costs

Corporate administration costs

Borrowing costs

Net foreign exchange loss

Other expenditure

Written down value of assets sold

Provision for surplus foreign exchange and gold contracts

Unrealised foreign exchange gain on US dollar borrowing

Provision for hedging contract restructures

Profit/(loss) from ordinary activities before income tax expense

Income tax (expense)/benefit relating to ordinary activities

Profit/(loss) from ordinary activities after related income tax expense

Net (profit)/loss attributable to outside equity interest

Net profit/(loss) attributable to members of the parent entity

Total share issue expenses attributable to members of the parent entity recognised
directly in equity

Total changes in equity other than those resulting from transactions with owners as
owners attributable to members of the parent entity

Basic earnings per share (cents per share)

Diluted earnings per share (cents per share)

Consolidated

2003
$’000

607,222

(452,282)

154,940

5,966

(26,760)

(18,960)

(14,975)

(13,001)

(3,738)

(102)

23,951

24,681

(11,681)

120,321

(29,236)

91,085

1,062

92,147

2002
$’000

479,667

(395,331)

84,336

3,402

(21,547)

(15,263)

(10,660)

(2,955)

(3,551)

(854)

(80,564)

–

(25,000)

(72,656)

21,383

(51,273)

(1,760)

(53,033)

(2,714)

(2,239)

89,433

(55,272)

29.6

29.3

(19.2)

The Statement of Financial Performance is to be read in conjunction with the discussion and analysis on page 52 and the notes to the
financial statements set out on pages 57 to 67.

Newcrest Mining Concise Annual Report 2003

Statement of Financial Position

At 30 June 2003

CURRENT ASSETS

Cash assets

Receivables

Other financial assets

Inventories

Deferred foreign exchange contract loss

Other

Total Current Assets

NON-CURRENT ASSETS

Receivables

Inventories

Property, plant and equipment

Exploration, evaluation and development

Deferred foreign exchange contract loss

Other

Total Non-Current Assets

TOTAL ASSETS

CURRENT LIABILITIES

Payables

Interest bearing liabilities

Foreign exchange contract liabilities

Current tax liabilities

Provisions

Other

Total Current Liabilities

NON-CURRENT LIABILITIES

Interest bearing liabilities

Foreign exchange contract liabilities

Deferred tax liabilities

Provisions

Other

Total Non-Current Liabilities

TOTAL LIABILITIES

NET ASSETS

EQUITY

Contributed equity

Retained profits

Total parent entity interest

Total outside equity interest

TOTAL EQUITY

Consolidated

2003
$’000

2002
$’000

101,065

69,009

134

16,808

24,481

26,455

237,952

39,853

8,851

562,042

761,595

65,117

163,606

14,365

99,108

175

25,396

–

22,910

161,954

20,038

8,380

599,472

439,768

–

146,377

1,601,064

1,214,035

1,839,016

1,375,989

181,215

83,703

35,477

–

9,080

7,127

57,578

66,706

48,500

12,850

24,826

23,075

316,602

233,535

401,405

484,054

65,117

50,797

48,540

71,528

637,387

953,989

885,027

784,305

93,798

878,103

6,924

885,027

27,800

20,648

44,990

25,400

602,892

836,427

539,562

528,324

3,251

531,575

7,987

539,562

The Statement of Financial Position is to be read in conjunction with the discussion and analysis on page 52 and the notes to the
financial statements set out on page 57 to 67.

Newcrest Mining Concise Annual Report 2003 55

Newcrest
Moving Forward

Statement of Cash Flows

For the year ended 30 June 2003

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts in the course of operations

Cash payments in the course of operations

Interest received

Borrowing costs paid

Income taxes paid

Net cash provided by/(used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for property, plant and equipment

Proceeds from sale of non-current assets

Exploration and evaluation expenditure

Payments in respect of mine development

Payments in respect of mines under construction

Feasibility expenditure

Borrowing costs paid capitalised to development projects

Payments of research and development costs

Net cash provided by/(used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings

Repayment of borrowings:

Bank loans

Loans from bullion banks

Gold loan

Repayment of foreign exchange contracts hedging borrowings

Repayment of finance lease principal

Proceeds from share issues

Share and option issue costs paid

Dividends paid

Net cash provided by/(used in) financing activities

Net increase/(decrease) in cash held

Cash at the beginning of the financial year

Cash at the end of the financial year

Consolidated

2003
$’000

2002
$’000

608,266

(380,835)

