Newcrest Mining Annual Report 2013

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NEWCREST MINING LIMITED ANNUAL REPORT 2013

Contents

Company Snapshot

Results at a Glance

Chairman’s Report

Managing Director’s Review

The Board

Operations

Projects

Exploration

Sustainability

Mineral Resources and Ore Reserves

Corporate Governance

Diversity

Financial Report

Directors’ Report

Operating and Financial Review

Remuneration Report

Auditor’s Independence Declaration

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flows

Consolidated Statement of Changes in Equity

Notes to the Financial Statements

Directors’ Declaration

Independent Auditor’s Report

Shareholder Information

Five Year Summary

Corporate Directory

123

124

126

128

IBC

Newcrest has responded rapidly and decisively to
changing external conditions and delivered major capital
investments in the face of operational challenges.
Newcrest is well-positioned for the current market cycle.

2012/2013 highlights

Delivery of major investments

Decisive action in response
to market environment

> Cadia East plant expansion and Panel Cave 1

> Operate for free cash flow neutral

> Lihir plant expansion

> Telfer contract stripping

Operational challenges

> Running two major brownfields

projects in parallel with operations

> Lihir plant reliability

> Gosowong ground conditions

> Hidden Valley conveyor

or positive outcomes at every asset

> Remove high-cost production:

optimising plants, deferring capital,
utilising stockpiles

> Reduce operating cost: lower

activity, contract renegotiations,
labour reductions

NEWCREST MINING ANNUAL REPORT 2013(cid:14)1

Company Snapshot

Miner of choice™

Newcrest is the largest gold producer listed on the Australian
Securities Exchange and one of the world’s largest gold
mining companies by gold reserves and market capitalisation.
Newcrest’s vision is to be the Miner of choice™ for all stakeholders.

Being the Miner of choice™ for all stakeholders means
our people, the communities in which we operate and our
shareholders. Social responsibility, safety and sustainability
are fundamental guideposts to this vision.

Newcrest is an unhedged gold producer that owns and
operates a portfolio of predominantly low-cost, long-life mines
in Australia, the Pacific region, Asia and Africa, and maintains
a strong pipeline of brownfields and greenfields exploration
projects. Our reserve and resource base is strong, with gold
reserves representing more than 25 years of production at
current rates.

Newcrest has strong technical capabilities in deep
underground block caving, shallow targeted underground
mines, large open pits and a variety of metallurgical
processing skills.

Our mines are located in Australia, Papua New Guinea
(PNG), Indonesia, and Côte d’Ivoire in West Africa.

Current operations include:
– Cadia Valley Operations (near Orange, New South Wales);
– Telfer (Pilbara Region, Western Australia);
– Gosowong (Halmahera Island, Indonesia);
– Lihir (New Ireland Province, PNG);
– Hidden Valley (Morobe Province, PNG); and
– Bonikro (Côte d’Ivoire, West Africa).

Discovery of new ore bodies is an important element in
Newcrest’s strategy and the Company has a strong and
successful exploration track record. A key objective of Newcrest’s
exploration activities is to secure large mineral districts, or
provinces, in order to establish long-term mining operations,
while enhancing the potential for further discoveries.

Headquartered in Melbourne, Australia, Newcrest is among the
top 50 companies listed on the Australian Securities Exchange.
It is also listed on the Port Moresby Stock Exchange.

Asset Locations and Ownership Percentage

i
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2(cid:14)NEWCREST MINING ANNUAL REPORT 2013

NEWCREST MINING ANNUAL REPORT 2013(cid:14)3

Results at a Glance

Operational performance

Profit/(loss) and cash flow

> Gold production 2,110koz; copper

> Statutory loss of A$5,778 million

production 80kt

> Unit cash cost A$750/oz; cash margins

(after impairment, write-down and
restructure costs of A$6,229 million)

of A$800/oz (on gold price of A$1,550/oz)

> Underlying profit of A$451 million

> All-in sustaining cost of A$1,283/oz

> Cash flow from operations of A$707 million

Major projects achieved key milestones

> Cadia East commenced commercial

production January 2013

> Lihir plant expansion completed

February 2013

Supporting projects completed

> Flotation expansion and NCA tank

refurbishment at Lihir

> Contract stripping at Telfer

Gold produced

Copper produced

Gold price realised

Sales revenue

EBITDA(1)(2)

EBIT(1)(2)

Statutory proﬁ t/(loss)(3)

Underlying proﬁ t(2)(4)

Operating cash ﬂ ow

Capital expenditure (cash ﬂ ow basis including exploration)

Return on capital employed (ROCE)(5)

Gearing (Net debt/Net equity and equity)(6)

EPS on Statutory proﬁ t/(loss)

Interim and Final dividend

> EBITDA margin of 36%; EBIT margin of 20%

Balance sheet

> Gearing of 29.1%

> Cash and undrawn committed debt
facilities at 30 June 2013 of over
A$950 million

12 months to
30 June 2013

12 months to
30 June 2012

%
Change

2,109,784

2,285,917

80,366

76,015

(ounces)

(tonnes)

(A$ per ounce)

(A$ million)

(percent)

1,550

3,775

1,367

756

(5,778)

451

707

2,098

4.8

29.1

(A$ cents per share)

(754.5)

(A$ cents per share)

12.0

(8)

(4)

(15)

(36)

(52)

(617)

(58)

(59)

(23)

(52)

133

(617)

(66)

1,609

4,416

2,151

1,590

1,117

1,084

1,726

2,714

10.1

12.5

146.0

35.0

(1) EBITDA is ‘Earnings before interest, tax, depreciation, amortisation and signiﬁ cant items’. EBIT is ‘Earnings before interest, tax and signiﬁ cant items’.

EBITDA and EBIT are used to measure segment performance and have been extracted from Note 37 ‘Segment Information’ on page 118.

(2) EBIT, EBITDA and Underlying proﬁ t are non-IFRS ﬁ nancial information and have not been subject to audit by the Company’s external auditor.
(3) Statutory proﬁ t/(loss) is proﬁ t/(loss) after tax attributable to owners of the parent.
(4) Underlying proﬁ t is proﬁ t after tax before signiﬁ cant items attributable to owners of the parent. Refer to page 51 for further details.
(5) Return on Capital Employed is calculated as EBIT divided by average capital employed.
(6) Gearing is calculated as net debt to net debt and equity. Refer to page 50.

4(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Group Gold Production
(thousand ounces)

Group Copper Production
(thousand tonnes)

Underlying Proﬁt
($ million)

*
7
2
5
,
2

6
8
2
,
2

0
1
1
,
2

2
6
7
,
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1
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6
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9

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6
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4
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6
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3
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1
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9
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1
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3
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9
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1
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3
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F

9
0
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F

0
1
Y
F

1
1
Y
F

2
1
Y
F

3
1
Y
F

* Production from the former LGL operations

included from the acquisition date of
30 August 2010

EBIT
($ million)

Cash Flow from Operations
($ million)

Ordinary Dividends
(cents)

0
9
5
,
1

4
4
5
,
1

9
3
1
,
1

3
7
7

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5
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1
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3
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1
1
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2
1
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F

3
1
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F

9
0
Y
F

0
1
Y
F

1
1
Y
F

2
1
Y
F

3
1
Y
F

NEWCREST MINING ANNUAL REPORT 2013(cid:14)5

Chairman’s Report

after a decade of sustained increases, the gold price fell during
the year, with a significant and rapid price decline occurring
early in the final quarter of financial year 2013. the decline
triggered major adjustments to business and operating plans
by gold producers around the world. this, along with lower
than expected production, made 2013 a very challenging year
for newcrest. the company’s performance was impacted,
disappointing your Board, management and shareholders alike.

the company responded decisively to the weakness in
the gold price, culminating in the 7 June announcement
of a range of key actions as we moved to manage for
the best cash outcome rather than maximum production.
these actions included a reduction in capital expenditure
for 2014, the elimination of higher cost ounces from the
production profile, the acceleration of significant cost
reduction programs across the business and the decision
not to pay a final dividend for the 2013 financial year.

growth options have been preserved and can be reactivated
should conditions improve.

like many other gold mining companies, newcrest reviewed
the carrying value of its assets in response to the rapid
decline in the gold price. this resulted in significant non-cash
accounting charges of a$6.2 billion after tax, relating to
asset impairments, the write-down of higher cost assets
and inventory, a write-down of the investment in evolution
mining limited and business restructuring costs.

a large part of the write-downs related to ‘goodwill’ recognised
on the acquisition of former lihir gold limited assets. ‘goodwill’
for a mining asset has always to be written off eventually.
the lihir orebody, in terms of size and grade, is one of the
great orebodies of the world. we are very positive about lihir
and the improved contribution it is now making to newcrest.
newcrest has the longest reserve life of its global peer group.

For other parts of the business, such as telfer and Hidden
Valley, the write-downs reflect the materially lower gold price,
reduction in valuation multiples and the resulting fall in the
market value of these assets.

newcrest remains well placed financially, with a sound
balance sheet and investment grade credit ratings.
gearing has increased to 29.1 percent, mainly due to the
investment in projects at cadia east and lihir, as well as the
recent impairments. this level is acceptable in the present
circumstances. our longer-term objective is to keep gearing
under 15 percent. this provides a buffer for the company to
weather significant adverse events such as the plunge in metal
prices, which occurred in 2013. From a liquidity point of view,
as at 30 June 2013, newcrest had around a$950 million in cash
and undrawn bilateral bank facilities.

6 newcrest mining annual report 2013

During the year, the investments in the cadia east underground
mine and lihir plant expansion were largely completed.
cadia and lihir are large, long-life, lower-cost assets
which underpin future production and shareholder returns.
they are big drivers of our value and we are very confident
that the benefits are beginning to flow. these investments
are in shareholders’ long-term interests, but we acknowledge
that some shareholders would have welcomed a larger share
of the substantial operating cashflows that the company
enjoyed during the peak price period.

You may be aware of various claims about newcrest
‘selectively briefing’ market analysts during the lead up to
the 7 June announcement of its business review. newcrest
took this accusation very seriously. it is a company with strong
values that attaches great importance to its compliance and
governance obligations in every country in which it operates.
Former australian securities exchange chairman, Dr maurice
newman, was engaged by the Board to conduct an independent
review of the company’s disclosure and investor relations
practices and to make recommendations in relation to any
improvements or changes that might be required to address
any issues identified by him. Dr newman’s report was released
to the market on 5 september. the australian securities and
investments commission initiated its own investigation into
these matters and we are cooperating fully with them.

During the year, two new non-executive Directors joined
the Board. mr philip aiken has extensive experience in the
resources sector, both within australia and internationally.
mr peter Hay brings experience in the business, corporate law
and investment banking sectors. these two additional directors
add to the capability of the Board.

we continue to believe that the outlook for gold is positive.
asian demand for gold is very strong. However, predicting the
gold price is a personal judgement. experienced gold investors
view gold shares as a fundamental part of their portfolio,
as a hedge against external uncertainty.

Finally, i make a point about our people. right across the
company, action was taken with speed and good sense
to position the company for a lower price environment.
an extraordinary effort was demanded of a great many
of our employees to undertake this work. regrettably many
employees lost their jobs as a result of the ensuing changes.
executives and our people in management roles will receive nil
to very low incentive rewards this year. i take this opportunity
to thank our employees for their efforts in the face of these
exceptional circumstances and note that they too share
with shareholders a financial disappointment.

we continue to place a high priority on employee safety,
community relationships and environmental management.
the sustainability report is a record of our activities in this
regard and can be viewed at www.newcrest.com.au/
sustainability/current-sustainability-report.

newcrest has the flexibility to make more changes should the
gold price decline further. on the other hand, should conditions
improve, we retain a range of options for growth and better
margins having reset the company’s cost base.

Don Mercer
chairman

Managing Director’s Review

the 2013 financial year was a period of transition, where
both cadia east and the lihir plant expansion moved
to commercial production, concluding three years of
construction and investment of a$2.05 billion at cadia
east and us$1.37 billion at lihir.

the cadia east project achieved commercial production in
January 2013 following the development of panel cave 1 and
completion of the plant expansion and materials handling
systems. the new process plant at lihir was handed over to
operations in February 2013. Both projects were completed
on time and within 8 percent of their budget and both projects
performed to expectation and will underpin the company’s
long-term gold and copper production.

the year was also characterised by a very volatile gold
market and some technical operating challenges which,
in combination, resulted in outcomes for the year falling
short of our expectations. gold production was 8 percent
below expectation, principally due to maintenance issues
in the older plant at lihir and highly variable ground conditions
at gosowong. copper production, capital expenditure and
total operating costs were within guidance levels for the
2013 financial year.

During the year, the safety renew program focussed on
mobile plant and equipment safety initiatives and the roll-out
of the Behavioural Based safety program across the company.
overall safety performance improved with the number of
serious potential incidents reduced by more than half compared
with the previous year. our safety performance was, however,
marred by the unfortunate death of a labourer at lihir who
died in January 2013 following an accident involving a truck.

the gold price declined throughout much of the 2013
financial year, falling by approximately one third from a
high of almost us$1,800 per ounce in early october 2012 to
a low of us$1,200 per ounce in late June 2013. in response to
commodity prices materially lower than earlier expectations,
a detailed business review of capital, costs and production
was conducted with the objective of maximising free cash flow.

the lower, more volatile gold price and the compression in
gold valuation multiples in financial markets combined with the
continuing higher cost environment for some assets resulted
in the decision by the Board to impair or write-down the
carrying value of some assets by a combined a$6.2 billion.
cash flow was not impacted by these accounting write-downs.
the majority of this impairment was associated with the
a$3.49 billion write-down of lihir’s accounting goodwill
which arose from the scrip merger with lihir gold limited
in 2010. since this merger, the lihir gold mine has contributed
1.89 million ounces of gold to newcrest’s production profile
and added a further 15.7 million ounces of gold in mineral
resources. the lihir deposit, in terms of size and grade,
is significant by world standards and the lihir mine is expected
to play an important role in newcrest’s future production
and earnings.

Higher cost assets, including telfer and Hidden Valley, were
also impaired in the lower price, higher cost environment.

as a result, newcrest reported a statutory loss of
a$5,778 million for the 12 months ending 30 June 2013
after significant items totalling a$6,229 million after tax.
underlying profit for the period was lower than the previous
year at a$451 million, primarily reflecting lower than planned
production at lihir and gosowong and a decline in commodity
prices. operating cash flow was a$707 million.

over the last four years, newcrest has paid a$992 million
in dividends and invested a$5.9 billion in development
and capital projects and a$537 million in exploration related
activities. these investments, and the loss for the year, have
resulted in gearing increasing from an expected 20 percent
to 29 percent as at 30 June 2013. newcrest retains a sound
balance sheet with significant financial liquidity and has
no debt facilities to be refinanced in the 2014 financial year.

newcrest’s focus on cash flow maximisation resulted
in a revision to mine plans to focus on lower cost, higher
margin ounces, reducing exploration, studies and projects
expenditure and rationalising corporate costs. the focus
on maximising cash flow has resulted in lower production at
some assets where higher cost ounces have been postponed
but remain available for future production. lower gold prices
and higher gearing also led to the decision not to pay a
final dividend this year. newcrest will maintain its focus on
reducing gearing.

importantly, our growth options have been maintained and
our strategy of focussing on predominantly long-life, low-cost
gold assets, primarily in australia, asia and the pacific region,
remains unchanged. compared with the 2013 financial year,
capital expenditure is expected to decline from a$1.9 billion to
a$0.8 billion, excluding production stripping, and exploration
expenditure from a$152 million to a$85 million for the 2014
financial year. critical exploration programs at wafi-golpu,
telfer and gosowong will be the focus of exploration activity
during the 2014 financial year. project activity and expenditure
is focussed on the continued underground expansion of cadia
east and optimisation of the pre-feasibility at wafi-golpu.

at an executive management level, geoff Day was appointed
as egm sustainability & external affairs, succeeding
stephen creese who retired from his role of egm corporate
affairs, and craig Jones assumed the role of egm of australia
and indonesia operations following the departure of
peter smith due to the Brisbane office closure. we thank
stephen and peter for their positive contributions and
hard work for newcrest.

this has been a difficult year for newcrest, our shareholders
and the broader gold sector. i would like to acknowledge the
drive and commitment of our employees during this period
of significant challenge. i remain confident in the delivery
of shareholder value from our portfolio of operations,
development options and exploration activity. i also look
forward to the year ahead where we begin to reap the
full benefits from the last several years of newcrest’s
major project development program.

Greg Robinson
managing Director and chief executive officer

newcrest mining annual report 2013 7

The Board

Don Mercer
NoN-ExEcutivE chairmaN

Bachelor of science (Hons)
and master of arts (econ)

Greg Robinson
maNagiNg DirEctor aND
chiEf ExEcutivE officEr

Bachelor of science (Hons) geology
and mBa from columbia university

mr mercer was appointed as non-executive chairman of
newcrest in october 2006. He is also non-executive chairman
of air liquide australia limited.
mr mercer has extensive business experience obtained as
a senior executive of major international organisations.
He is a former managing Director and chief executive officer
of anZ Banking group limited and is a former chairman of the
australian institute of company Directors limited, orchestra
Victoria, australia pacific airports corporation limited and
orica limited. mr mercer was also chancellor of rmit university.

mr robinson was appointed to the Board in november 2006.
mr robinson was appointed managing Director and chief
executive officer of newcrest in July 2011 after serving as Director
Finance of newcrest from 2006 to 2011. prior to joining newcrest,
mr robinson was with the BHp Billiton group from 2001 to
2006 in various executive roles, including chief Finance and
chief Development officer, energy, and chief Financial officer,
petroleum. mr robinson was also a member of the group
executive committee. Before joining BHp Billiton, he was a Director
of investment Banking at merrill lynch & co. mr robinson is a
Director of the minerals council of australia, the world gold council
and st Vincent’s institute, and a member of the australian institute
of company Directors.