4,860

(15,019)

(18,265)

199,007

(21,316)

440

(33,340)

(6,449)

(151,425)

(49,706)

(2,895)

(658)

458,938

(354,725)

1,567

(12,029)

(3,427)

90,324

(8,858)

14,379

(44,832)

(14,423)

(185,380)

(55,536)

(10,731)

(521)

(265,349)

(305,902)

–

(4,178)

(58,262)

(14,153)

(10,415)

256,516

(2,714)

(13,752)

158,936

(45,000)

(8,047)

(58,087)

–

(8,782)

158,812

(2,239)

(13,606)

153,042

181,987

86,700

14,365

101,065

(33,591)

47,956

14,365

The Statement of Cash Flows is to be read in conjunction with the discussion and analysis on page 53 and the notes to the financial
statements on pages 57 to 67.

Newcrest Mining Concise Annual Report 2003

Notes to the Concise Financial Report

Note 1 Accounting Policies
This concise financial report has been derived from the Consolidated Entity’s full 2003 Financial Report which complies with
the Corporations Act 2001, Australian Accounting Standards and Urgent Issues Group Consensus Views. This concise
financial report has been prepared in accordance with accounting standard AASB 1039 ‘Concise Financial Report’, and the
relevant provisions of the Corporations Act 2001.

The concise financial report does not and cannot be expected to provide as full an understanding of the financial
performance, financial position and financing and investing activities of the Consolidated Entity as the full financial report.

It has been prepared on the basis of historical costs and, except where stated, does not take into account changing money
values or fair values of non-current assets.

These accounting policies have been consistently applied by each entity in the Consolidated Entity and, except where there is
a change in accounting policy as set out in Note 2, are consistent with those of the previous year.

A full description of the accounting policies adopted by the Consolidated Entity may be found in the Consolidated Entity’s full
Financial Report.

Note 2 Changes in Accounting Policies
The accounting policies adopted are consistent with those of the previous financial year except as follows:

(a) Adoption of Accounting Standard AASB 1044
The Consolidated Entity has adopted the new Accounting Standard AASB 1044 ‘Provisions, Contingent Liabilities and
Contingent Assets’ which has resulted in a change in the accounting for dividend provisions. Previously, the Consolidated
Entity recognised a provision for dividend based on the amount that was proposed or declared after the reporting date. In
accordance with the requirements of the new standard, a provision for dividends will only be recognised at the reporting date
where the dividends are declared, determined or publicly recommended prior to the reporting date. The effect of the revised
policy has been to increase consolidated opening retained profits and decrease provisions at the beginning of the financial
year by $14,331,000.

(b) Adoption of Revised Accounting Standard AASB 1012
The Consolidated Entity has adopted the Revised Accounting Standard AASB 1012 ‘Foreign Currency Translation’ effective for
annual reporting periods beginning on or after 1 January 2002. The first time application of this standard resulted in
recognition in the Statement of Financial Position of all foreign currency contracts, marked to the spot exchange rate at
balance date. Previously, foreign currency contracts that qualified for hedge accounting were recorded off-balance sheet. As
at 30 June 2003 this has resulted in $24,481,000 and $65,117,000 of current liability and non-current liability for the loss on
foreign currency contracts respectively. These liabilities qualify for hedge accounting and the losses have been recorded as
deferred assets and will be released to the Statement of Financial Performance when the underlying hedged event occurs.

(c) Deferred Lease Rate Income
Gains and losses under gold hedge contracts, intended to hedge specific production and where the hedged production has
not been delivered at balance date, are deferred and recognised in the Statement of Financial Performance in accordance
with the delivery of the production. In relation to gold lease rate allowances, deferred gains and losses have previously been
recorded off-balance sheet. Consistent with recent developments in Accounting Standards, at 30 June 2003 this amount is
brought on-balance sheet and resulted in the recording of a non-current debtor and non-current deferred income of
$32,740,000. This amount is subject to movements in future gold lease rates and the spot gold price and will be revalued
each reporting period.