Gerard Bond
fiNaNcE DirEctor aND
chiEf fiNaNcial officEr

Bachelor of commerce, chartered
accountant and graduate Diploma
of applied Finance and investment

Philip Aiken AM
NoN-ExEcutivE DirEctor

Bachelor of engineering (chemical) and
advanced management program (HBs)

member of the Human resources and
remuneration committee and safety,
Health and environment committee

mr Bond was appointed to the Board as an executive Director
in February 2012, after joining newcrest as Finance Director
and chief Financial officer in January 2012.
mr Bond has many years’ experience in the global financial
and resources industry with BHp Billiton, coopers & lybrand
and price waterhouse. prior to joining newcrest, he was with
BHp Billiton for over 14 years, where he held a number of senior
executive roles, including Deputy cFo of the aluminium business,
cFo and then acting president of the nickel business, and most
recently was BHp Billiton’s Head of group Human resources.
He is a Fellow of the Financial services institute of australia
and an alternate Director of the world gold council.

mr aiken was appointed to the Board in april 2013.
mr aiken has extensive australian and international business
experience, principally in the engineering and resources
sectors. He is non-executive chairman of aveva plc (from 2012),
senior independent Director of essar energy plc (from 2010)
and a non-executive Director of its listed subsidiary essar oil
limited (from 2012), and a non-executive Director of national
grid plc (from 2008).
mr aiken is a former group president energy BHp Billiton, president
BHp petroleum, managing Director Boc/cig, chief executive of
Btr nylex, chairman of robert walters plc (2007–2012), Director
of miclyn express offshore ltd (2010–2012), senior advisor
macquarie Bank (europe) and senior independent Director
of Kazakhmys plc (2008–2013).

Vince Gauci
NoN-ExEcutivE DirEctor

Bachelor of engineering (mining)

member of the safety, Health and
environment committee and the Human
resources and remuneration committee

Peter Hay
NoN-ExEcutivE DirEctor

Bachelor of laws

mr gauci was appointed to the Board in December 2008.
mr gauci is the non-executive chairman of the Broken Hill
community Foundation, a former chairman of runge limited
(2008–2011), a former Director of liontown resources limited
(2007–2011) and coates Hire limited. He has over 40 years’
experience in the global mining industry and was formerly
the managing Director of mim Holdings limited.

8 newcrest mining annual report 2013

mr Hay was appointed to the Board in august 2013.
mr Hay has a strong background and breadth of experience in
business, corporate law, finance and investment banking advisory
work. He is the non-executive honorary chairman of the advisory
Board of lazard australia. He is a non-executive Director of the
anZ Banking group limited (from 2008), myer Holdings limited
(from 2010), alumina limited (from 2002) and guD Holdings
limited (from 2009). He is a non-executive member of the
Board of management of epworth Healthcare (from 2008) and a
non-executive Director of landcare australia limited (from 2008).
mr Hay’s former directorships include nBn co. limited, pacifica
group limited, lazard pty ltd and he was a partner of the legal
firm Freehills until 2005, where he served as chief executive
officer from 2000. He has been a member of the australian
government takeovers panel since may 2009.

Lady Winifred Kamit
NoN-ExEcutivE DirEctor

Bachelor of arts and Bachelor of laws

member of the Human resources and
remuneration committee and the safety,
Health and environment committee

Richard Knight
NoN-ExEcutivE DirEctor

Bachelor of science (mining engineering),
master of science (mine production
management) and chartered engineer

chairman of the safety, Health and
environment committee and a member
of the audit and risk committee

lady Kamit was appointed to the Board in February 2011.
lady Kamit has extensive business experience and broad
community knowledge of papua new guinea. she is currently a
consultant at gadens lawyers in port moresby and was formerly
a senior partner of that firm.
lady Kamit was a Director of lihir gold limited (lgl) from
october 2004 until completion of newcrest’s acquisition of lgl
in september 2010. she is a Director of nautilus minerals niugini
limited, anZ Banking group (png) limited (from 2012) and
steamships trading company limited (from 2005). lady Kamit is
a councillor of the papua new guinea institute of national affairs
and chairperson of coalition for change png, an initiative against
violence against women and children. she is a former Director
of post courier limited (2004–2012).

mr Knight was appointed to the Board in February 2008.
mr Knight is non-executive chairman of the mining engineering
advisory Board, monash university and a Director of mining
education australia. He is a former executive Director of north
limited, and was chairman and chief executive officer of
the iron ore company of canada and chief executive officer
of energy resources of australia limited. He is a former Director
of oZ minerals limited, Zinifex limited, st Barbara limited,
portman limited, northern orion resources inc. and
asia pacific resources.
mr Knight has extensive experience in the international
mining industry.

Rick Lee
NoN-ExEcutivE DirEctor

Bachelor of chemical engineering (Hons)
and master of arts (econ) as a rhodes
scholar from oxford university

chairman of the Human resources and
remuneration committee and a member
of the audit and risk committee

Tim Poole
NoN-ExEcutivE DirEctor

Bachelor of commerce and
chartered accountant

member of the audit and risk
committee and the Human resources
and remuneration committee

mr lee was appointed to the Board in august 2007.
mr lee has extensive resources, finance and international
commercial experience. He is the non-executive chairman
of oil search limited (Director from 2012, chairman from 2013),
and lead independent Director of salmat limited (from 2012).
mr lee is a former chairman of the australian institute of company
Directors and c. czarnikow limited (2001–2011), the former Deputy
chairman of ridley corporation limited (2001–2013), a former
Director of csr limited (2005–2011) and the australian rugby
union limited. He was chief executive officer of nm rothschild
australia group, prior to which he spent 16 years in the csr
sugar division.

mr poole was appointed to the Board in august 2007.
mr poole contributes wide-ranging financial, investment and
governance knowledge and experience. He is non-executive
chairman of the unlisted management company, westbourne
credit management limited, lifestyle communities limited
(from 2007), continuity capital partners pty limited and the
leK consulting advisory Board. mr poole is also a non-executive
Director of Victoria racing club limited and australiansuper
pty ltd and chairman of its investment committee. He is
a former managing Director of Hastings Funds management
and was chairman of asciano limited (2007–2009).

John Spark
NoN-ExEcutivE DirEctor

Bachelor of commerce and Fellow of the
institute of chartered accountants

chairman of the audit and risk
committee and a member of the safety,
Health and environment committee

mr spark was appointed to the Board in september 2007.
mr spark is the non-executive chairman of ridley corporation
limited (Director from 2008, chairman from 2010). He is a former
Director of anl limited, Baxter group limited and macarthur coal
limited (until 2011). mr spark is a registered company auditor and
former managing partner of Ferrier Hodgson, melbourne. He has
an extensive background in company reconstruction, accounting,
profit improvement and financial analysis.

newcrest mining annual report 2013 9

Operations

Local, regional, global

In response to the recent decline in the gold price, Newcrest has adjusted its
mine plans such that each operation is expected to be free cash flow neutral
or positive in the 2014 financial year at a gold price of A$1,450. Increasing
production from our lower cost assets remains a key focus for the Company.

10(cid:14)NEWCREST MINING ANNUAL REPORT 2013

NEWCREST MINING ANNUAL REPORT 2013(cid:14)11

12(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Cadia Valley

The Cadia East underground mine is expected to increase Cadia Valley
production to 700,000–800,000 ounces of gold per year. This large,
low-cost operation will continue to underpin Newcrest’s asset base.

Cadia Valley
Australia

2013 Statistics

Mining Method
Resources† – Gold

– Copper

Reserves† – Gold

– Copper

Total Mine Production
Total Ore Treated
Production – Gold

– Copper

Cash Cost
Total Cost
EBIT Margin

Underground
million ounces
million tonnes
million ounces
million tonnes

47.7
8.99

27.5
4.78

11,344 thousand tonnes
25,478 thousand tonnes
ounces
tonnes

446,879
53,913

378 A$ per ounce of gold produced
691 A$ per ounce of gold produced
47 percent

† Resources and Reserves are stated as at 31 December 2012

The Cadia Valley operations are located in central western
New South Wales, Australia, 25 kilometres south-west of the
city of Orange and 250 kilometres west of Sydney. The Cadia
Valley mines are 100 percent owned by Newcrest. Production
for the year ended June 2013 was 446,879 ounces of gold and
53,913 tonnes of copper at a cash cost of A$378 per ounce.
As at 31 December 2012, the Cadia Valley Mineral Resource
estimated to contain 47.7 million ounces of gold and 8.99
million tonnes of copper, including an Ore Reserve estimated
to contain 27.5 million ounces of gold and 4.78 million tonnes
of copper.

The Cadia Hill gold-copper porphyry deposit was discovered
by Newcrest in 1992. Gold was first produced in 1998, and after
14 years of operation the Cadia Hill open pit mine was placed in
care and maintenance at the end of June 2012. Stockpiled open
pit material is available for milling and technical studies of
future mining options for the remaining Cadia Hill Ore Reserve
will continue. The Ridgeway gold-copper mine, discovered in
1996, is located three kilometres from the Cadia Hill open pit.
Production commenced from the underground sub-level cave
in April 2002, and in 2010 Ridgeway transitioned to a block
cave operation beneath the original sub-level cave.

The Cadia East deposit is a porphyry zone of gold-copper
mineralisation adjacent to the eastern edge of the Cadia Hill
orebody. It was discovered before Ridgeway and is one of
the world’s largest gold deposits. The Cadia Valley Mineral
Resource includes a Cadia East Mineral Resource estimated
to contain 37.6 million ounces of gold and 7.53 million tonnes
of copper, which includes an Ore Reserve estimated to contain
23.5 million ounces of gold and 4.22 million tonnes of copper.

The Cadia East underground panel cave mine will be Australia’s
largest underground mine with a mine life of more than
30 years. The Cadia East project commenced construction
in April 2010 and comprised the development of the Cadia East
underground panel cave mine and the expansion of the existing
Cadia Valley processing plant capacity to 26 million tonnes
per year. Commercial production levels were achieved in January
2013, and annual production from Cadia Valley operations
is expected to increase to around 700,000–800,000 ounces
of gold and 90,000 tonnes of copper in the coming years.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)13

14(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Lihir is one of the world’s largest gold deposits. A major expansion
of the Lihir plant was completed in early 2013, enabling increased
ore processing and operating flexibility.

Lihir

Lihir
Papua New Guinea

2013 Statistics

Mining Method
Resources† – Gold
Reserves† – Gold
Total Mine Production
Total Ore Treated
Production – Gold
Cash Cost
Total Cost
EBIT Margin

Open pit
64.2 million ounces
32.7 million ounces
29,605 thousand tonnes
6,941 thousand tonnes

649,340 ounces

689 A$ per ounce of gold produced
895 A$ per ounce of gold produced

56 percent

† Resources and Reserves are stated as at 31 December 2012

The Lihir operation is located on the island of Niolam,
900 kilometres north-east of Port Moresby in the New Ireland
Province of Papua New Guinea (PNG). Lihir is located within
the Luise Volcano Caldera on the east coast of Niolam Island.
The Luise Caldera is an extinct volcanic crater that is
geothermally active.

Lihir is one of the world’s largest gold deposits, with an
operational life projected to exceed more than 30 years.
The Lihir operation is 100 percent owned by Newcrest, following
the acquisition of Lihir Gold Limited (LGL) in August 2010.

Production for the year ended June 2013 was 649,340 ounces
of gold at a cash cost of A$689 per ounce. As at 31 December
2012, Lihir had a Mineral Resource estimated to contain
64.2 million ounces of gold, including an Ore Reserve
estimated to contain 32.7 million ounces of gold.

The Lihir deposit was discovered in 1982 and extensively drilled
prior to mine construction in 1995 and the commencement
of gold production in May 1997. The operation employs
a conventional open pit mining method comprising drill,
blast, load and haul, and comprises a single orebody with
three linked open pits: Minifie, Lienetz and Kapit. Ore is
predominantly refractory sulphide ore, which is treated
using autoclaves and a pressure oxidisation process before
the gold can be recovered by a conventional leach process.

A major expansion of the Lihir process plant was completed
in the 2013 financial year, which substantially replicated the
existing process stream, including installation of an additional
autoclave and milling equipment, oxygen production capacity,
leaching capacity and flotation. This will enable increased
throughput and greater operational flexibility in treating
the different ores and stockpiles within the Lihir system.

A program to refurbish the original plant at Lihir has resulted
in improved performance in the final quarter of the 2013
financial year, and this program is expected to be completed
during the 2014 financial year, bringing the plant to a standard
consistent with its world class orebody.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)15

Newcrest is adapting Telfer to leverage its large resource base and
established infrastructure in the current gold price environment.

Telfer

Telfer
Australia

The Telfer gold-copper mines are located in the Great Sandy
Desert in The Pilbara, Western Australia, approximately
400 kilometres south-east of Port Hedland. The Telfer
mines are 100 percent owned by Newcrest. Production
for the year ended June 2013 was 525,500 ounces of gold
and 26,453 tonnes of copper at a cash cost of A$1,022 per
ounce. As at 31 December 2012, the Telfer Province Mineral
Resource was estimated to contain 20.2 million ounces
of gold and 1.18 million tonnes of copper, including an
Ore Reserve estimated to contain 11.6 million ounces
of gold and 0.66 million tonnes of copper.

The original Telfer mine reached full production in 1977.
Ongoing exploration identified a large, low-grade oxide
Mineral Resource in Main Dome and to the north-west
in West Dome, resulting in a mill expansion in 1986 and
a dump leach operation from 1988. Additional reefs on the
eastern flank of Main Dome were identified in the 1990s
and mined using narrow vein underground techniques.
This operation was suspended in October 2000 due to
escalating costs and a gold price around A$300 per ounce.

Construction of the current operation commenced in early
2003, following a comprehensive feasibility study. Telfer now
comprises two mines: Telfer Open Pit, including Main Dome
and West Dome pits and Telfer Underground, a sub-level cave
mine beneath the Main Dome open pit with a 6 million tonne
per year shaft hoisting system. Ore is combined in a large,
twin train, flotation treatment plant with a capacity to process
around 22 million tonnes per year, which produces gold doré
and a copper-gold concentrate.

2013 Statistics

Mining Method
Resources† – Gold

– Copper

Reserves† – Gold

– Copper

Total Mine Production
Total Ore Treated
Production – Gold

– Copper

Cash Cost
Total Cost
EBIT Margin

Open Pit and Underground
million ounces
million tonnes

20.2
1.18

11.6
0.66

million ounces
million tonnes

91,288 thousand tonnes
21,543 thousand tonnes

525,500
26,453

ounces
tonnes

1,022 A$ per ounce of gold produced
1,411 A$ per ounce of gold produced

27 percent

† Resources and Reserves are stated as at 31 December 2012

Gosowong

The Gosowong operation is one of Newcrest’s highest margin
mines with an exploration program seeking to extend the
current five-year mine life.

Gosowong
Indonesia

2013 Statistics*

Mining Method
Resources† – Gold
Reserves† – Gold
Total Mine Production
Total Ore Treated
Production – Gold
Cash Cost
Total Cost
EBIT Margin

Underground
2.0 million ounces
1.6 million ounces
6,793 thousand tonnes
869 thousand tonnes

312,711 ounces

621 A$ per ounce of gold produced
852 A$ per ounce of gold produced

58 percent

† Resources and Reserves are stated as at 31 December 2012
* 100 percent share

16(cid:14)NEWCREST MINING ANNUAL REPORT 2013

The Gosowong operations are located on Halmahera Island,
Indonesia, and is operated by PT Nusa Halmahera Minerals,
which is owned by Newcrest (75 percent interest) and PT
Aneka Tambang (25 percent interest), a company listed on the
Indonesian Stock Exchange and the ASX. PT Aneka Tambang
increased its stake from 17.5 percent to the current 25 percent
in December 2012.

Production for the year ended June 2013 was 312,711 ounces
of gold and 342,835 ounces of silver at a cash cost of
A$621 per ounce. As at 31 December 2012, the Gosowong
Mineral Resource was estimated to contain 2.0 million ounces
of gold and 3.1 million ounces of silver, including an Ore Reserve
estimated to contain 1.6 million ounces of gold and 2.2 million
ounces of silver.

Gold mineralisation at Gosowong was discovered by Newcrest
geologists in 1993 and comprises multiple high-grade epithermal
deposits. Mining operations commenced in 1999, initially from
the Gosowong open pit and subsequently from the Toguraci
open pit. Decline development at the high-grade Kencana
underground mine commenced in July 2005, with ore production
commencing in March 2006 and continuing to the present
day. A further cutback of the Gosowong open pit commenced
in October 2010 and was completed in the June 2013 quarter.
The Toguraci underground mine is the second underground
project developed at Gosowong, with first ore production
in September 2011. The processing plant at Gosowong has
a capacity in excess of 800,000 tonnes per year.

The Gosowong Province remains highly prospective,
and exploration activity to identify further epithermal
vein structures and link zones is ongoing.

Hidden Valley

The goldfields district of Morobe Province covers a portion of the
Papuan Orogenic belt, which hosts a number of world-class gold
and copper-gold deposits.

Hidden Valley
Papua New Guinea

2013 Statistics*

Mining Method
Resources† – Gold
Reserves† – Gold
Total Mine Production
Total Ore Treated
Production – Gold
Cash Cost
Total Cost
EBIT Margin

Open pit
3.3 million ounces
1.8 million ounces
10,869 thousand tonnes
1,844 thousand tonnes

85,004 ounces

1,613 A$ per ounce of gold produced
2,081 A$ per ounce of gold produced

(4) percent

† Resources and Reserves are stated as at 31 December 2012
* 50 percent share

Hidden Valley is a gold and silver mine located approximately
90 kilometres south-west of Lae in the Morobe Province of
PNG. Regionally, the goldfields district of the Morobe Province
covers a portion of the Papuan Orogenic belt, which hosts
a number of world-class gold and copper-gold deposits,
including Porgera and Ok Tedi. Hidden Valley is owned by
the Hidden Valley unincorporated joint venture, one of three
joint ventures between subsidiaries of Newcrest and Harmony
Gold Mining Company Limited, collectively known as the
Morobe Mining Joint Ventures.

Newcrest’s 50 percent share of production for the year ended
June 2013 was 85,004 ounces of gold and 856,328 ounces
of silver at a cash cost of A$1,613 per ounce. As at 31 December
2012, the Hidden Valley Mineral Resource estimated to contain
6.6 million ounces of gold and 115 million ounces of silver
(100 percent), including an Ore Reserve estimated to contain
3.6 million ounces of gold and 64.2 million ounces of silver
(100 percent). The Hidden Valley Mine consists of the Hidden
Valley Kaveroi and Hamata open pits located approximately
6 kilometres apart, and an ore processing facility situated
in steep, heavily forested, mountainous terrain. Both pits
employ conventional load and haul mining techniques.
The ore treatment plant was commissioned in August 2009.
In May 2010, construction and commissioning of the
Hidden Valley operation was completed and the production
ramp-up commenced.

At full capacity, the mine is expected to produce over
250,000 ounces of gold and 3.6 million ounces of silver
per year (100 percent terms) over a projected 14-year mine life.

Newcrest’s tenements in Côte d’Ivoire cover approximately 17,000
square kilometres within the Birimian Greenstone belt, known to host
a large number of significant gold deposits in the West African region.

Bonikro

Bonikro
Côte d’lvoire

2013 Statistics*

Mining Method
Resources† – Gold
Reserves† – Gold
Total Mine Production
Total Ore Treated
Production – Gold
Cash Cost
Total Cost
EBIT Margin

Open pit
2.7 million ounces
1.4 million ounces
22,402 thousand tonnes
1,896 thousand tonnes
90,350 thousand ounces

984 A$ per ounce of gold produced
1,222 A$ per ounce of gold produced

34 percent

† Resources and Reserves are stated as at 31 December 2012
* 100 percent share

The Bonikro operation is located in the central-southern portion
of the West African nation of Côte d’Ivoire, approximately
250 kilometres north-west of the commercial capital of Abidjan.
The Bonikro operation is owned and operated by LGL Mines
CI SA, an Ivoirean company in which Newcrest holds 89.89%,
following the acquisition of LGL in August 2010.

Production for the year ended June 2013 was 90,350 ounces
of gold at a cash cost of A$984 per ounce. As at 31 December
2012, the Bonikro Mineral Resource estimated to contain
2.7 million ounces of gold, including an Ore Reserve estimated
to contain 1.4 million ounces of gold.

Construction of the Bonikro mine began in May 2007, with
gold production commencing in October 2008. The operation
employs a conventional open pit mining method comprising
drill, blast, load and haul. The predominant method of gold
recovery is via carbon in leach technology, with some gold
recovered via a gravity circuit. A growth option to expand the
plant at Bonikro remains viable but has not been approved
at this point.

Newcrest is currently exploring numerous prospects within
30 kilometres of the Bonikro mine that have the potential
for additional ore supply. In addition, Newcrest holds rights
to a very large regional package of exploration tenements
in Côte d’Ivoire acquired through the acquisition of LGL
in August 2010.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)17

Projects

Growth opportunities

In the current market environment, Newcest will focus on
production from its high-quality core assets and has deferred
longer-dated studies and major capital expenditure. However,
a number of growth options have been retained for potential
future development as market conditions improve.

18(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Wafi-Golpu (50 percent)
Newcrest’s most significant undeveloped growth option
is Wafi-Golpu, located in the Morobe province of PNG, with
a large Mineral Resource estimated to contain 28.5 million
ounces of gold and 9.06 million tonnes of copper (100 percent)
as at 31 December 2012. Wafi-Golpu is owned by the Wafi-Golpu
unincorporated joint venture, one of three joint ventures with
Harmony Gold Mining Company Limited, collectively known as
Morobe Mining Joint Ventures (MMJV). A project evaluation is
ongoing with a focus in the coming year on reducing start-up
capital, improving orebody knowledge and exploration drilling,
stakeholder engagement and design work.

Namosi (69.94 percent)
Namosi is one of the largest porphyry copper systems in
the Pacific Islands, located 30 kilometres west of Fiji’s capital
city, Suva. It has a Mineral Resource estimated to contain
7.9 million ounces of gold and 7.86 million tonnes of copper
(100 percent) as at 31 December 2012. Newcrest’s Namosi
Joint Venture partners include Nittetsu Mining Co. Ltd and
Mitsubishi Materials Corporation. A pre-feasibility study to
evaluate development alternatives for the Namosi project
is currently focussed on low capital start-up options,
community engagement and regional exploration.

O’Callaghans
O’Callaghans is a tungsten and base metal deposit,
located within 10 kilometres of the Telfer process plant
within Newcrest’s existing tenure. It has a Mineral Resource
estimated to contain 0.26 million tonnes of tungsten trioxide,
0.39 million tonnes of zinc and 0.19 million tonnes of lead as
at 31 December 2012. This project has the potential to reduce
cash costs in the Telfer province through by-product credits.

Lihir Kapit Pit
The Kapit pit is a high-grade deposit north of Lienetz pit at Lihir.
The deposit is close to the coast and requires a seawall to be
built prior to mining the orebody. It is an important part of the
long-term production profile at Lihir; however, this project has
been deferred as Newcrest seeks to maximise free cash flow
through the processing of stockpiles that would otherwise
have had to be relocated. The development of the Kapit pit
can be brought forward should market conditions improve.

Other Expansions
Potential brownfields expansions at Telfer, Bonikro and
Hidden Valley are in the concept study stage. These are on
hold but remain options should market conditions improve.

Wafi-Golpu

Wafi-Golpu is a world-class deposit in a highly prospective
mineralised belt. Study work continues with a focus on
lower capital start-up options.

Wafi-Golpu
Papua New Guinea

2013 Statistics*

Mining Method

Resources† – Gold
Reserves† – Gold

Potential Open Pit
and Underground

14.3 million ounces
6.2 million ounces

† Resources and Reserves are stated as at 31 December 2012
* 50 percent share

Wafi-Golpu, located in the Morobe Province of PNG, approximately
65 kilometres south-west of the town of Lae, is an advanced
exploration project that forms part of the MMJV (Newcrest
50 percent).

As at 31 December 2012, the Wafi-Golpu Mineral Resource
was estimated to contain 28.5 million ounces of gold and
9.06 million tonnes of copper (100 percent), including an
Ore Reserve estimated to contain 12.4 million ounces of gold
and 5.44 million tonnes of copper (100 percent).

Wafi-Golpu comprises an extensive body of gold-only epithermal
style mineralisation (Wafi) and deeper porphyry related
copper-gold mineralisation (Golpu and Nambonga). Spatially, the
Golpu and Wafi deposits are located in close proximity to each
other. The Golpu deposit is located immediately north of and
below the Wafi deposit. The Nambonga porphyry mineralisation
is located to the west of the Wafi-Golpu diatreme.

The presence of a new gold zone, referred to as the ‘Northern
Zone’, was confirmed west of Golpu during the 2012 financial
year. Mineralisation has been identified over 200 metres of
strike and remains open. The emergence of the Northern Zone
demonstrates the potential of the Wafi-Golpu complex for
new gold discoveries.

A technical pre-feasibility study completed in August 2012
confirmed Golpu as a world-class deposit, with cash costs
expected to be at the bottom of the industry curve. Study
work continues, with a focus on reducing start-up capital,
improving orebody knowledge, and engaging with all
stakeholders. The Golpu development option has the potential
to underpin production growth at Newcrest in the next decade.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)19

Exploration

Focus on discovery

Three of Newcrest’s six operations and two of its growth provinces
were the direct result of Newcrest exploration activities, either
through discovery or early-stage entry and resource drilling.

20 newcrest mining annual report 2013

The near mine exploration programs have defined a new zone
of mineralisation at Lihir at Kapit North East. At Gosowong
discovery drilling was focussed on extending the mine life,
while at Telfer drilling targeted the West Dome Deeps prospect
and the prospective gap located below the Telfer Deeps
Sub-Level Cave mine and above the Vertical Stockwork Corridor.
Near mine drilling at Bonikro in Côte d’Ivoire targeted resource
extensions within the mine district.

Away from operational sites, drilling recommenced at
Namosi targeting higher grade mineralisation within the
Waivaka Corridor. The search for new discoveries focussed
on greenfields projects including the Morobe Exploration Joint
Venture tenements, Manus Island and Mt Andewa (all in PNG),
Côte d’Ivoire regional tenement package and the early stage
joint venture at Tandai (Indonesia). Consistent with strategy,
exploration projects have been turned over relatively quickly
with decisions made during the year to exit the Tandai
Joint Venture (Sumatra) and the Mt Andewa Project (PNG).

The Newcrest Minerals Group seeks to grow the Newcrest
Mineral Resources base and Ore Reserves through exploration,
innovation and collaboration. The inexpensive capture of
gold resources, bringing new provinces into the portfolio,
organic growth in existing provinces, and efficient conversion
of resources to reserves are the primary goals of the
exploration program.

Over the past five years, Newcrest has invested approximately
A$650 million in exploration and resource definition activities
across its portfolio of assets. As a result of these exploration
programs, Newcrest has added 38 million ounces of gold and
12 million tonnes of copper to Mineral Resources, and 17 million
ounces of gold and 8 million tonnes of copper to Ore Reserves.
During this period, the Company achieved its exploration
objective of increasing gold resources at a cost less than
A$20 per ounce.

During the 2013 financial year, Newcrest exploration focussed
on drill testing a number of near mine targets, advancing
drilling at major projects such as Golpu and Namosi, testing
the Newcrest portfolio of greenfields prospects and converting
existing Mineral Resources into Ore Reserves.

Resource definition drilling demonstrated the continuity
of higher grade mineralisation within the upper levels of
the Golpu deposit and improved Newcrest’s understanding
of the structural framework of the Wafi-Golpu porphyry
copper-gold system. Exploration drilling within the project
area during the year confirmed the potential for additional
higher-grade epithermal gold mineralisation.

Namosi is one of the largest porphyry copper systems in the
Pacific Islands, with a resource estimated to contain 7.9 million ounces
of gold and 7.86 million tonnes of copper.

Namosi

Namosi
Fiji

2013 Statistics*

Mining Method
Resources† – Gold
Reserves† – Gold

Potential Open Pit

5.5 million ounces
3.6 million ounces

† Resources and Reserves are stated as at 31 December 2012
* 69.94 percent share

The Namosi project, which is located approximately
30 kilometres west of Fiji’s capital city, Suva, is centred
on a district that has been periodically explored over the
past 40 years and is highly prospective for copper-gold
porphyry systems. Namosi is one of the largest porphyry
copper systems in the Pacific Islands.

In late 2007, Newcrest signed a definitive joint venture
agreement with Nittetsu Mining Co. Ltd and Mitsubishi
Materials Corporation to establish the Namosi Joint Venture
to explore for porphyry copper-gold and epithermal style
gold mineralisation in the Namosi region of Fiji. Newcrest has
a 69.94 percent interest in the Namosi Joint Venture and is the
manager of the exploration activities.

As at 31 December 2012, the Namosi Mineral Resource
was estimated to contain 7.9 million ounces of gold and
7.86 million tonnes of copper (100 percent), along with
an Ore Reserve estimated to contain 5.2 million ounces
of gold and 4.95 million tonnes of copper (100 percent).

A pre-feasibility study to evaluate development
alternatives for the Namosi project is currently focussed
on low-capital start-up options, community engagement
and regional exploration.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)21

Sustainability

Long-term commitment

Newcrest is committed to supporting positive economic and social outcomes as well
as minimising environmental impacts in the regions where we operate. We work closely
with governments, communities, civil society organisations and other local stakeholders
to ensure that Newcrest’s sustainability objectives and programs are aligned with
local priorities and expectations. We know that sharing the benefits of mining with
our host communities and managing the impacts from our mines is the right thing
to do and this philosophy underpins Newcrest’s vision to be the Miner of choice™.

Newcrest made significant progress during the financial year
on our key sustainability objectives, particularly in the areas
of governance, policies and partnerships. We also continued
to implement a wide range of sustainability and community
programs focussing on economic and social development,
health and safety and environmental management.

While the Newcrest Board has long had ultimate accountability
for our sustainability agenda, during the reporting period
our Executive Committee was strengthened to include a
dedicated position with a specific mandate and responsibility
for developing and implementing Newcrest’s sustainability
program. This enhancement to our sustainability governance
arrangements will ensure that sustainability priorities
at Newcrest continue to be developed and implemented
in line with shareholder, government, community and
employee expectations.

A number of decisions were made during the period that
strengthen our sustainability policy framework through
our support for two key initiatives aimed at increasing
transparency and supporting human rights principles,
particularly in developing countries. Newcrest resolved to
formally apply for membership to the Extractive Industries
Transparency Initiative (EITI) and the Voluntary Principles
on Security and Human Rights (VPSHR). Newcrest continues
to publish an annual Sustainability Report using the Global
Reporting Initiative framework.

While still to be fully imbedded, the eight community standards
within the Company’s Communities Policy are currently being
referenced across all sites.

The health and safety of our employees and local communities
remain Newcrest’s number one priority. In recognition of
the impact that malaria can have on the health and wellbeing
and life expectancy of our employees and local communities
near some of our operations, along with business productivity,
Newcrest developed a comprehensive malaria management
framework that includes standards and guidelines for each
site. At our offshore sites malaria control teams minimise
mosquito breeding sites and we maintain medical clinics

for rapid diagnosis and treatment. We also continued our five
year partnership with the Medicines for Malaria Venture (MMV)
which invests in antimalarial drug research and undertakes
key initiatives to continually improve malaria programs. On-site
malaria assessments and prevention training were conducted
with MMV at Lihir, Gosowong and Bonikro during the period
while a separate feasibility study aimed at eliminating malaria
from the Lihir group of islands commenced in conjunction
with ISGlobal.

Community agreements remain an important mechanism to
ensure that Newcrest is supporting community programs that
are sustainable and aligned to the priorities and expectations
of our regional and local stakeholders. During the year, formal
reviews of our existing community agreements at our Lihir,
Hidden Valley and Telfer operations were progressed and
implementation of ongoing community programs at Cadia,
Gosowong and Bonikro continued with a wide range of
successful outcomes and milestones achieved.

Community programs, particularly in developing countries,
have focussed on ventures that will provide economic wellbeing
that will endure independently of the mine. For example,
at Gosowong the Corporate Social Responsibility (CSR) program
has a focus on sustainable economic development, including
the diversification and development of local agriculture,
farming and aquaculture industries. The creation of cassava,
corn and sago plantations and associated marketing and sales
arrangements are the three main agriculture projects currently
supported by Gosowong’s CSR program. During the reporting
period the first cassava harvest took place, producing 20,000
kilograms of cassavas, which are further processed to produce
tapioca flour. These CSR agriculture projects are estimated to
increase the current average income of the families involved
by almost 40 percent. This extra money can be used to
support other business development activities and improve
living standards.

Further information about sustainability at Newcrest, including
our 2012 Sustainability Report, can be found on our website
www.newcrest.com.au/sustainability.

LIHIR TUBERCULOSIS CONTROL STRATEGY

COMMUNITY INVESTMENT AT BONIKRO

Tuberculosis (TB) is second only to HIV/AIDS as the
greatest killer worldwide due to a single infectious agent.
In collaboration with the New Ireland Province Kavieng
District Health Office and the Disease Control division
of the National Department of Health, in PNG, Newcrest
is implementing a TB control strategy at Lihir that is
targeting early diagnosis and effective management
to stop transmission of this prevalent disease in Lihir
island communities.

22(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Newcrest is partnering with the United Nations in
Côte d’Ivoire to develop a regional development framework
where community development funds provided by our
Bonikro mine are allocated to agreed projects within
the mine impact area. In April 2013, a series of agriculture
projects initiated under the partnership were formally
transferred to community stakeholders.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)23

Mineral Resources and Ore Reserves

Newcrest Mining Limited updated its Mineral Resource and
Ore Reserve estimates for the twelve month period ended
31 December 2012. Mineral Resource and Ore Reserve estimates
were previously updated for the year ended 31 December 2011.

Principal changes include updated commodity prices applied
when estimating resources and reserves, normal production
depletion from operating mines, and other adjustments
during the period from January 2012 to December 2012.

The accompanying statement of Mineral Resources and
Ore Reserves conforms to the Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves
(The JORC Code) 2004 Edition.

Group Mineral Resources, after mining depletion, are estimated
at 161.2 million ounces of gold and 20.98 million tonnes of
copper. This represents a net increase of 11.5 million ounces of
gold (7.7 percent) and 0.94 million tonnes of copper (4.7 percent).
Silver Mineral Resources are estimated at 142.2 million ounces,
which represents a net increase 25.4 million ounces of silver
(21.8 percent).

The increase in Minerals Resources at 31 December 2012
was driven by additions at Lihir (7.6 million ounces of gold),
Cadia East Underground (4.4 million ounces of gold, 0.95
million tonnes of copper and 16.8 million ounces of silver) and
Wafi-Golpu (1.0 million ounces of gold and 7.8 million tonnes
of silver)(1). These increases largely reflect exploration success
and the impact of increased metal prices on pit shells and
cut-off grades respectively.