Newcrest Mining Concise Annual Report 2003 57

Newcrest
Moving Forward

Notes to the Concise Financial Report (continued)

Note 3 Revenue from ordinary activities

Sales revenue
Sale of gold
Sale of gold/copper concentrate

Total sales revenue
Other revenues
Interest from other persons
Gross proceeds from sale of non-current assets
Net foreign exchange gains
Other revenue items

Total other revenues

Total revenue from ordinary activities

Note 4 Expenses and losses included in profit from ordinary activities
before income tax expense

Depreciation of:

Property, plant and equipment

Amortisation of:

Plant and equipment under finance leases
Mine development
Mines under construction
Mine leases
Deferred mining
Cadia royalty
Other deferred expenditure

Total depreciation and amortisation

Borrowing costs:
Bank loans
Finance charges on capitalised leases
Other borrowing costs
Less: Capitalised borrowing costs

Total borrowing costs expensed

Other items:
Operating lease rentals
Government royalties
Research and development expenditure
Provision for:

Employee entitlements
Restoration and rehabilitation
Stores obsolescence
Other

(Gains)/losses:

Net foreign exchange loss

Sales of assets
Sales of assets have given rise to the following profits and (losses):

Proceeds from sale of property, plant and equipment
Carrying value of property, plant and equipment sold

Profit/(loss) on sale of property plant and equipment

Newcrest Mining Concise Annual Report 2003

Consolidated

2003
$’000

121,410
485,812

607,222

4,928
440
–
598

5,966

2002
$’000

198,075
281,592

479,667

1,473
1,403
–
526

3,402

613,188

483,069

Consolidated

2003
$’000

2002
$’000

56,800

54,780

6,640
31,936
–
292
949
966
15

97,598

11,726
1,656
4,488
(2,895)

14,975

3,359
15,603
658

6,377
3,454
931
143

13,001

440
(102)

338

6,715
23,227
13,692
603
1,025
1,473
–

101,515

15,618
1,222
4,551
(10,731)

10,660

709
10,690
521

6,376
5,244
543
2,168

2,955

1,403
(854)

549

Note 5 Individually significant items charged/(credited) in operating profit from ordinary activities before income

tax expense

Foreign exchange gain on unhedged US dollar loan (i)
Liability for surplus foreign currency and gold contracts (ii)
Liability for hedging contract restructures (iii)

Tax effect of significant items

Total significant items after tax

(i) Unrealised gain on unhedged US dollar loan:

US$80,000,000 borrowing has been revalued to the spot foreign currency exchange rate at year end

Consolidated

2003
$’000

(24,681)
(23,951)
11,681

(36,951)
11,085

(25,866)

24,681

76,300
–
(41,353)
(23,951)
10,996

25,000
11,681
(1,025)
35,656

2002
$’000

–
80,564
25,000

105,564
(31,669)

73,895

–

–
76,300
–
–
76,300

–
25,000
–
25,000

(ii) Opening surplus foreign currency contract provision
Provision for surplus foreign currency contracts
Amounts paid in the current year on contracts that matured
Over provision written back
Closing surplus foreign currency contracts provision

(iii) Opening balance of hedge restructure provision

Losses recognised during the year
Provision released to income on maturity of contracts
Closing balance of hedge restructure provision

Note 6 Dividends

Dividends recognised in the current year by the Company are:
2003 – Dividend paid during the year
2002 final dividend recognised when declared during the year.
Refer to ‘Changes in accounting policies’ Note 2(a):
Final – ordinary

2002 – Dividend paid in previous financial year
Final – ordinary

Franked dividends declared or paid during the year were franked
at the tax rate of 30 percent (2002: 30 percent)
Subsequent events
Dividends proposed and not recognised as a liability(1):
Since the end of the financial year, the Directors declared the
following dividends:
Final – ordinary

Cents per
share

Total
amount
$’000

Franked/
unfranked

Date of
payment

5.0

15,931

Franked

18 Oct 2002

14,359

Franked

19 Oct 2001

5.0

16,346

Franked

17 Oct 2003

(1) The financial effect of this dividend has not been brought to account in the financial statements for the year ended 30 June 2003 and will be

recognised in subsequent financial reports. Dividends proposed will be fully franked at the tax rate of 30 percent (2002: 30 percent).