Group Ore Reserves, after mining depletion, are estimated at
87.3 million ounces of gold and 12.10 million tonnes of copper.
This represents a net increase of 8.1 million ounces of gold
(10.3 percent) and 3.64 million tonnes of copper (43.0 percent).
Silver Ore Reserves are estimated at 77.2 million ounces,
which represents a net increase 17.8 million ounces of silver
(30.0 percent). This result is inclusive of the August 2012
Golpu Ore Reserve announcement.

The increase in Ore Reserves as at 31 December 2012 was
driven by additions at Wafi-Golpu (5.5 million ounces of gold,
2.32 million tonnes of copper and 9.9 million ounces of silver)(1),
Cadia East (1.3 million ounces of gold, 0.55 million tonnes of
copper and 11.1 million ounces of silver), Lihir (1.2 million ounces
of gold) and Namosi (0.8 million ounces of gold and 0.78 million
tonnes of copper)(2). These increases are largely driven by the
completion of the Golpu Technical Prefeasibility Study and the
impact of increased metal price assumptions.

Mineral Resources are quoted inclusive of Ore Reserves. Metal
price assumptions used for all Newcrest Mineral Resources
as at 31 December 2012 were US$1,350/oz for gold, US$3.10/lb
for copper and US$23/oz for silver. Price assumptions for Ore
Reserves are US$1,250/oz for gold, US$2.70/lb for copper and
US$20.00/oz for silver. In the case of Gosowong, a gold price of
US$1,400/oz was used to estimate Mineral Resources and Ore
Reserves, acknowledging the shorter life of the currently known
deposits. Where appropriate, resources were also constrained
spatially by a notional pit shell based on US$1,400/oz for
gold, and US$4.00/lb for copper or for underground mining,
by a shape based on the marginal cut-off grade used as a
conservative measure to remove non-contiguous mineralisation.
Cost assumptions are based on the latest approved study
for each deposit.

Mineral Resources and Ore Reserves for the Morobe Mining
Joint Ventures are based on Competent Persons statements
provided by the Morobe Mining Joint Ventures and Harmony
Gold Mining Company Limited, and are quoted as Newcrest’s
50 percent interest.

(1) Newcrest’s 50 percent share.
(2) Newcrest’s 69.94 percent share.

24(cid:14)NEWCREST MINING ANNUAL REPORT 2013

CADIA VALLEY (NSW)

Mineralisation recognised to date in the Cadia Province is
porphyry related gold and copper, hosted in rocks of Ordovician
age. Ore bodies are typically large tonnage, low-grade gold with
strong copper by-product and minor base metal associations.
Minor molybdenum and silver mineralisation is also present.
Ore is sourced by bulk mining methods from open pit and
underground operations. Exploration is ongoing within the
Cadia Province, targeting large-scale alteration systems located
within the regional tenement package.

Cadia Hill Open Pit
Cadia Hill is porphyry related sheeted vein deposit. The Cadia
Hill Mineral Resource and Ore Reserve remain unchanged
since December 2012. Cadia Hill stockpiles have decreased
by 0.09 million ounces and 8.5 kilotonnes of copper.

Open pit mining at Cadia Hill was suspended in June 2012
following completion of pit stage 3.

Cadia Extended
The Cadia Extended underground resource is located to
the north-west of Cadia Hill beneath the backfilled Cadia
Extended pit. The Cadia Extended Mineral Resource is
unchanged since December 2012. No Ore Reserve has been
estimated for Cadia Extended.

Ridgeway Underground
Ridgeway Underground is a large-scale underground mine
using sub-level cave extraction and block caving (Ridgeway
Deeps) below the sub-level cave. Since December 2012, the
Mineral Resource has been depleted by 0.18 million ounces
of gold and 23.0 kilotonnes of copper and the Ore Reserve
has been depleted by 0.18 million ounces of gold and
21.5 kilotonnes of copper.

Big Cadia
Big Cadia is centred on an area of shallow historic workings
located north of the Cadia Hill open pit and east of the
Ridgeway Mine cave zone. The mineralisation is skarn style
and has been evaluated as a gold and copper bearing Mineral
Resource for future development by open pit mining. The Big
Cadia Mineral Resource and Ore Reserve are unchanged since
December 2012.

Cadia East Underground
Cadia East is a low-grade, porphyry related gold and copper
deposit located immediately east of Cadia Hill, with mining
based on bulk underground extraction by panel caving
methods. Development has been completed for the undercut
and extraction levels associated with the initial Panel Cave
(PC1), and commercial production commenced in January 2013.

Since December 2012, the Mineral Resource has been depleted
by 0.07 million ounces of gold and 4.8 kilotonnes of copper,
and the Ore Reserve has been depleted by 0.07 million ounces
of gold and 4.7 kilotonnes of copper.

TELFER (WA)

Gold and copper mineralisation in the Telfer Province is largely
structurally controlled reefs, veins and stockwork hosted
by sedimentary rocks.

The Telfer operation is comprised of Telfer Open Pit (Main Dome
and West Dome) and Telfer Underground. Open pit mining is a
conventional truck and hydraulic excavator operation. Selective
mining techniques are used for excavation of the high-grade
reefs, while stockwork ore and waste are mined using bulk
methods. The limited quantities of near-surface oxidised
stockwork are also bulk mined.

Since December 2012, exploration has continued in the Telfer
region. Exploration is focussed on:
– Discovering additional higher grade underground resources

at West Dome and Main Dome; and

– Generation of new targets within regional tenements.

Telfer is currently the subject of various technical studies,
ranging from evaluating optimal mining solutions for
individual deposits through to province-scale evaluations.

Main Dome Open Pit
The Main Dome deposit is the largest in the Telfer area and
comprises a series of stacked stratabound reefs and discordant
stockwork within a folded dome structure. Since December
2012, the Mineral Resource has been depleted by 0.20 million
ounces of gold and 9.6 kilotonnes of copper. The Ore Reserve
has been depleted by 0.20 million ounces of gold and
8.9 kilotonnes of copper.

Since December 2012, the contained metal in open pit stockpiles
(including Main Dome and West Dome) has increased by
0.05 million ounces of gold and 2.1 kilotonnes of copper.

West Dome Open Pit
The West Dome deposit is located 2 kilometres north-west
of the Main Dome deposit and is a continuation of the folded
sedimentary sequence in a second sub-parallel structure.
Since December 2012, the Mineral Resource has been depleted
by 0.10 million ounces of gold and 3.4 kilotonnes of copper
and the Ore Reserve has been depleted by 0.10 million ounces
of gold and 3.2 kilotonnes of copper.

Telfer Deeps Underground
The Telfer Deeps Underground comprises the operating
sub-level cave (SLC) mine and selective high-grade reef mining
external to the SLC. Mineralisation includes stratabound reefs,
cross cutting veins and stockwork zones around the reefs.
Since December 2012, the Mineral Resource has been depleted
by 0.11 million ounces of gold and 7.8 kilotonnes of copper
and the Ore Reserve has been depleted by 0.11 million ounces
of gold and 7.8 kilotonnes of copper.

Vertical Stockwork Corridor (VSC)
The VSC deposit lies directly below the existing Telfer Deeps
Underground SLC. The VSC Mineral Resource and Ore Reserve
are unchanged since December 2012.

O’Callaghans
The O’Callaghans poly-metallic deposit is located approximately
10 kilometres south of the Telfer Gold Mine. The mineralisation
contains tungsten, copper, zinc and lead as a sub-horizontal
layer of poly-metallic skarn (altered limestone). The O’Callaghans
Mineral Resource and Ore Reserve are unchanged since
December 2012.

Telfer Satellite Deposits
The Telfer Satellite deposits lie within a zone located
approximately 30 kilometres from the Telfer Gold Mine.
The ‘Satellites’ are a group of structurally controlled
gold deposits, including Backdoor West, Dolphy, Big Tree
and Camp Dome. The Telfer Satellite Mineral Resource is
unchanged since December 2012, and no Ore Reserve has
been estimated for Telfer Satellite deposits.

LIHIR (PNG)

The Lihir Gold Mine is located on Niolam Island, 900 kilometres
north-east of Port Moresby in the New Ireland Province of
Papua New Guinea (PNG). Lihir is a volcanic sea mount that
rises steeply from sea level to approximately 600 metres
above sea level. The Luise Caldera, in which all of the known
ore deposits are located, is on the east coast of the island.

The Lihir Gold Mine consists of three linked open pits,
Minifie, Lienetz and Kapit, that will be mined over the life
of the project. Mining is by conventional open pit methods.

Since December 2012, the insitu pit Mineral Resource has
been depleted by 0.61 million ounces of gold and the insitu
Ore Reserve has been depleted by 0.61 million ounces of gold.
The contained metal in Lihir stockpiles has increased by
0.09 million ounces of gold.

At Lihir, the optimal extraction of mineralisation (both inside
and outside current resources) are the subject of various
technical studies.

GOSOWONG (INDONESIA)

Gosowong is located on Halmahera island in North Maluku
Province in the eastern part of the Republic of Indonesia.
Gosowong is owned and operated by PT Nusa Halmahera
Minerals, an incorporated joint venture between Newcrest
(75 percent) and PT Aneka Tambang (25 percent). For the
purpose of reporting Mineral Resources and Ore Reserves,
Newcrest reports 100 percent of the assets. Economic
mineralisation in the Gosowong province is low sulphidation,
gold-silver epithermal veining.

The Gosowong operation includes the Kencana, Toguraci
underground mines and the Gosowong open pit. Newcrest
has an active exploration program in place at Gosowong,
which is focussed on:
1. Defining additional resources within the vicinity of the

current operations at Toguraci and Kencana; and

2. Discovering a major new (+1 million ounces) deposit within

the broader Contract of Work area.

Kencana
The Kencana mineralised system is a complex intersecting
network of structures consisting of well-developed epithermal
veins and link structures. Since December 2012, the Mineral
Resource has been depleted by 0.12 million ounces of gold
and the Ore Reserve has been depleted by 0.12 million ounces
of gold.

Toguraci
Toguraci is a group of low sulphidation epithermal deposits
located 2 kilometres south-west of the Gosowong mine.
Since December 2012, the Mineral Resource has been depleted
by 0.03 million ounces of gold and the Ore Reserve has been
depleted by 0.03 million ounces of gold.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)25

Mineral Resources and Ore Reserves

GOSOWONG (INDONESIA) (continued)

NAMOSI JOINT VENTURE (FIJI)

Gosowong Pit Cut-Back
The Gosowong Pit Mineral Resource is located in the walls
and floor of the existing Gosowong open pit. Since December
2012, the Mineral Resource has been depleted by 0.02 million
ounces of gold and the Ore Reserve has been depleted by
0.02 million ounces of gold.

Gosowong Tailings Storage Facilities and Stockpiles
The Gosowong Tailings Mineral Resource and Ore Reserve
comprise reclaimed tailings deposited during the earlier
processing of high-grade ore from the Kencana deposit.
Since December 2012, minor amounts of the Gosowong
Tailings have been regularly processed.

Since December 2012, the Gosowong ‘operational’ stockpiles
(including Kencana, Toguraci and Gosowong Pit) did not have
a material change.

The Namosi tenement is located about 30 kilometres
west of Fiji’s capital city, Suva. The Namosi project is a joint
venture between Newcrest, Nittetsu and Mitsubishi Materials.
Newcrest holds a 69.94 percent interest in the joint venture
and is manager of project activities.

Waisoi
The Waisoi deposit is characterised by copper-gold-molybdenum
mineralisation hosted in and adjacent to porphyry intrusions.
The deposit includes two broad overlapping mineralised zones:
Waisoi East and Waisoi West. The Waisoi Mineral Resource
and Ore Reserve are unchanged since December 2012.

Further growth opportunities exist for Waisoi in the next
five years. The deposit is the subject of a pre-feasibility study.
The Waisoi deposit is to be extracted via bulk open cut
mining methods.

MOROBE MINING JOINT VENTURES (PNG)

The Morobe Mining Joint Ventures are three 50:50
unincorporated joint ventures between subsidiaries of
Newcrest and Harmony Gold Mining Company. The joint
venture interests are located in the Morobe Province of PNG
and include the Hidden Valley and Wafi-Golpu deposits.

Hidden Valley
The Hidden Valley Mine is located 90 kilometres south-west
of Lae in the Morobe Province of PNG. Mineralisation is
structurally controlled epithermal gold – silver stockwork
veining hosted in granite and metasedimentary rocks.

The Hidden Valley Mine consists of the Hidden Valley Kaveroi
and Hamata open pits located approximately 6 kilometres
apart. Since December 2012, the Mineral Resource has
decreased through combined resource update and depletion
by 0.35 million ounces of gold and the Ore Reserve has been
depleted by 0.05 million ounces of gold (50 percent terms).
Operational stockpiles decreased by 0.01 million ounces
of gold.

Wafi-Golpu
Wafi-Golpu comprises the Golpu porphyry deposit, the Wafi
high sulphidation epithermal deposit and the Nambonga
porphyry deposit. The deposits are situated 60 kilometres
west-south-west of Lae, on the western flanks of the
Timini Range, Morobe Province in PNG.

The Wafi and Golpu Mineral Resource and Ore Reserve
are unchanged since December 2012.

The Nambonga Mineral Resource is unchanged since
December 2012.

Wainaulo
The Wainaulo deposit lies in the Waivaka Corridor, which
is a 5 kilometres long, east-north-east trending zone of
porphyry-related mineralisation. The Wainaulo Mineral
Resource is unchanged since December 2012, and no Ore
Reserve has been estimated for the Wainaulo deposit.

OTHER REGIONS

Marsden (NSW)
The Marsden copper-gold porphyry deposit is located between
the NSW towns of Forbes and West Wyalong, approximately
150 kilometres south-west of the Cadia Valley Operations.
The Marsden Mineral Resource and Ore Reserve are unchanged
since December 2012.

Côte d’Ivoire (West Africa)
The Côte d’Ivoire operations and projects (CI) include
Bonikro, Hiré and Dougbafla-East deposits, as well as various
exploration tenements. Gold mineralisation occurs primarily
in two modes: as structurally controlled shear zones and
as stockwork veining.

The Bonikro open pit mine and the Dougbafla deposit are
located within the Oumé Project area, central to southern
Côte d’Ivoire. The Hiré deposit is located approximately
10 kilometres south-east of Bonikro. Hiré is the focus of a
feasibility study to evaluate its potential as an open pit mine
(with processing at the nearby Bonikro processing facility).

Since December 2012, the Bonikro Mineral Resource has
been depleted by 0.10 million ounces of gold and the Ore
Reserve has been depleted by 0.08 million ounces of gold.
Since December 2012, contained metal in Bonikro stockpiles
has increased by 0.02 million ounces of gold. The Hiré and
Dougbafla-East Mineral Resources are unchanged since
December 2012. No Ore Reserves have been estimated
for the Hiré and Dougbafla-East deposits.

Newcrest has an active exploration program in place within
Côte d’Ivoire, which is focussed on:
1. Defining extensions to the current resources; and
2. Greenfields exploration outside the mine and project areas.

26(cid:14)NEWCREST MINING ANNUAL REPORT 2013

2013 Mineral Resources

As at 31 December 2012

Gold and Copper Resources
(# = includes stockpiles)

Cadia East Underground

Ridgeway Underground#

Other#

Measured Resource

Indicated Resource

Inferred Resource

Total Resource

Contained Metal

Dry
Tonnes
(million)

Gold
Grade
(g/t Au)

Copper
Grade
(% Cu)

Dry
Tonnes
(million)

Gold
Grade
(g/t Au)

Copper
Grade
(% Cu)

Dry
Tonnes
(million)

Gold
Grade
(g/t Au)

Copper
Grade
(% Cu)

Dry
Tonnes
(million)

Gold
Grade
(g/t Au)

Copper
Grade
(% Cu)

Insitu
Gold
(million
ounces)

Insitu
Copper
(million
tonnes)

Com–
petent
Person

–

0.11

170

–

1.2

0.44

– 2,500

0.42

0.28

360

0.34

0.19 2,800

0.41

0.26

37.6

0.51

0.13

130

170

0.68

0.36

0.34

0.23

0.37

0.39

180

0.60

0.35

260

0.30

0.10

590

0.36

0.14

3.4

6.8

7.53

0.61

0.85

Total Cadia Province – Gold and Copper

Main Dome Open Pit#

0.43

0.07

West Dome Open Pit

Telfer Underground

Other

O’Callaghans

–

Total Telfer Province – Gold and Copper

Lihir#

Gosowong #*

Bonikro#

Namosi JV (69.94%)

Marsden

MMJV – Hidden Valley
Operations (50%)#

MMJV – Waﬁ /Golpu/
Nambonga (50%)

100

–

2.3

–

4.0

0.83

–

0.8

–

1.2

–

Total Other Provinces – Gold and Copper

Total Gold and Copper

380

390

0.57

770

4.4

–

0.65

0.08

0.53

0.06

1.3

4.2

0.32

0.03

0.57

0.54

0.76

0.28

–

0.29

9.0

–

0.07

0.25

0.34

0.24

460

0.63

0.08

410

0.53

0.06

1.20

0.31

0.42

0.33

1.9

1.4

–

150

0.31

1.9

9.6

1.1

– 1,000

–

4.7

– 1,300

0.11

0.33

260

0.10

0.38 1,600

200

0.19

0.37

1.3

–

5.4

0.08

0.17

230

1.1

–

47.7

8.99

9.2

7.1

3.7

0.2

0.36

0.24

0.30

0.05

–

0.29

–

0.22

2.0

1.3

0.11

0.17

1.3

–

0.34

–

20.2

64.2

2.0

2.7

5.5

1.3

3.3

1.18

–

5.50

0.78

–

460

0.77

0.81

130

0.7

0.64

590

0.76

0.77

14.3

4.53

93.2

10.8

161.2

21.0

Silver Resources
(# = includes stockpiles)

Cadia Valley Operations#

Gosowong#*

MMJV – Hidden Valley/
Hamata/Kaveroi (50%)#

MMJV – Waﬁ /Golpu/
Nambonga (50%)

Total Silver

Polymetallic Resources
(# = includes stockpiles)

Measured

Indicated

Inferred

Total Polymetallic

Measured Resource

Indicated Resource

Inferred Resource

Total Resource

Contained Metal

Dry
Tonnes
(million)

Silver
Grade
(g/t Ag)

0.11

–

0.8

–

1.4

–

Dry
Tonnes
(million)

2,600

4.4

460

Silver
Grade
(g/t Ag)

0.61

1.4

Dry
Tonnes
(million)

Silver
Grade
(g/t Ag)

Dry
Tonnes
(million)

410

0.31

5.0

110

0.40

3,000

1.2

4.7

570

Silver
Grade
(g/t Ag)

0.58

1.4

Insitu Silver
(million ounces)

Com-
petent
Person

56.3

3.1

57.5

25.3

142.2

Tonnes

Grade

Contained Metal

Dry
Tonnes
(million)

–

9.0

Tungsten
Trioxide
Grade
(% WO3)

–

0.34

0.25

0.33

Zinc
Grade
(% Zn)

–

0.55

0.15

0.50

Lead
Grade
(% Pb)

–

0.27

0.07

0.25

Insitu
Tungsten
Trioxide
(million tonnes)

Insitu Zinc
(million tonnes)

Insitu Lead
(million tonnes)

–

0.24

0.02

0.26

–

0.38

0.01

0.39

–

0.18

0.01

0.19

Com-
petent
Person

Note: Rounding may cause some computational discrepencies in totals.

* The ﬁ gures shown represent 100 percent of the Mineral Resource. Gosowong/Toguraci is owned and operated by PT Nusa Halmahera Minerals,

an incorporated joint venture between Newcrest (75 percent) and PT Aneka Tambang (25 percent).
Newcrest and Harmony Gold Mining Company Limited have 50–50 ownership in each of the Morobe Mining Joint Ventures. Newcrest has a 69.94 percent
share of the Namosi Joint Venture.
Competent Person
1. Ann Winchester, 2. James Biggam, 3. Geoff Smart, 4. Colin McMillan, 5. Craig Irvine, 6. Vik Singh, 7. Greg Job (Harmony), 8. Paul Dunham (MMJV).

NEWCREST MINING ANNUAL REPORT 2013(cid:14)27

2013 Ore Reserves

As at 31 December 2012

Proved Reserve

Probable Reserve

Total Reserve

Contained Metal

Gold
Grade
(g/t Au)

Copper
Grade
(% Cu)

Insitu Gold
(million
ounces)

Insitu
Copper
(million
tonnes)

Com-
petent
Person

Gold and Copper Reserves
(# = includes stockpiles)

Cadia East Underground

Ridgeway Underground#

Other#

Dry
Tonnes
(million)

Gold
Grade
(g/t Au)

Copper
Grade
(% Cu)

–

0.55

0.14

Total Cadia Province – Gold and Copper

Main Dome Open Pit#

0.43

0.07

West Dome Open Pit

Telfer Underground

O’Callaghans

–

Total Telfer Province – Gold and Copper

Lihir#

Gosowong#*

Bonikro#

Namosi JV (69.94%)

Marsden

MMJV – Hidden Valley
Operations (50%)#
MMJV – Waﬁ /Golpu/
Nambonga (50%)

100

–

4.0

–

0.8

–

2.3

–

0.83

–

1.2

–

Total Other Provinces – Gold and Copper

Total Gold and Copper

–

Dry
Tonnes
(million)

1,500

100

240

180

380

4.6

940

100

Gold
Grade
(g/t Au)

0.50

0.68

0.39

0.76

0.61

1.1

–

2.1

1.3

0.12

0.28

1.5

230

0.86

Copper
Grade
(% Cu)

0.29

0.32

0.36

0.09

0.06

0.30

0.29

–

0.37

0.47

–

1.2

Dry
Tonnes
(million)

1,500

100

110

270

180

480

4.6

940

100

0.50

0.68

0.50

0.73

0.61

1.1

–

2.1

1.2

0.12

0.28

1.5

230

0.86

Proved Reserve

Probable Reserve

Total Reserve

Contained Metal

Dry
Tonnes
(million)

Silver
Grade
(g/t Ag)

–

0.8

–

Dry
Tonnes
(million)

1,600

4.6

230

Silver
Grade
(g/t Ag)

0.66

1.4

Dry
Tonnes
(million)

1,600

4.6

230

Silver
Grade
(g/t Ag)

0.66

1.4

0.29

0.32

0.21

0.09

0.06

0.30

0.29

–

0.37

0.47

–

1.2

23.5

2.2

1.8

27.5

6.4

3.6

1.6

–

11.6

32.7

1.6

1.4

3.6

0.9

1.8

4.22

0.32

0.23

4.78

0.25

0.11

0.14

0.17

0.66

–

3.46

0.47

–

6.2

2.72

48.2

87.3

6.65

12.10

Insitu Silver
(million ounces)

Com-
petent
Person

33.1

2.2

32.1

9.9

77.2

1,2

Com-
petent
Person

Tonnes

Grade

Contained Metal

Dry
Tonnes
(million)

–

Tungsten
Trioxide
Grade
(% WO3)

–

0.28

Zinc
Grade
(% Zn)

–

0.62

Lead
Grade
(% Pb)

–

0.30

Insitu
Tungsten
Trioxide
(million tonnes)

Insitu Zinc
(million tonnes)

Insitu Lead
(million tonnes)

–

0.16

–

0.36

–

0.18

Note: Rounding may cause some computational discrepencies in totals.

* The ﬁ gures shown represent 100 percent of the Ore Reserve. Gosowong/Toguraci is owned and operated by PT Nusa Halmahera Minerals, an incorporated

joint venture between Newcrest (75 percent) and PT Aneka Tambang (25 percent).
Newcrest and Harmony Gold Mining Company Limited have 50–50 ownership in each of the Morobe Mining Joint Ventures. Newcrest has a 69.94 percent
share of the Namosi Joint Venture.
Competent Person
1. Lino Manca, 2. Steven Butt, 3. Justin Clout, 4. Nigel Clark, 5. Darryl Dyason, 6. Anton Kruger, 7. German Flores.

28(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Silver Reserves
(# = includes stockpiles)

Cadia Valley Operations#

Gosowong#*

MMJV – Hidden Valley/
Hamata/Kaveroi (50%)#
MMJV – Waﬁ /Golpu/
Nambonga (50%)

Total Silver

Polymetallic Reserves
(# = includes stockpiles)

Proved

Probable

Total Polymetallic

Corporate Governance

The Board believes that adherence by the Company and
its people to the highest standard of corporate governance
is critical in order to achieve its vision.

The Company’s corporate governance practices during
the year to 30 June 2013 are outlined below. This includes
information required under the ASX Corporate Governance
Council’s Corporate Governance Principles and Recommendations
(2nd edition) (the ASX Principles).

1. BOARD OF DIRECTORS

Role and Responsibilities
The Board sets the Company’s strategic goals and objectives,
and oversees the management and performance of the
Company’s business. The Board is ultimately accountable to
Newcrest’s shareholders for the performance of the business.
The role of the Board is described in the Board Charter, which
is available on the Company’s website: www.newcrest.com.au.

Responsibility for the day-to-day management of the
business is delegated to the Managing Director and
Chief Executive Officer (CEO), and the Executive Committee.
The Board has approved a formal Statement of Management
Authorities and Responsibilities. The Statement is supported
by a comprehensive financial control framework of
delegated authorities, including authorities delegated
to individual Executives.

Board Composition
Newcrest’s Board currently comprises 11 Directors:
two Executive Directors (the Managing Director and CEO –
Greg Robinson, and the Finance Director and Chief Financial
Officer (CFO) – Gerard Bond) and nine Non-Executive Directors.

The Chairman is an independent Non-Executive Director
and is not a former executive of the Company. The roles of
the Chairman, and the Managing Director and CEO are not
exercised by the same individual.

The names, skills and experience of each Director, and date
of appointment are set out on pages 8 and 9 of this report.
Details of changes to the Board during 2012–13 and the current
year to date are set out in the Directors’ Report on page 39.

The Board has determined that as a general rule, a Non-Executive
Director will not serve on the Board for more than 10 years.
Non-Executive Directors are required to submit themselves
for re-election every three years, and at least one Director
must stand for election each year.

Selection and Appointment of Directors
Directors regularly review the Board’s structure, size and
composition to ensure that it has the range of skills, expertise
and experience demanded by the Company’s operations.

The Company seeks to maintain a Board with a broad range
of skills focussed on resource, operational and mining-related
expertise, broad commercial and financial understanding,
and business experience and strength in other key areas
such as health, safety and environment, in each case
appropriate to meet the needs of a business of Newcrest’s
size and complexity.

Nominations to the Board are considered by the full Board.
The Directors consider that this is the most efficient way
to deal with the selection and appointment practices of the
Company. Further, ultimate responsibility for decision-making
in this area rests with the Board. For these reasons, the Board
does not have a separate nomination committee.

When considering new appointments to the Board,
suitable candidates are identified, using external professional
advisers if necessary. The Board considers the range of
skills, experience and diversity in considering candidates
for appointment.

Appointment of the Managing Director and CEO is made by
the Board, with professional advice as required.

Board Committees
There are three standing committees of the Board, which
assist the Board by providing detailed analysis of key issues.
The Board also operates a Board Executive Committee on
an ad hoc basis. Each Director receives all committee papers
and minutes, and is invited to attend all committee meetings.
In practice, all Directors attend each committee meeting other
than in exceptional circumstances. Each committee reports
its deliberations to the next Board meeting.

Each committee has its own charter. The charters can be
viewed in the Corporate Governance section on the Company’s
website: www.newcrest.com.au.

Details of the number of Board and committee meetings
held during the financial year, and each Committee member’s
attendance at the meetings are set out on page 40 of
this report.

Audit and Risk Committee
Members: John Spark (Chairman), Richard Knight, Richard Lee
and Tim Poole.

Function: This Committee assists the Board to fulfil its
responsibilities including with respect to the integrity of
the Company’s financial statements, compliance with all
accounting and financial reporting obligations and applicable
legal and regulatory requirements, risk management and
internal control processes and effectiveness, insurance, and
internal and external audit. The Committee oversees, reviews
and makes recommendations to the Board with respect to the
above matters.

The Audit and Risk Committee holds at least four formal
scheduled meetings each year, and meets as otherwise
required on an informal basis throughout the year. Full details
of meeting attendance are included in the Directors’ Report.

The Committee is chaired by, and comprised of, independent
Non-Executive Directors.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)29

Corporate Governance

Human Resources and Remuneration Committee
Members: Richard Lee (Chairman), Phil Aiken AM, Vince Gauci,
Winifred Kamit and Tim Poole.

Function: This Committee assists the Board to fulfil its
responsibilities with respect to the remuneration framework
for all employees; remuneration levels for Executive Managers
and Directors; human resources and remuneration strategies;
implementation and administration of major components of
the Company’s remuneration strategies, policies and practices;
the behavioural and cultural framework and practices; oversight
of organisational design and human capability; performance
management practices and outcomes; appointment of
remuneration consultants; and oversight of industrial
relations policies, practices and strategies. The Committee
also considers the Company’s practices in relation to diversity,
including gender diversity. The Committee’s role is to review
and advise the Board, and it holds no delegated authority
from the Board.

All members of the Committee are independent
Non-Executive Directors.

Safety, Health and Environment Committee
Members: Richard Knight (Chairman), Phil Aiken AM,
Vince Gauci, Winifred Kamit and John Spark.

Function: This Committee assists the Board in its role of
monitoring and reviewing the Company’s practices in the
areas of safety, health and environmental management,
and monitors and reviews the Company’s performance and
approach to compliance with its policies and legal requirements
in these areas. It reviews the Company’s response on issues
of concern or material non-compliance, recommendations
from management in relation to industry trends and world
standards, and reports and makes recommendations to
the Board based on the Committee’s work and findings.
The Committee’s role is to review and advise the Board,
and it holds no delegated authority from the Board.

All members of the Committee are independent
Non-Executive Directors.

Board Executive Committee
Members: The Chairman, Managing Director and CEO
(or in his absence the Finance Director and CFO) and one
other Non-Executive Director. In practice, all Directors are
invited to attend meetings of the Committee.

Function: This Committee acts as a delegate of the Board to
facilitate Board processes and decisions between scheduled
Board meetings, and at short notice. The Committee holds
the full delegated authority of the Board in relation to matters
referred to it by the Board.

Company Secretary
All Directors have access to the services and advice of the
Company Secretary. The appointment and removal of the
Company Secretary is a matter for decision by the Board
as a whole.

Stephen Creese was appointed as Company Secretary in
November 2009. He stepped down as Company Secretary
on 10 August 2012 when Scott Langford was appointed
as Company Secretary. Details of the qualifications and
experience of the Company Secretary are set out on page 40
of this report. Scott Langford is supported by Peter Larsen,
an experienced lawyer, who is Deputy Company Secretary.

Board Independence
Directors are considered independent if they are independent
of management and free from any business or other relationship
that could materially interfere with, or reasonably be perceived
to materially interfere with, the exercise of their unfettered
and independent judgment.

All Non-Executive Directors satisfy the Company’s criteria
for independence, which align with the guidance provided
by the ASX Corporate Governance Council recommendations.

All Directors are required to disclose their relevant interests, and
to give notice of any potential conflict of interest. Each Director
is required to disclose any business or other relationship that
he or she has directly, or as a partner, shareholder or officer of
a company or other entity that has an interest in the Company
or a related entity. The Board continues to monitor the
independence of each Director, and periodically reviews
its approach to assessing Director independence.

Access to Independent Advice and Information
All Directors have direct access to all relevant Company
information and to the Company’s Senior Executives.
The Board has adopted a policy which ensures that Directors
also have access to independent legal, accounting or
other professional advice as necessary to discharge their
responsibilities, at the Company’s expense.

2. BOARD AND EXECUTIVE PERFORMANCE

Board Performance Evaluation
The Board undertakes an annual review of its own
performance effectiveness and that of its committees and
individual Directors. This process is led by the Chairman based
on a formal questionnaire and evaluation provided to each
Board member. Periodically, an external consultant is retained
to assist in the process. The outcomes of the evaluation are
reviewed and considered by the Board, and changes effected
where required.

In 2012, the Board engaged an independent consultant to
undertake its annual review, which was finalised in October
of that year. The performance review process in 2012 included
interviews with Directors and Senior Executives. The review
was wide-ranging, and its outputs and conclusions, which
were positive, were analysed and presented to the Board.

The review concluded that the Board and its committees
were functioning effectively. Consideration to improve
the functionality and performance of the Board and its
committees occurs at regular intervals. The practice of having
all Directors present at all committees is strongly supported.

30(cid:14)NEWCREST MINING ANNUAL REPORT 2013

4. RESPONSIBLE AND ETHICAL BEHAVIOUR

Code of Conduct and Values
The Code of Conduct reflects the Company’s values,
and provides a framework within which its entire workforce
functions, including in its interaction with stakeholders.
This helps to ensure the appropriate degree of integrity
in the Company’s dealings. Company employees have been
trained in the values and expected behaviour under the Code
to ensure compliance ’in action‘. The Code of Conduct can be
viewed in the Corporate Governance section on the Company’s
website: www.newcrest.com.au.

The Company also has a comprehensive range of corporate
policies which detail the framework for acceptable corporate
behaviour, and these are subject to periodical review. A number
of the policies referred to in the Code of Conduct may be
found on the Company’s website, including Safety and Health
Policy, Diversity Policy, High Performance Policy, International
Employees Policy, Communities Policy and Environmental Policy.

The Company has a Speak Out Policy, which encourages
employees and contractors to raise concerns or to report
instances of misconduct, or suspected misconduct, on an
anonymous basis. Complaints are referred to an independent
third party service provider for initial consideration. Issues
identified are then reported to management, so that concerns
can be addressed and, where appropriate, investigated further.

Securities Dealing Policy
The Company has a Securities Dealing Policy, which was last
revised in August 2012.

It provides for ’prohibited periods‘ (or ’blackout periods‘) when
staff must not deal in the Company’s securities. The blackout
periods around the half year and full year results commence
immediately following the close of the half and full year result
period. A blackout period also applies from the date two weeks
prior to the Annual General Meeting (AGM). These blackout
periods end immediately after the announcement of the
Company’s quarterly, half year and full year results, and
the AGM results at the conclusion of the AGM.

The policy prohibits the use by employees of derivatives
such as caps, collars, warrants or similar products in relation
to Company securities, including shares acquired under the
Company’s equity incentive schemes, whether or not they are
vested. The policy also prohibits the entry into transactions
in associated products which operate to limit the economic
risk of their security or interest holdings in the Company.
The Directors and the Company Secretary are not permitted
to enter into margin loans in relation to Newcrest securities
at any time and other designated employees must seek
approval from the Company Secretary if they intend to
enter into such transactions.

The policy can be found in the Corporate Governance section
on the Company’s website: www.newcrest.com.au.

Executive Performance Evaluation
The Company has in place a performance appraisal system
for Executives, which is designed to help measure and optimise
performance. Details regarding the Company’s performance
management system for the period 2012–13 are set out in
the Remuneration Report on pages 56 to 69.

The Board annually reviews the performance of the CEO against
agreed performance measures and other relevant factors.

The CEO undertakes a similar exercise in relation to each
of the Senior Executives. The outcomes of the CEO’s annual
performance review of the Senior Executives are then approved
by the Board.

Each of the Company’s Senior Executives (including the
Managing Director and CEO, and the Finance Director and CFO)
has undergone performance evaluation during the 2012–13
reporting period, in accordance with the Company’s Work
Performance System.