Dividend franking account
30 percent franking credits are available to shareholders of Newcrest Mining Limited for subsequent financial years of
$15,834,290 (2002: $22,662,000).

The above available amounts are based on the balance of the dividend franking account at year end adjusted for:

(a) franking credits that will arise from the payment of any current tax liability;

(b) franking debits that will arise from the payment of dividends recognised as a liability at year end;

(d) franking credits that the entity may be prevented from distributing in subsequent years.

The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends.

Newcrest Mining Concise Annual Report 2003 59

Newcrest
Moving Forward

Notes to the Concise Financial Report (continued)

Note 6 Dividends (continued)

Change in measurement of dividend franking account
In accordance with the New Business Tax System (Imputation) Act 2002, the measurement basis of the dividend franking
account changed on 1 July 2002 from an after tax profits basis to an income tax paid basis.
The amount of franking credits available to shareholders disclosed as at 30 June 2003 has been measured under the new
legislation and represents income tax paid amounts available to frank distributions. The balance disclosed as at 30 June 2002
has also been measured under the new legislation and represents after tax profits able to be distributed fully franked, at the
current tax rate.
The change in the basis of measurement does not change the underlying value of franking credits or tax offsets available to
shareholders from the dividend franking account.

Note 7 Financial Instruments
The Consolidated Entity uses derivative financial instruments in the normal course of business for the purpose of hedging its
future production and sales and managing its commodity, foreign currency and interest rate exposures. The derivative
financial instruments used by the Consolidated Entity are explained below.

(a) Commodity Contracts
(i) Gold Hedging and Commitments
The Consolidated Entity has entered into forward sales, put options and call options to hedge future production and sales.
(The table excludes transactions to close out New Celebration hedging).
Australian Dollar Hedging
Financial year ending
30 June 2003

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11+

30 June 30 June
2002
Total

2003
Total

Forward sales (1)

A$ denominated (koz)

A$/oz

Forward purchases (2)
A$ denominated (koz)

A$/oz

Put options purchased (3)

Strike price A$450/oz–A$599/oz
Strike price A$600/oz–A$699/oz
Strike price greater A$700/oz

TOTAL

A$/oz

Gold loans (4)

Gold Loan (koz)

A$/oz

Call options sold (5)

A$ denominated (koz)

Strike price (A$/oz)

Contingent call options sold (5)
Strike price A$450/oz–A$550/oz
Strike price A$551/oz–A$599/oz
Strike price greater A$600/oz

TOTAL

Strike price (A$/oz)

Ounces subject to in-triggers

538

301

593

693
–
200

893

593

104

488

176

548

535
36
–

571

527

260

437

611

–

443
30
50

523

583

488

–

412
50
–

462

529

210

In-trigger price (A$/oz)

550–600 550–695

Ounces subject to out-triggers

311

252

330

627

–

453
180
–

633

578

488

–

382
100
–

482

546

100

695

382

460

635

–

251
320
–

571

601

488

–

192
180
100

472

580

100

695

372

430

659

–

176
330
–

506

623

488

–

80
180
100

360

589

100

695

260

301

653

–

110
205
100

415

639

488

–

–
215
100

315

600

100

695

215

Out-trigger price (A$/oz)

440–500 440–550 440–550 440–550 440–558 440–550

Total hedged (includes gold loan, forwards & put options)
1,044

A$ denominated (koz)

778

1,031

1,099

1,004

A$/oz

573

587

591

610

629

Total committed (includes forwards, gold loan, call options & contingent call options)
858

A$ denominated (koz)

1,000

983

880

632

A$/oz

496

562

576

601

616

Newcrest Mining Concise Annual Report 2003

784

631

684

612

225

709

–

50
–
100

150

703

488

–

–
50
100

150

607

695

100

440

443

673

443

640

150

809

2,415

1,742

650

731

–

–
–
100

100

809

104

488

–

–
–
100

100

620

–

301

593

2,176
1,065
550

3,791

609

632

488

176

548

1,601
811
500

2,912

562

920

–

2,294
1,005
895

4,194

629

750

488

363

534

1,991
882
500

3,373

557

1,281

– 550–695 550–625

100

1,992

2,092

440 440–558 440–550

354

715

354

661

6,537

6,686

615

640

5,834

6,228

590

596

Note 7 Financial Instruments (continued)