3. DIRECTORS’ FEES AND EXECUTIVE REMUNERATION

Directors’ Fees
Remuneration of Non-Executive Directors is fixed rather
than variable, so that Board membership of a high standard
is maintained and market remuneration trends reflected.
Remuneration levels and trends are customarily assessed
every two years, with the assistance of independent
remuneration consultants as required, and adjusted
where necessary to align with Board remuneration levels
in comparable Australian-listed companies.

The total annual remuneration paid to all Non-Executive
Directors may not exceed the maximum amount authorised
by the shareholders in general meeting. The total ’fee pool‘
is currently $2,700,000 and was approved by shareholders
in 2010. The Board has determined not to seek shareholder
authorisation for an increase in the fee pool in 2013 as
Non-Executive Director fees remain at the level set in
December 2010.

Statutory superannuation contributions and fees that
a Non-Executive Director agrees to salary sacrifice (pre-tax),
are included in the calculation of the total amount of Directors’
fees payable.

Executive Remuneration
The Company’s Remuneration Policy recognises the different
levels of contribution within management to the short-term
and long-term success of the Company. A significant proportion
of each Senior Executive’s remuneration is placed ‘at risk’, and
is dependent upon both personal and Company performance
formally appraised each year.

The Board has established with the Managing Director and
CEO specific personal and corporate performance objectives
for the short- and long-term. The performance of the Managing
Director and CEO is formally assessed against these objectives
annually. The assessment helps determine the level of
‘at risk’ remuneration paid to the Managing Director and
CEO. The Human Resources and Remuneration Committee
must approve contracts with remuneration consultants.
Remuneration recommendations made by remuneration
consultants in relation to Key Management Personnel must
be made to the Non-Executive Directors on the Committee.

Details of the Company’s policies and practices in relation
to both Non-Executive Directors’ and Senior Executives’
remuneration, and how they relate to Company performance,
are set out in the Remuneration Report on pages 56 to 69.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)31

Corporate Governance

5. SHAREHOLDER COMMUNICATION, CONTINUOUS
DISCLOSURE AND MARKET COMMUNICATIONS

The Board recognises the importance of keeping the market
fully informed of the Company’s activities and of stakeholder
communication in a timely, balanced and transparent manner.

The Company’s Continuous Disclosure Policy establishes a
system and procedures to ensure that Company information
considered to be material is announced immediately to the
market through the ASX.

The Company also has a policy and procedures on
public announcements, investor relations and external
communications, which establishes a procedure and
controls around:
a) the internal approval process for the approval and issuing

of public releases and documents by the Company,
including media releases;

b) the way in which the Company communicates with

the investment community and shareholders through
Investor Relations;

c) external communications generally by sites; and
d) the appointment of designated people authorised

to speak on behalf of the Company.

All releases made to the ASX are placed immediately on
the Company’s website. Other key communications are also
placed immediately on the website. General and historical
information about the Company and its operations is also
available on the website.

The Board’s policy is to seek to achieve effective
communication with its shareholders through compliance
with ASX Listing Rules and Corporations Act 2001 reporting
requirements, webcasting the AGM, the half year and full year
financial results presentations, and the production results
at the end of each quarter. The Company provides advance
notice to analysts in respect of briefings, and posts the
relevant corporate dates for the year on its website:
www.newcrest.com.au.

The Company maintains a record of meetings with analysts,
including the date, location and persons attending.

Shareholders may receive electronic versions of the notice of
meeting, annual report and dividend notices, and can request
to receive key investor communications by email.

The Company holds an accessible and informative AGM and
the full text of the notice of meeting is placed on the website
along with links to the webcast. Shareholder questions at the
AGM are encouraged by the Chairman. Any shareholders unable
to attend may submit written questions to the Chairman prior
to the meeting. Shareholders also have the opportunity to
meet informally with Directors and Senior Executives following
the meeting.

The Company’s auditors attend the AGM and are available
to answer questions relating to the conduct of the audit, the
preparation and content of the auditor’s report, the accounting
policies adopted by the Company in the preparation of its
financial statements, and the independence of the auditor
in relation to the conduct of the audit.

6. DIVERSITY

Newcrest places a high value on diversity. A full report
on diversity and the Company’s practices, initiatives and
performance against its stated objectives can be found
on pages 34 to 37 of this report.

32(cid:14)NEWCREST MINING ANNUAL REPORT 2013

7. AUDIT AND RISK MANAGEMENT

The Board recognises that risk management and internal
controls are fundamental to sound management, and that
oversight of such matters is a key responsibility of the Board.
The Company has a detailed risk management and internal
control framework incorporating policies and procedures,
which set out the roles, responsibilities and guidelines
for identifying and managing material business risks.

The Board reviews the effectiveness of management’s
implementation of risk management and of the internal
control systems at least annually. The Audit and Risk
Committee assists the Board with respect to oversight
of risk management policy, and of effective internal controls
and risk management processes.

Management of Risk
Newcrest’s Risk Management Framework is used to
identify and evaluate risk events, establish robust controls
and mitigation strategies, and to provide an assurance
process in relation to effectiveness and implementation
of these. The aim is to provide an overarching, uniform and
consistent framework for identifying, assessing, monitoring
and managing material business risks. These risks include
strategic, corporate and commercial, major hazard (including
operational, health and safety, and environmental), and
project management risks. The Company also regularly reviews
and tests crisis management and emergency management
systems. Risk profiles, including identification and assessment
of related controls, are reviewed and updated by management,
and reported to the Audit and Risk Committee at each
committee meeting.

Internal Control Framework
Newcrest has controls in place that are designed to support
the Risk Management Framework, safeguard the Company’s
interests, and ensure the integrity of its financial reporting.
Key controls include:
– An integrated, robust planning and budgeting process
delivering a five-year strategic plan and linked detailed
budget annually. The Board reviews the plan, and approves
the budget. Progress against performance targets is
reported against monthly, and supplemented regularly
with forecast updates.

– A comprehensive capital approval process controlling

the authorisation of capital expenditure and investments.
Key capital decisions are subject to technical and
commercial review.

– A system of delegated authorities: This cascades authority
levels for expenditure and commitments from the Board,
the delegation to the Managing Director and CEO, and the
further cascading of authorities from the Managing Director
and CEO to the rest of the Company.

– Appropriate due diligence procedures for acquisitions

and divestments.

– The annual preparation of a capital strategy document

setting out the key capital structure, liquidity and cash flow
at risk objectives of the Company. In addition, the Company’s
Treasury Department has detailed policies for the management
of debt, commodities and currency exposures, investment
of surplus cash, and interest rate risk management.
– A system of financial control processes to ensure the

integrity of financial reporting.

– Each half year, the completion by management of a detailed
internal control questionnaire covering financial stewardship,
and legal and risk issues.

Management Assurance
At the Board meetings to approve Newcrest’s half yearly
and annual financial statements for the financial year ended
30 June 2013, the Board received and considered written
statements from the Managing Director and CEO, and Finance
Director and CFO in relation to Newcrest’s system of risk
oversight and management, and compliance with internal
controls. These assurance statements were supported by
an internal process of compliance confirmations by Executive
General Managers and General Managers responsible for
operations and key functions.

The certificate of management assurance stated that the
financial statements had been prepared in conformity with
generally accepted accounting principles, and that they gave
a true and fair view of the state of affairs of the Company.
The certificate also stated that the risk management and
internal compliance and control systems were operating
effectively in all material respects in relation to the reporting
of financial risks.

The Directors made comprehensive enquiries of management,
the Audit and Risk Committee, and other relevant parties as to
the content of the proposed financial statements, and applied
their knowledge of the affairs of the Company in reading and
approving the accounts.

8. SUSTAINABILITY

Sustainability is an important part of the Company’s vision
to develop successful mining operations through balancing
economic prosperity, environmental quality and social
responsibility. The Company is a signatory to the Australian
Minerals Industry Sustainability Code ‘Enduring Value’,
and integrates environmental and social management into
all facets of the business. A Sustainability Report detailing
the Company’s environmental and social performance is
prepared each year. This can be found on the Company’s
website: www.newcrest.com.au, in the Sustainability section.

External Audit
The Audit and Risk Committee is responsible for the
selection, evaluation, compensation and, where appropriate,
replacement of the external auditor, subject to shareholder
approval where required. The current external auditor is
Ernst & Young.

The Audit and Risk Committee ensures that the lead external
audit partner and quality review partner must rotate off
that role every five years or, if they have acted in that capacity
for five out of the last seven successive financial years, will
be subject to a two year ‘cooling off’ period following rotation.
The Audit and Risk Committee and the Board may resolve to
extend the five year period by not more than two successive
years, subject to compliance with the Corporations Act 2001.

The Audit and Risk Committee meets with the external auditor
throughout the year to review the adequacy of the existing
external audit arrangements, with particular emphasis on the
effectiveness, performance and independence of the audit.

The Audit and Risk Committee receives assurances from the
external auditor that they meet all applicable independence
requirements in accordance with the Corporations Act 2001,
and the rules of the professional accounting bodies. This
independence declaration forms part of the Directors’ Report.

The external auditor attends the AGM and is available to
answer shareholder questions regarding aspects of the
external audit and their report.

Details of the services provided by Ernst & Young to the
Company, and the fees paid or due and payable for those
services are referred to the Directors’ Report and set out
in Note 38 of the Financial Report.

Internal Audit
The Company has an internal audit function which is managed
by the Manager Internal Audit reporting through to the Finance
Director and CFO, and supported by internal resources and
external consultants. The function undertakes audits of critical
finance, business and operational processes, and tests key
internal controls. The annual internal audit plan is structured
to cover all material operating sites and processes on a rolling
program. It is also based on an evaluation of all the risks to
Newcrest. Findings are regularly reported to senior management
and the Audit and Risk Committee, and corrective actions are
monitored, reviewed and reported.

Material findings are reported to the Board. The internal audit
function and the Audit and Risk Committee have direct access
to each other, and have the necessary access to management
to seek information and explanations. The Chairman of the
Audit and Risk Committee has direct access to the Manager
Internal Audit.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)33

Diversity

Diversity at Newcrest Mining incorporates differences
that relate to gender, age, ethnicity and cultural background.

It also extends to differences in background and life
experience, communication styles, interpersonal skills,
education, functional expertise, and problem-solving styles.
The Company approach recognises that individuals are
important and that each person has a unique contribution
to make. The benefits of diversity are maximised when
individuals feel included and able to participate fully.

Diversity and inclusion at Newcrest are business imperatives,
and the Company approach is based on four key drivers:
– a vision to be the ‘Miner of choice’™;
– a high-performance culture which embraces diversity;
– a desire to attract, recruit, engage and retain

diverse talent; and

– a belief that our workforce should reflect the communities

in which Newcrest operates.

Diversity at Newcrest is led by the Board and the
Executive Committee (ExCo) together with the ExCo Diversity
Subcommittee, and is driven by recognition that an inclusive
culture and diverse workforce supports high performance.
The Diversity Subcommittee is the primary governance body
for overseeing the execution of the diversity and inclusion
agenda. The Subcommittee is chaired by the Executive General
Manager People and Communications, and has other senior
business representatives as members including the Executive
General Manager Minerals and the Executive General
Manager Lihir.

Underpinned by Newcrest’s values, the Diversity Policy
outlines how Newcrest aims to support a diverse workforce,
including treating employees fairly, setting measurable targets,
ensuring legislative compliance and supporting diversity in its
communities. Newcrest’s Diversity Policy actively promotes a
culture that values difference. The Diversity Policy is published
on the Newcrest website at www.newcrest.com.au/about-us/
company-policies, and is able to be accessed by all employees
via the internal portal. The policy is also displayed at all
sites. Newcrest’s standards and procedures are reviewed
and updated annually, ensuring that they support the
objectives set.

MEASURES

The Board has set clear objectives to support greater diversity
across the Company. Progress is monitored quarterly and
assessed annually, via the Diversity Subcommittee and the
Board’s Human Resources and Remuneration Committee,
which has its diversity responsibilities reflected in its Charter.
A number of these objectives, relate to gender and achieving
gender diversity. Three measures identified to improve gender
diversity in Newcrest were approved by the Board in 2010.
These included establishing a Diversity Subcommittee to
provide oversight and report bi-annually to ExCo and the
Board on Newcrest’s diversity initiatives and programs.

The Diversity Subcommittee was established in 2011 and meets
quarterly. Now in its third year, the Diversity Subcommittee has
provided support and feedback on activities and approaches
to address barriers identified, as well as providing an increased
focus and profile for diversity. The Diversity Dashboard
prepared for the Diversity Subcommittee provides key data,
and assists the Subcommittee to track Newcrest’s progress
against the approved objectives. In addition, diversity data
is included in the monthly report to Executive Committee
and on a quarterly basis to the Board’s Human Resources and
Remuneration Committee. With the Diversity Subcommittee
in place, a new measure for the 2013 financial year was adopted
by the Board, to support Newcrest’s commitment to increasing
participation of women in manager roles and to build a pipeline
of female people leaders. The new measure is to increase
the proportion of women in management levels 2–4 by
15 percent by 31 December 2013. Level 2 to level 4 roles refer
to management roles classified from Supervisor through
to General Manager.

These reportable measures (see Gender Diversity section,
page 36) reflect Newcrest’s commitment to three main
focus areas for increasing the representation of women in
Newcrest’s workforce: attraction, retention and promotion.

Newcrest has in place additional measures, together with
an action plan which sets out the specific actions that will
be taken, to further increase diversity including age, ethnicity
and cultural diversity. The Diversity Action Plan includes specific
initiatives to support the attraction and retention of a diverse
workforce. A key measure is the training and development of
employees who are from the local communities. Participation
of locals and nationals in the Superintendent Program has
significantly increased this year with 23 percent of those
selected for the program being locals or nationals. Approximately
half of the participants in each program have been from Lihir
in Papua New Guinea (PNG).

PROVIDING PATHWAYS TO EMPLOYMENT
AND CAREERS

Newcrest recognises that people are its most important
asset, and that diversity is critical in contributing to the local
communities in which it operates by creating and providing
employment opportunities within these communities.
The overwhelming majority of employees at Newcrest’s
operations in Indonesia, PNG, West Africa and Fiji are nationals
and locals. Newcrest is committed to developing its people
across the Group, and to building a workforce – including
the leadership team – that reflects the communities
in which it operates.

Newcrest has in place a number of programs to support
both men and women from culturally diverse backgrounds
to develop skills required to expand career opportunities.
These include programs for members of the community
seeking employment opportunities and those employed
by the Company.

34(cid:14)NEWCREST MINING ANNUAL REPORT 2013

The Telfer Aboriginal Training and Employment Strategy
(TATES) at Telfer in Western Australia has been in place since
2002. TATES has provided a range of training and employment
opportunities to the local indigenous community. Over the life
of the strategy, more than 400 indigenous people, primarily
members of the local Martu community, have participated in
training and employment programs delivered through TATES.
While some participants have been employed by Newcrest,
others have accessed employment with other organisations
as a result of the skills and knowledge they have gained
through TATES.

Currently, TATES supports more than 30 indigenous
people working under various employment arrangements,
including full-time and part-time employment for Newcrest or
contractors Pilbara Logistics, ESS Remote and Birra Personnel
Resources, a part Martu owned business. Critical to the
success achieved has been the support provided to Aboriginal
and Torres Strait Islander people, including by the Telfer
Aboriginal mentors who are part of the Newcrest Community
Relations team. This approach has contributed to improved
workforce participation for the Martu and the wider Aboriginal
and Torres Strait Islander community at Telfer over the life
of the program.

At Cadia in Orange, New South Wales, a mentoring program is
providing valuable support and opportunities for Apprentices,
including both men and women, some of whom are older
workers. The program provides new Apprentices with access
to a mentor through a formal program established in 2012,
providing valuable support to a number of women and older
workers with no previous training or mining experience.

Established in November 2012, the Cadia Women’s Network
provides participants with access to a network and information
about issues specific to women in mining. The Network
meets monthly over lunch, and the sessions have included
presentations by senior women about their own careers,
the opportunities they have had and the challenges they have
experienced. Other topics explored have included work–life
balance, professional behaviour, dealing with work colleagues,
and strategies for overcoming barriers to career progression
and participation for women.

The Frontline Manager Program and the Superintendent
Program are designed to enhance leadership skill and to
provide participants with the knowledge required to undertake
leadership and manager roles. Access to these programs
has been identified as an important enabler, providing
national employees with the opportunity to gain the skills
and knowledge required to meet the inherent requirements
for leadership and management positions. They are also
contributing to providing the Company with a diverse pool
of candidates for these critical roles.

On Lihir Island, Newcrest conducts a business administration
program on-site. This course aims to bring 10 young Lihirian
women into a workplace each year from the surrounding
villages. This program is a pathway for women into a range
of job roles on the mine site. Initiated by the Company’s senior
Lihirian women, this program includes the opportunity for
participants to develop English language skills – identified
as critical to improving their ability to be promoted. This year,
eight local women have participated in the program.

The Trainee Business Administration Program is Newcrest’s
key education program for young Lihirian woman. Modules
within this program include workplace harassment, bullying
and HIV awareness.

A growing issue in PNG is violence against women. The United
Nations (UN) has stated that it is at pandemic levels. It is also
an issue that is rarely spoken about. The Company has provided
access to a number of education and awareness raising
opportunities for employees, providing information and
support to Newcrest staff. This may also assist in getting
the messages back to families and villages, and contribute to
breaking the taboo of silence around this subject. The Walking
in Her Shoes Workshop (developed in sub Saharan Africa)
takes participants through a case study that explores the
experience of a victim of violence, and formed part of the
Graduate Conference attended by 47 graduates. Newcrest
also conducted a ‘national house cry’ on-site in May 2013,
on the issue of violence against women, which was well
attended by Newcrest employees.