(a) Commodity Contracts (continued)
(i) Gold Hedging and Commitments (continued)
US Dollar Hedging
Financial year ending
30 June 2003

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11+

30 June 30 June
2002
Total

2003
Total

Forward sales (1)

US$ denominated (koz)

US$/oz

Put options purchased (3)

Strike Price US$490/oz–US$515/oz

US$/oz

–

100

501

333

506

Total hedged (includes gold loan, forwards & put options)
98

US$ denominated (koz)

100

US$/oz

501

386

285

330

–

285

330

344

350

–

344

350

333

341

–

333

341

Total committed (includes forwards, gold loan, call options & contingent call options)
333

US$ denominated (koz)

344

285

–

US$/oz

–

333

330

350

341

TOTAL
Total hedged (includes gold loan, forwards & put options)
1,044
98

A$ denominated (koz)
US$ denominated (koz)

778
100

TOTAL

878

1,142

1,031
285

1,316

1,099
344

1,443

1,004
333

1,337

Total committed (includes forwards, gold loan, call options & contingent call options)
858
333

A$ denominated (koz)
US$ denominated (koz)

1,000
344

880
285

632
–

983
68

383

355

–

383

355

383

355

784
383

1,167

684
383

TOTAL

632

1,051

1,165

1,344

1,191

1,067

–

443
–

443

443
–

443

–

354
–

354

354
–

354

1,413

344

130

502

1,543

358

1,413

344

6,537
1,543

8,080

5,834
1,413

7,247

–

230

505

230

505

–

6,456
230

6,686

6,228
–

6,228

Transactions previously brought to account in the Statement of Financial Performance for New Celebration are:

Financial year ending
30 June 2003

Put options purchased (koz) (3)
Strike price A$500/oz–A$599/oz
Strike price A$600/oz–A$699/oz

TOTAL

A$/oz

Forward purchases

A$ denominated (koz)

A$/oz

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11+

30 June 30 June
2002
Total

2003
Total

55
29

10
1

632

601

576

587

–
–

–

–
–

–

–
–

–

–
–

–

–
–

–

–
–

–

65
30

628

577

125
85

210

637

210

567

(1) Forward sales represent contracts at which future production is sold at specific prices in Australian and US dollars and include:

• 250,000 ounces of variable price forwards that have a realisable price dependent upon the spot price at maturity; and
• 875,000 ounces of convertible put options that are purchased put options that can become forward sales if the spot price increases to defined

levels ranging from $564 per ounce to $750 per ounce.

(2) Forward purchases have been undertaken as a part of the hedgebook restructure.
(3) Put options purchased provide the right, but not the obligation, to deliver gold at specific prices in Australian and US dollars if the spot price is less

than the strike price at expiry date.

(4) The gold loan was monetised at A$488 per ounce in June 2000. Repayment obligations thereunder represent future commitments.
(5) Call options sold create an obligation to deliver gold at specific prices if the spot price is greater than the strike price at expiry date. All contracts are
in Australian dollars. Contingent call options sold can become sold call options if the spot price increases to defined levels ranging from $550 per
ounce to $695 per ounce.

The average hedged price per ounce in respect of 6,122,872 ounces (2002: 6,686,000 ounces) represents the estimated
achieved gold price which includes a lease rate allowance of 1.6 percent (2002: 1.6 percent).

The tables exclude 130,000 ounces of Australian dollar spot deferred transactions and 437,500 ounces of US dollar spot
deferred transactions designated against future production. They will be progressively converted into fixed forward
transactions.

During the year 46,000 ounces of US dollar knock-out put options maturing in 2003/04 were closed out. A $2,981,173 gain
resulting from the close-out will be brought to account over the original maturity profile.

Newcrest Mining Concise Annual Report 2003 61

Newcrest
Moving Forward

Notes to the Concise Financial Report (continued)

Note 7 Financial Instruments (continued)

(a) Commodity Contracts (continued)
(ii) Copper Hedging

Financial year ending
30 June 2003

Forward sales (1)

A$ denominated (kmt)

Price (A$/mt)

Contingent forward sales (2)

A$ denominated (kmt)

Strike price (A$/mt)
Out-trigger price (A$/mt)

Total hedged

A$ denominated (kmt)

Total committed (inc. contingent)

A$ denominated (kmt)

2003/04

2004/05

2005/06

2006/07

30 June
2003
Total

30 June
2002
Total

–

–
–

–

8.1

2,646

36.0

2,646

36.0

2,646

80.1

2,646

164.8

2,754

–

–
–

8.1

–

–
–

–

–
–

–

32.4

–
2,877
– 2,816–2,838

36.0

80.1

164.8

36.0

80.1

197.2

(1) Forward sales represent contracts under which future production is sold at specific prices in Australian dollars.
(2) Contingent forward sales are forward sales that lapse if the spot price increases to the out-trigger price range.

During the year 33,100 million tonnes of copper forward sales and 16,550 million tonnes of copper ratchet forward sales
maturing between 2003/04 and 2004/05 were closed out. A $7,031,708 gain resulting from the close out will be brought to
account over the original maturity profile. In early July 2003, the remaining 8,100 million tonnes of copper contracts maturing
in 2004/05 were closed out, realising a gain of A$180,000.

(b) Foreign Exchange Contracts

Revenue Hedging
The Consolidated Entity has entered into forward foreign currency exchange contracts, put option contracts and call option
contracts to hedge potential forward sales commitments denominated in US dollars.

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

30 June
2003
Total

30 June
2002
Total

–

19.8

0.7657

59.0

120.0

90.0

20.0

10.0

419.0

468.0

0.7570

0.7577

0.7590

0.7573

0.7559

–

50.0

0.5150

13.1

0.7419

59.0

120.0

90.0

20.0

10.0

419.0

454.9

0.7570

0.7590
0.61–0.64 0.62–0.65 0.63–0.66 0.63–0.67 0.66–0.68 0.67–0.68

0.7577

0.7590

0.7570

0.7573

0.7559

59.0

120.0

90.0

20.0

10.0

419.0

487.8

0.7570

0.7577

0.7590

0.7573

0.7559

Financial year ending
30 June 2003

Forward sales (1)
Principal (US$M)

Rate

A$ Call options purchased (2)

Principal (US$M)

Strike price

A$ Put options purchased (3)

Principal (US$M)

Strike price

A$ Put options sold (4)

Principal (US$M)

Strike price

Contingent A$ Put options sold (5)

Principal (US$M)

Strike price
In-trigger price

Total committed (inc. contingent)

Principal (US$M)

Rate

Newcrest Mining Concise Annual Report 2003

Note 7 Financial Instruments (continued)

(b) Foreign Exchange Contracts (continued)

Revenue Hedging (continued)
In 2001/02 a provision was made to mark-to-spot the surplus foreign currency contracts maturing in 2003/04. This is an
accounting provision only (refer Note 5). The table above excludes these surplus contracts which are no longer regarded as
hedges. Details of these contracts are as follows:

A$ Call options purchased (US$M) (2)
Strike price
Contingent A$ Put options sold (US$M) (5)
Strike price

Provision recorded at mark-to-spot (refer Note 5)
Mark to market valuation at 30 June 2003

2003/04

61.0
0.7570
61.0
0.7570

$’000

(10,996)
(8,043)

Capital Hedging
The Consolidated Entity has entered into forward foreign currency exchange contracts to hedge anticipated capital purchases.

Forward purchases (US$M) (6)
Rate

Forward purchases (EurM) (6)
Rate

2003/04

84.4
0.6012

9.7
0.5825

(1) Forward sales represent an obligation to sell US dollars in exchange for Australian dollars at a fixed price.
(2) A$ call options purchased provide the right, but not the obligation, to sell US dollars (and buy Australian dollars) if the spot price is greater than the

strike price at expiry date.

(3) A$ put options purchased provide the right, but not the obligation, to buy US dollars (and sell Australian dollars) if the spot price is less than the

strike price at expiry date.

(4) A$ put options sold create an obligation to sell US dollars (and buy Australian dollars) if the spot price is less than the strike price at expiry date.
(5) Contingent A$ put options sold create an obligation to sell US dollars (and buy Australian dollars) if the spot price falls to below trigger prices and

subsequently remains less than the strike price at expiry date.