Graduate, Traineeship and Apprenticeship programs at Lihir
currently provide access to formal training and employment
for more than 320 people from the local and broader community.

Newcrest, in partnership with the Western Australian
Department of Sport and Recreation, have conducted
the Desert Sport Development Program (DSDP) for the
Martu people of the Western Desert for the past 10 years.
This program involves the continuing development
of sport, including Australian Rules football, softball
and children’s sports including Little Athletics, and the
management of regular multi-community sports carnivals.

In 2010 the Western Desert Sports Council or Ngurra
Kujungka Inc. was established to oversee the DSDP operations,
including the Western Desert Football and Softball Leagues,
the tri-annual Sports Festivals, the organisation of sport and
people development, fundraising and management of funds.
Ngurra Kujungka and its programs are an excellent example
of community development, of people and communities
growing and being empowered to take responsibility for
their own development.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)35

Diversity

GENDER DIVERSITY

The proportion of women employees across the Company, and women in senior roles are shown below:

Women at Newcrest – as at 30 June 2013

Board

Senior Executives

Other employee groups

Number
of Women

Representation (%)
30 June 2011

Representation (%)
30 June 2012

Representation (%)
30 June 2013

1,047

12.5%

13%

12.5%

10%

13%

10%

13%

The following table summarises Newcrest’s diversity measures and the performance against each of these measurable objectives
as at 30 June 2013.

Diversity Measure

To increase the proportion of women
selected for the graduate program
from 25% as of 31 December 2010
to 33.3% as at 31 December 2013.

That 33.3% of succession plans for
all level 2 to level 5 roles will have
at least one female included by
31 December 2013.

Increase the proportion of women
in management levels 2–4 by 15%
by 31 December 2013.*

*Measure adopted in 2012.

31 Dec 2013
Target

30 June 2011

30 June 2012

30 June 2013

Comments

33.3%

26.0%

29.5%

24.3%

33.3%

25.0%

27.2%

38.0%

15.0%

8.7%

21.3%

We expect to achieve the 33.3% target
by 31 December 2013. As at the date of
this report, the proportion is 29.5%.

Succession plans for 2013 were finalised
in April and will continue to be undertaken
annually – 38% of level 2–4 roles have
at least one woman included.

The participation of women in Newcrest
workforce at management levels 2–4 has
increased over the reporting year, and has
exceeded the target.

Newcrest’s commitment to diversity and inclusion is focussed
both internally and externally. Company participation in groups
such as Women in Resources Victoria (WiRV), Women in
Mining New South Wales (WIMIN), and the Australian Mining
and Minerals hosted Australian Women in Resources Alliance
has provided an opportunity to support the work undertaken
by these groups to provide opportunities and a voice to
women in the mining and resources sector, and also for
the Company to promote further the benefits of diversity.
Through sponsorship opportunities, Newcrest is able to
support the work undertaken by the communities in which we
operate and also within the broader mining sector. Internally,
diversity and inclusion has been promoted and awareness
raised through a range of programs, projects and activities.

EMPLOYEE FEEDBACK

Employee consultation, communication and feedback
are important factors in identifying and addressing issues,
and contribute to maintaining a positive relationship with
all employees at Newcrest. As part of a review of parental
leave, interviews have been conducted with employees who
have accessed parental leave in the past two years, providing
valuable information about the employees’ experiences.
This has assisted in illuminating areas of the process requiring
additional focus, resulting in changes that are anticipated
to improve the experience of employees accessing parental
leave and returning to work from parental leave, and may also
contribute to improved employee retention and satisfaction.

EMBEDDING FLEXIBILITY

Newcrest’s flexibility agenda continues to evolve and supports
the retention of diverse talent. While most people working
with Newcrest are looking for a full-time role, increasingly
people are looking for flexibility. This is an important enabler
for some employees, particularly those with caring and
other domestic responsibilities. A small number of employees
have formal arrangements in place in relation to flexible work,
which includes altered start and finish times, and working
from home for part of the week. Many others choose to access
flexible work arrangements on an informal basis. Additionally,
as part of creating a flexible working culture, many employees
use technology to enable them to work remotely.

Flexible work at Newcrest also includes part-time work
arrangements and job share. These options are not limited
to corporate offices. At the Company’s mine site at Telfer
in Western Australia, all employees work on a fly-in fly-out
(FIFO) roster. FIFO is a method of employing people in remote
areas and is common in large mining states across Australia.
The employees are flown to the worksite where they work
for a number of days, and are then flown back to their point
of hire for a number of days of rest. At Telfer, the Company
has six employees sharing three roles. One of these employees
is a woman. This arrangement has supported each of these
employees to meet either caring responsibilities or other
domestic responsibilities.

36(cid:14)NEWCREST MINING ANNUAL REPORT 2013

The opportunity to purchase up to four weeks of additional
leave has been an important inclusion in the suite of employee
benefits, and has enabled employees to access leave to meet
individual needs. The opportunity has been taken up by both
men and women.

Internal communication has played an important role in
continuing to raise awareness of the availability of flexible
work arrangements. Articles focussed on employees who
are accessing flexible work arrangements have been effective
in delivering important messages about the Company’s
commitment to diversity and flexibility.

PROMOTING INCLUSION AND BUILDING CAPABILITY

Newcrest recognises that every person is unique and has
a different journey. This philosophy inspired the Company
to share its diversity and inclusion story via individual digital
stories, created and told by Newcrest employees. It was
intended that the stories would be used both internally
and externally to:
– raise awareness of and promote diversity within Newcrest;
– provide information about different roles within Newcrest,

and how people came to be in those roles;

– promote Newcrest as an employer with a raft of opportunities

for all, including those who may have experienced some
disadvantage in the employment market as result of
their diversity;

– promote traditionally male-dominated job roles to women; and
– build our profile as Miner of choice™.

The aim was to develop individual stories that reflected the
level of diversity within the Company, as well as showcasing
the employee’s own experience using the theme of
‘my diversity’ as a starting point. A ‘hands off’ approach
was adopted as a core element in the project, which allowed
participants to tell the story they wanted to tell. Among
others, the stories have given a voice to women working
in mining in a variety of roles, and have provided an insight
into the pathways that have led to their rewarding and
challenging careers.

While the stories have provided an opportunity to promote
internally diversity and inclusion, equally rewarding has been
the opportunity to raise the profile and awareness of mining
and the jobs that people do in the industry, particularly among
young people through a number of different opportunities
such as the work undertaken with the Careers Education
Association Victoria (CEAV). Sharing Newcrest’s stories with
the CEAV and Career Educators working with young people
has led to an opportunity to contribute to the content of
resources produced by the CEAV for use in schools. A link
to the Newcrest diversity digital stories is a further resource
for students, accessible via the CEAV website and part of
the resources available to support career educators working
with students.

The stories have had a broad appeal and there has been the
opportunity to share the stories with a wide range of people.
One example is that of ‘Telfer Western Australia, Truck Driver’.
The employee is an Aboriginal woman who is passionate about
improving participation of Aboriginal and Torres Strait Islander
people. To support her goal, Newcrest has provided copies
of her story to organisations and individuals working with
Aboriginal and Torres Strait Islander people, to help them
prepare for and/or secure employment. This has included
sharing the story with students in remote regions of
Western Australia.

The Company recognises the benefits of bringing together
talented people of different thinking styles, gender, age,
ethnicity and cultural backgrounds. In particular, this helps
create an environment where innovative ideas are fostered,
to help Newcrest to realise its potential and meet corporate
goals in a global market. It also enables Newcrest to foster
stronger problem-solving capability, enhanced community
connections, and increased morale, motivation and engagement.

The benefits of a diverse workforce are realised and maximised
when individuals feel included and able to contribute fully.
Newcrest is therefore committed to strengthening the
capability of Newcrest leaders to manage in a more inclusive
way, which will also contribute to the high performance culture.
Internal leadership development modules that specifically
focus on diversity and inclusion have been developed and
incorporated into programs such as the Leader Induction, the
Frontline Manager Program and the Superintendent Program.
The material covers inclusive leadership, the benefits of diverse
teams, and Newcrest’s commitment to diversity and inclusion.
In addition, to reduce the possibility that ideas and decisions
are constrained by biases and perceptions, Newcrest has
also incorporated modules on unconscious bias into all
leadership training.

Raising unconscious interpretations into conscious awareness
is an important step in creating an inclusive culture. It is
anticipated that access to these modules will support program
participants to develop the capability, knowledge and skills
required to be effective inclusive leaders and to more effectively
manage diverse teams, and that this will also contribute to
improved outcomes in key activities that impact on diversity,
including performance reviews and development discussions,
recruitment and selection, and talent identification.

Diversity has had an increased profile at significant internal
events, including the Graduate Conference, the Managing
Director’s Conference (held semi-annually for all General
Managers and Executive General Managers), and the Human
Resources Community of Practice Workshop, contributing
further to ensuring diversity and inclusion remains on
the agenda.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)37

Financial Report
For the year ended 30 June 2013

Directors’ Report

Operating and Financial Review

Remuneration Report

Auditor’s Independence Declaration

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flows

Consolidated Statement of Changes in Equity

Notes to the Financial Statements

Directors’ Declaration

Independent Auditor’s Report

123

124

38(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Directors’ Report

The Directors present their report together with the consolidated
financial report of the Newcrest Mining Limited Group, comprising
the Company and its controlled entities, for the year ended
30 June 2013 and the Auditor’s Report thereon.

DIRECTORS

The Directors of the Company at any time during the financial year
were, and until the date of this report are:

Don Mercer

Non-Executive Chairman

Greg Robinson

Managing Director and Chief Executive Officer

Gerard Bond

Finance Director and Chief Financial Officer

Philip Aiken

Non-Executive Director (appointed 12 April 2013)

Vince Gauci

Non-Executive Director

Peter Hay

Non-Executive Director (appointed 8 August 2013)

Winifred Kamit

Non-Executive Director

Richard Knight

Non-Executive Director

Rick Lee

Tim Poole

Non-Executive Director

John Spark

Non-Executive Director

All Directors held their position as a Director throughout the entire
year and up to the date of this report, except as stated above.

PRINCIPAL ACTIVITIES

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

CONSOLIDATED RESULT

The loss after tax attributable to Newcrest shareholders
(‘Statutory (Loss)/Profit’) for the year ended 30 June 2013
was a net loss of $5,778 million (2012: profit of $1,117 million).

Refer to the Operating and Financial Review for further details.

DIVIDENDS

The following dividends of the Company have been paid,
determined or recommended since the end of the preceding year:
– Final (15% franked) dividend for the year ended 30 June 2012
of 23 cents per share, amounting to $176 million, was paid
on 19 October 2012.

– Interim unfranked dividend for the year ended 30 June 2013
of 12 cents per share, amounting to $92 million, was paid
on 16 April 2013.

The Directors have determined that there will be no payment
of a final dividend for the year ended 30 June 2013.

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

A copy of the Auditor’s Independence Declaration as required
under section 307C of the Corporations Act 2001 is attached.
During the year, other assurance related services and advisory
services were provided by Ernst & Young (auditor to the Company)
– refer Note 38 to the financial statements. The Directors are
satisfied that the provision of these services did not impair
the Auditor’s Independence.

ROUNDING OF AMOUNTS

Newcrest Mining Limited is a company of the kind referred
to in ASIC Class Order 98/100 and, in accordance with that
Class Order, amounts in the Directors’ Report and the Financial
Report are rounded to the nearest $1,000,000 except where
otherwise indicated.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Managing Director reports monthly to the Board 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 Group. The Directors
are not aware of any environmental matters which would have
a materially adverse impact on the overall business of the Group.

The operations of the Group are subject to environmental
regulation under the jurisdiction of the countries in which
those operations are conducted, including Australia, Indonesia,
Papua New Guinea (PNG), Côte d’Ivoire and Fiji. The Group releases
an annual Sustainability Report.

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 are also a broad
range of industry specific environmental codes of practice which
apply to all mining operations and other operations of the Group.
The environmental laws and regulations generally address the
potential impact of the Group’s activities in relation to water
and air quality, noise, surface disturbance and the impact upon
flora and fauna.

The Group 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: 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 Group.

The number of events reported in each category during the year
is shown in the accompanying table. In all cases environmental
authorities were notified of those events where required and
remedial action undertaken. The Category IV (major) environmental
incident (based upon assessment of volume spilled, not impact)
recorded during the year involved a spill of oil on a wharf lay-down
area in Lae, Papua New Guinea, which was subsequently cleaned up
and remediated.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Category

Refer to the Operating and Financial Review for the significant
changes in the state of affairs of the Group.

FUTURE DEVELOPMENTS

Refer to the Operating and Financial Review on likely developments
and future prospects of the Group.

SUBSEQUENT EVENTS

There are no other matters or circumstances which have
arisen since 30 June 2013 that have significantly affected or
may significantly affect the operations of the Group, the results
of those operations, or the state of affairs of the Group in
subsequent financial years.

2013 – Number of incidents
2012 – Number of incidents

SHARE RIGHTS

46
97

III

3
23

1
2

–
–

During the year, an aggregate of 118,130 rights were exercised,
resulting in the issue of 118,130 ordinary shares of the Company
for nil consideration. At the date of this report there were
1,596,241 unissued shares under rights (1,596,241 at 30 June 2013).

In order to minimise dilution of its share capital through the
exercise of rights under the Company’s share-based payments
plans and the Dividend Reinvestment Plan, the Company intends
to buy back the corresponding number of shares on market as and
when required. There were no shares bought back and cancelled
during the year to 30 June 2013.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)39

Directors’ Report

INDEMNIFICATION AND INSURANCE OF DIRECTORS
AND OFFICERS

Newcrest maintains a Directors’ and Officers’ insurance policy
that, subject to some exceptions, provides insurance cover
to past, present or future Directors, Secretaries or Executive
Officers of the Group and its subsidiaries. The Company has paid
an insurance premium for the policy. The contract of insurance
prohibits disclosure of the amount of the premium and the
nature of the liabilities insured.

INFORMATION ON DIRECTORS

Details of the Directors’ qualifications, experience and special
responsibilities are set out on pages 8–9.

INFORMATION ON COMPANY SECRETARY

Scott Langford
General Counsel and Company Secretary
Bachelor of Laws (Hons) and Bachelor of Science.
Mr Langford joined Newcrest in July 2012 as General Counsel,
with responsibility for the Group’s legal and company secretarial
function. He was formally appointed as Company Secretary
in August 2012.

Prior to joining Newcrest, Mr Langford was a Partner at Allens,
a leading commercial law firm. He joined Allens in 1987, and
became a partner there in 1995. At Allens, he was a key legal
adviser to major international mining and resource companies,
including Rio Tinto and Newcrest, and was co-head of the firm’s
Energy and Resources Practice Group.

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:

Directors’ Meetings

Audit & Risk
Committee Meetings

Human Resources
& Remuneration
Committee Meetings

Safety, Health
& Environment
Committee Meetings

Don Mercer

Greg Robinson

Gerard Bond

Philip Aiken

Vince Gauci

Winifred Kamit

Richard Knight

Rick Lee

Tim Poole

John Spark

–

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.

Details of the functions and memberships of the Committees of the Board are presented in Newcrest’s Corporate Governance Statement.

DIRECTORS’ INTERESTS

As at the date of this report, the interest of each Director in the shares and rights of Newcrest Mining Limited were:

Number of
Ordinary Shares

Nature of
Interest

Number of Rights
Over Ordinary Shares

Nature of
Interest

25,000

60,490

28,488

7,769

18,400

–

326

40,000

28,447

4,235

32,105

Indirect

Direct and Indirect

Direct

Indirect

N/A

Indirect

Direct and Indirect

–

243,428

60,377

N/A

Direct

–

N/A

Director

Don Mercer

Greg Robinson

Gerard Bond

Philip Aiken

Vince Gauci

Peter Hay

Winifred Kamit

Richard Knight

Rick Lee

Tim Poole

John Spark

40(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Directors’ Report
OPERATING AND FINANCIAL REVIEW

1. OVERVIEW

Newcrest is a gold, copper and silver producer that has operations
and exploration projects in Australia, the Pacific region, Asia and
West Africa.

Newcrest’s strategy is to generate shareholder value through
the discovery and development of gold deposits and production
of gold (and associated by-product minerals). Newcrest maintains
floating commodity price exposure and accordingly endeavours
to maintain a conservative capital structure consistent with
having this commodity price risk. The Company aligns its decisions
and actions to this strategy by focussing on three key value drivers:
growth in gold reserves, operating at the lowest possible cost,
and to maximise return on capital employed.

2013 was significant for Newcrest with the delivery of major
expansion projects at Cadia Valley and Lihir. These projects
established a platform for production growth at the Company’s
two largest and long life assets. The Cadia East Project achieved
commercial production in January 2013 following the development
of Panel Cave 1 and completion of the plant expansion and
materials handling systems, and the Lihir plant expansion was
commissioned in February 2013.

After a period of price weakness the gold price suffered a large
fall in mid April 2013, which has been sustained and accompanied
since with increased volatility. On 7 June 2013, Newcrest confirmed
its focus on maximising free cash flow in a lower gold price
environment by removing higher cost ounces from the production
profile and accelerating reductions in operating costs, corporate
costs and capital expenditure. The objective is for each operation
to be free cash flow neutral or positive in the 2014 financial year
at a gold price equivalent to A$1,450 per ounce.