(6) Forward purchases represent an obligation to buy US dollars or Euros in exchange for Australian dollars at a fixed price.

(c) Interest Rate Risk
The Consolidated Entity is exposed to interest rate risk in respect of primary financial assets and liabilities, managed through
derivative financial instruments such as gold lease rate swaps.

The Consolidated Entity’s interest rate risk exposures together with the effective interest rate for each class of financial assets
and financial liabilities at balance date are summarised as follows:

Fixed interest rate maturing in:

Average Interest Rate

30 June 2003

Financial Assets
Cash
Bills receivable
Bullion awaiting settlement
Accounts receivable –
trade & other
Outside equity interest
loan receivable

Financial Liabilities
Trade and other creditors
Finance lease liabilities
Bank loans

Floating
interest
rate
$’000

50,099
–
–

–

1 Year
or less
$’000

–
49,962
–

–

Over 1-5
Years
$’000

More
than
5 Years
$’000

–
–
–

–

–
–
–

–

Non
Interest
Bearing
$’000

4
–
7,849

51,103
49,962
7,849

49,243

5,786

–
25,056
120,103

–
4,209
49,137

–
18,538
141,621

–
9,392
117,052

181,215
–
–

181,215
57,195
427,913

Total
$’000

Floating(*)

Fixed
%

2.06
–
–

–

–
5.80
2.02

–
4.92
–

–

–
6.72
2.71(i)

Newcrest Mining Concise Annual Report 2003 63

Newcrest
Moving Forward

Notes to the Concise Financial Report (continued)

Note 7 Financial Instruments (continued)

30 June 2002

Financial Assets
Cash
Bullion awaiting settlement
Accounts receivable –
trade & other
Outside equity interest
loan receivable

Financial Liabilities
Trade and other creditors
Finance lease liabilities
Bank loans
Bullion bank borrowings

Floating
interest
rate
$’000

14,365
–

–

–
33,126
141,243
4,178

Fixed interest rate maturing in:

Average Interest Rate

1 Year
or less
$’000

Over 1-5
Years
$’000

More
than
5 Years
$’000

Non
Interest
Bearing
$’000

Total
$’000

Floating(*)

Fixed
%

–
–

–

–
–

–

–
–

–

–
9,217

14,365
9,217

103,124

6,805

–
5
58,263
–

–
9,274
157,239
–

–
1,039
150,571
–

57,578
–
–
–

57,578
43,444
507,316
4,178

4.75
–

–

–
5.97
2.85
4.97

–
–

–

–
0.24
2.71(i)
–

(*) Floating interest rates represent the most recently determined rate applicable to the instrument at balance date.

(i) The interest rate on the gold loan can increase from 2.71 percent to 10.05 percent from August 2003 for each dollar the spot gold price at the date

quarterly interest payments are due is above $600 per ounce to a maximum of $750 per ounce.

Gold Lease Rate
Hedging instruments involve the borrowing of gold for future repayment. The cost of borrowing gold is the gold lease rate.
The Company manages its exposure to movements in gold lease rates through a number of mechanisms one of which is to
prepay, through adjustment to the future deliverable price, a large portion of the expected short-term gold lease rate.

As an additional element of many of these arrangements, the future deliverable price has been enhanced by incorporating
into the arrangements a further mechanism where the cost of borrowing increases (indexed) by forfeiting the prepaid rate if
predetermined gold price barriers are breached. The barriers have been set above the spot price of gold prevailing at the
date of entering the transaction. Substantial decreases in the future deliverable price can result in the event that the barriers
are breached.

The Consolidated Entity has borrowed approximately 70 percent of gold on a floating basis under its forward sales contracts
and has embedded a prepaid rate into this borrowing. The future deliverable price per ounce in respect of gold hedging is on
the basis of an assumed lease rate equal to the prepaid rate of currently 1.6 percent (2002: 1.6 percent). The allowance is
subject to indexation based upon increases in the spot price of gold.

(i) Gold Lease Rate Arrangements
The table below sets out the average increase over the
floating cost of borrowing the gold in terms of the fixed rate
received/paid at certain gold prices.

Exposure as
at Year Ending

Notional
Principal (oz)

Max Net Ave Max Net Ave
Allowance
Receivable/
Payable
>A$750/oz
%

Allowance
Receivable/
Payable