The full year review of Newcrest’s asset carrying values in the
context of the continuing lower gold price environment, combined
with a compression of valuations in the gold industry and other
factors, has resulted in the impairment of the carrying value
of some assets, contributed to the write-down in the book value
of some assets and the recognition of future costs associated
with business restructuring. As a result, Newcrest has reported
a Statutory loss of A$5,778 million for 2013, after significant items
totalling A$6,229 million after tax (comprising asset impairments
of A$5,556 million after tax, asset write-downs of A$349 million
after tax, a write-down of its investment in Evolution Mining
Limited of A$273 million after tax and a charge for restructure
costs of A$51 million after tax). The Statutory profit for the prior
year was A$1,117 million.

Underlying profit(1) for 2013 was A$451 million. This was lower
than the prior year of A$1,084 million, reflecting the expected
transitions of an operating nature occurring at certain assets
in the 2013 financial year, lower than planned production at Lihir
and Gosowong, and the decline in commodity prices.

Sales revenue for the current period of A$3,775 million was
A$641 million or 15% lower than the prior period of A$4,416 million,
primarily as a result of a 12% reduction in the total gold sales volume
to 2,054,923 ounces and a 4% decline in the average realised gold
price to A$1,550 per ounce. Copper sales volume of 78,887 tonnes
for the current year was in line with the prior year. The average
realised copper price for the current period of A$3.38 per pound
was 6% lower than the prior year. Reduced gold sales reflect lower
production during the year and an increase in inventory at year
end due to the timing of shipments in June 2013.

Gold production for the 2013 financial year of 2,109,784 ounces
was 8% below the lower end of original (August 2012) production
guidance (2.3 million ounces). Of the four major producing assets,
Cadia Valley and Telfer achieved the original production guidance
while production was lower than planned at Lihir (primarily due
to plant reliability issues and major project delivery approximately
one month later than planned) and at Gosowong (primarily due
to restricted access to high grade stopes). Production at Hidden
Valley and Bonikro was also lower than planned. Group copper
production was in line with original guidance.

Total cost of sales (inclusive of depreciation) for the 2013 financial
year was A$2,753 million(2), compared to A$2,607 million in the
prior year. Total cash costs pre by-product credits of A$2,201 million
were in line with guidance. A planned increase in ore processing
volumes in the current year and an elevated level of mobile
fleet and plant maintenance activity were the key drivers of the
A$146 million or 6% increase in the cost of sales. Mill throughput
across the Group was higher in the current year, with significant
increases at Lihir (15%) and Cadia (22%) following the completion
of processing plant expansions at both assets. This resulted in
increased expenditure in the current year on energy, labour and
consumables. Depreciation of A$589 million was A$47 million
higher than the prior year, following the commencement of
commercial production at Cadia East and the completion of the
Lihir plant expansion during the current year.

Operating cash flow was A$707 million for the 2013 financial
year and reflects a substantially different operating environment
to the prior year, which generated an operating cash flow of
A$1,726 million. The reduction in operating cash flow in the current
year was primarily attributable to:
– Lower relative production from the historically higher margin

operations of Gosowong and Cadia Valley;

– Lower net receipts due to lower gold sales and lower gold

and copper prices;

– Increased investment in waste stripping at Telfer, Bonikro
and Lihir to expose ore for future gold production; and

– Higher treatment costs mainly due to higher volumes of ore

treated, higher levels of plant maintenance activity and higher
power costs.

The above factors were partially offset by lower expenditure on
ore mining activity.

Capital expenditure for the 2013 financial year was A$1,946 million,
within the original guidance range of A$1.8 – A$2.0 billion and
24% lower than the prior year of A$2,556 million. The reduction
reflects delivery of the Company’s two major expansion projects
during the current year at Cadia East and Lihir.

During the current year, Newcrest completed the sale of a 7.5%
interest in PT Nusa Halmahera Minerals, the incorporated joint
venture company that owns the Gosowong operation, to its
joint venture partner, PT Aneka Tambang. Consideration of up to
US$160 million consisted of US$130 million in cash and a further
US$30 million subject to an additional one million ounces of gold
resource being defined by December 2017. The accounting impact
of this sale is reflected directly in equity.

(1) Underlying profit is profit/(loss) after tax before significant items attributable to owners of the parent. Refer to section 6 for the reconciliation

to statutory profit/(loss). Underlying profit is non-IFRS financial information and has not been subject to audit by the Company’s external auditor.

(2) Cost of sales excludes a write down of inventory of A$177 million (pre-tax).

NEWCREST MINING ANNUAL REPORT 2013(cid:14)41

Directors’ Report
OPERATING AND FINANCIAL REVIEW

1. OVERVIEW (continued)

Newcrest increased its bilateral bank loan facilities to US$2.5 billion when it renewed these facilities in September 2012 for terms of three
and five years. In October 2012 Newcrest also issued US$1,000 million of corporate bonds in the United States; US$750 million of these
bonds are due for repayment in 2022 and have a coupon of 4.20% per annum, with the remaining US$250 million due for repayment in
2041 at a coupon of 5.75% per annum. The proceeds of this bond issue were used to repay existing unsecured short term indebtedness
and for general corporate purposes.

At 30 June 2013, Newcrest’s gearing level was 29.1% and the Company had A$958 million in cash and undrawn, committed bank facilities,
assisted by year end working capital balances. Newcrest remains committed to maintaining a conservative balance sheet. The Company
is managing its business activity with the objective of being free cash flow neutral or positive in the current market environment.
The Company expects to be free cash flow neutral or positive at a gold price of A$1,450 per ounce in the 2014 financial year, with all
capital expenditure, exploration programs and corporate overheads funded from operating cash flow.

The Newcrest Board has determined there will be no final dividend in relation to the financial year due to the reduced level of profitability in
the 2013 financial year, the increase in the level of gearing at 30 June 2013, and the planned application of operating cash flow to progression
of the Cadia East Panel Cave 2 in the coming 2014 financial year. This is consistent with the Company’s dividend policy, with dividend levels
set having regard to profitability and balance sheet strength, and reinvestment options in our business.

2. FINANCIAL AND OPERATING HIGHLIGHTS(1)

Measure

2013

2012

$ Change

Change %

For the year ended 30 June

Key financial data
Revenue
EBITDA(2)(3)
EBIT(2)(3)
Statutory profit/(loss)(4)
Underlying profit(3)(5)
Operating cash flow
Capital expenditure
Exploration expenditure
Gearing(6)
ROCE(7)

Key operational data
Total material mined
Total material milled
Gold produced
Gold sales
Realised gold price
Copper produced
Copper sales
Realised copper price
Cash costs(3)(8)
AUD:USD

A$ million
A$ million
A$ million
A$ million
A$ million
A$ million
A$ million
A$ million
%
%

t 000’s
t 000’s
000’s ounces
000’s ounces
A$/ounce
t 000’s
t 000’s
A$/lb
A$ million
A$

3,775
1,367
756
(5,778)
451
707
1,946
152
29.1%
4.8

172,301
58,571
2,110
2,055
1,550
80
79
3.38
2,201
1.027

4,416
2,151
1,590
1,117
1,084
1,726
2,556
158
12.5%
10.1

179,235
54,034
2,286
2,333
1,609
76
79
3.58
2,031
1.032

(641)
(784)
(834)
(6,895)
(633)
(1,019)
(610)
(6)
17%
(5.3)

(6,934)
4,537
(176)
(278)
(59)
4
–
(0.20)
170
(0.005)

(15)
(36)
(52)

(58)
(59)
(24)
(4)
133
(52)

(4)
8
(8)
(12)
(4)
6
–
(6)
8
–

(1) All figures in this Report relate to businesses of the Newcrest Mining Limited Group (‘Newcrest’ or ‘the Company’) for the 12 months ended 30 June 2013
(‘current year’ or ‘2013’) compared with the 12 months ended 30 June 2012 (the ‘prior year’ or ‘2012’), except where otherwise stated. All reference to $
is a reference to Australian dollars unless specifically marked otherwise.

(2) EBITDA is ‘Earnings before interest, tax, depreciation and amortisation and significant items’. EBIT is ‘Earnings before interest, tax and significant items’.

Both EBITDA and EBIT are used to measure segment performance and have been extracted from the ‘Segment information’ note to the financial statements.

(3) EBITDA, EBIT, Underlying profit and Cash costs are non-IFRS financial information and have not been subject to audit by the Company’s external auditor.
(4) Statutory profit/(loss) is profit/(loss) after tax attributable to owners of the parent.
(5) Underlying profit is profit after tax before significant items attributable to owners of the parent. Refer to section 6.
(6) Gearing is calculated as net debt to net debt and equity. Refer to section 5.2 for further details.
(7) ROCE is ‘Return On Capital Employed’ and is calculated as EBIT divided by average capital employed.
(8) Cash costs represent cost of sales minus finished goods inventory movements and depreciation. Refer to section 3.3 for breakdown on cash cost.

42(cid:14)NEWCREST MINING ANNUAL REPORT 2013

3. DISCUSSION AND ANALYSIS OF OPERATIONS AND
THE INCOME STATEMENT

3.2 Production and Revenue

For the year ended 30 June

2013

2012 Change %

3.1 Profit Overview
For the 12 months ended 30 June 2013, Newcrest reported a
Statutory loss of A$5,778 million. This included significant charges
of A$6,229 million relating to impairments, write-downs and
restructuring costs. In the corresponding prior year Newcrest
reported a Statutory profit of A$1,117 million.

Production Volumes(1)(2)
Gold
Copper
Silver

oz 2,109,784 2,285,917
76,015
1,997,247

80,366
1,931,816

t
oz

Underlying profit for the 2013 financial year of A$451 million was
58% lower than the prior year of A$1,084 million.

The differences between Statutory loss/profit and Underlying
profit are detailed in Section 6. The adjustments in the 2013
financial year comprise:
– Impairments of assets of A$5,556 million after tax, comprising:

– Lihir A$3,492 million;
– Telfer A$1,172 million;
– Hidden Valley A$406 million; and
– West Africa A$486 million (net of non-controlling interest

of A$27 million).

– Write-downs of non-current assets, inventories and

de-recognition of deferred tax assets of A$349 million
after tax at:
– Lihir A$136 million;
– Telfer A$88 million;
– West Africa A$20 million (net of non-controlling interest

of A$2 million); and

– Corporate A$105 million.

– Write-down in the investment in Evolution of A$273 million

after tax.

– Restructure costs of A$51 million after tax.

The differences between Underlying profit of A$451 million in
the current year and Underlying profit of A$1,084 million in the
prior year are quantified in the table below.

A$ million

For the year ended
30 June 2013

Underlying profit for the year ended 30 June 2012

1,084

Changes in revenues:
Volume – production

Gold
Copper
Silver

Volume – timing of sales

Gold
Copper
Silver

Price

Gold
Copper
Silver

Changes in mine costs:
Mine production cost
Deferred mining and inventory movement
Treatment, realisation and royalty
Depreciation

Other costs:

Corporate administration
Exploration
Other income/expense
Net finance costs
Share of profit of associates

Tax and non-controlling interest:

Income tax benefit
Non-controlling interest

Underlying profit for the year ended 30 June 2013

(307)
26
(1)

(164)
(31)
–

(120)
(35)
(9)

(207)
85
23
(47)

8
16
(68)
(68)
(3)

242
27

Sales Volumes(1)(2)
Gold
Copper
Silver

Realised Prices
Gold
Copper
Silver

Average AUD:USD
Closing AUD:USD

Revenue
Gold
Copper
Silver

Total Sales Revenue

oz 2,054,923 2,333,214
78,513
1,997,294

78,887
oz 1,943,032

A$/oz
A$/lb
A$/oz

US$/oz
US$/lb
US$/oz

A$m
A$m
A$m

A$m

1,550
3.38
27.13

1,585
3.44
27.89

1.0270
0.9275

3,149
573
53

3,775

1,609
3.58
31.55

1,655
3.69
32.55

1.0320
1.0191

3,740
613
63

4,416

(8)
6
(3)

(12)
–
(3)

(4)
(6)
(14)

(4)
(7)
(14)

–
(9)

(16)
(7)
(16)

(15)

(1) The 12 months production and sales ended 30 June 2013 includes 22,695
pre-commissioning gold ounces and 1,879 copper tonnes for the Cadia
East project. The 12 months production and sales ended 30 June 2012
includes 8,451 pre-commissioning gold ounces and 801 copper tonnes
for the Cadia East project. These ounces have been capitalised and
excluded from the unit cost calculations and profit and loss reporting.

(2) Production and sales from Cracow and Mt Rawdon in the 12 months

ended June 2012 contain four months of production only, up to the date
of divestment of 2 November 2011.

Gold production
and sales (ounces)

For the year ended 30 June

2013

2012

Production

Sales Production

Sales

(282)

(195)

(164)

Cadia Hill
Ridgeway
Cadia East
Telfer
Gosowong
Hidden Valley
Lihir
Bonikro

Continuing
operations

Cracow
Mt Rawdon

119,372
262,228
65,279

140,944
244,225
65,279
525,500 508,976
303,122
84,272
649,340 621,885
86,220

312,711
85,004

90,350

8,451

241,430 262,458
223,314 225,149
8,451
540,114 569,640
439,384 439,446
88,801 89,290
604,336 595,184
91,654

92,102

2,109,784 2,054,923 2,237,932 2,281,272

–
–

23,787 24,686
27,256
24,198

(146)

Total(1)

2,109,784 2,054,923 2,285,917 2,333,214

(1) Production and sales from Cracow and Mt Rawdon in the 12 months

ended June 2012 contains four months of production only, up to the date
of divestment of 2 November 2011.

(115)

269

451

NEWCREST MINING ANNUAL REPORT 2013(cid:14)43

80,366

78,887

76,015

78,513

– Ridgeway production increased 38,914 ounces or 17%,

Directors’ Report
OPERATING AND FINANCIAL REVIEW

3. DISCUSSION AND ANALYSIS OF OPERATIONS AND
THE INCOME STATEMENT (continued)

3.2 Production and Revenue (continued)

Copper production
and sales (tonnes)

For the year ended 30 June

2013

2012

Production

Sales Production

Sales

13,095
35,995
4,823
26,453

15,620
33,117
4,823
25,327

14,076
15,060
29,901 30,050
801
31,237 32,602

801

For the year ended 30 June

2013

2012

Production

Sales Production

Sales

187,452

187, 452

196,108 198,806

–

–
224,028 224,028
283,026 283,026
342,835 342,835
856,328 870,046
19,770
15,875

19,770
18,377

–

–
224,816 224,816
366,945 366,945
271,342 275,837
857,540 830,705
10,558
9,654

10,558
13,187

Cadia Hill
Ridgeway
Cadia East
Telfer

Total

Silver production
and sales (ounces)

Cadia Hill

Cadia East
Ridgeway
Telfer
Gosowong
Hidden Valley
Lihir
Bonikro

Cracow
Mt Rawdon

Total(1)(2)

Gold production of 2,109,784 ounces was 176,133 ounces or 8%
lower than the prior year, (or 6% lower excluding contributions
from assets divested in the prior year) with the key drivers of
this difference period-on-period being:
– Cadia Hill production for the 2013 financial year was 122,058

ounces or 51% lower than the prior year, and reflects the planned
transition to Cadia East sourced ore. In the prior year, ore feed
was sourced from the Cadia Hill open pit mine which suspended
operations on 30 June 2012, with some of the remaining lower
grade stockpiled ore processed in the current year. Whilst mill
throughput was higher in the current year, the lower grade
and recovery of the stockpile material reduced metal
production volume.

associated with the continued ramp up in mining rates as the
block cave matures. Ridgeway achieved record ore production
of 7.7 million tonnes for the 2013 financial year.

– Cadia East production increased by 56,828 ounces with the

project declaring commercial production from January 2013 while
continuing the expansion of the cave footprint. The primary
crusher was commissioned in March 2013, enabling increased
conveying of ore to the surface.

– Telfer production decreased 14,614 ounces or 3% primarily
due to the planned mining and processing of material from
West Dome containing higher sulphur content ore, leading
to lower gold recoveries.

– Gosowong production decreased by 126,673 ounces or 29% due
to lower grade ore being processed during the year. Poor ground
conditions restricted access to high grade areas of the Kencana
underground mine, resulting in the processing of lower grade
ore sourced from Toguraci and the Gosowong open pit. Mining
from the Gosowong pit was completed in July 2013.

Continuing operations 1,931,816 1,943,032 1,940,496 1,917,321

–
–

16,843
16,517
39,908 63,456

1,931,816 1,943,032

1,997,247 1,997,294

– Lihir production increased 45,004 ounces or 7% due to increased

(1) Production and sales from Cracow and Mt Rawdon in the 12 months
ended June 2012 contain four months of production only, up to the
date of divestment of 2 November 2011.

(2) All figures are 100% other than Cracow sales and production shown

at 70% and Hidden Valley sales and production shown at 50%.

Total sales revenue of A$3,775 million was 15% lower than the
prior year, primarily as a result of reduced gold sales volumes
and lower realised metal prices.

Gold revenue in the 2013 financial year of A$3,149 million was 16%
lower than the prior year of A$3,740 million, primarily as a result
of a 12% reduction in gold sales volumes to 2,054,923 ounces.
Reduced gold sales reflect lower production during the year and
an increase in inventory at year end due to the timing of gold
shipments in the June 2013 quarter. The realised gold price for
the 2013 financial year of A$1,550 per ounce was 4% lower than
the prior year gold price of A$1,609 per ounce.

Copper revenue in the 2013 financial year of A$573 million was 7%
lower than the prior year reflecting a 6% decrease in the realised
copper price to A$3.38 per pound. Copper sales volumes were
similar to the prior year.

Silver revenue of A$53 million decreased by 16% from A$63 million
in the prior year due to lower silver production and prices.

Newcrest’s sales revenue continues to be predominantly
attributable to gold, with gold revenue accounting for 83% of
total sales revenue for the 2013 financial year (85% in prior year).

processing capacity from completion of the plant expansion
in February 2013. The new capacity expansion increased tonnes
milled in the second half of the 2013 financial year by 52% over
the first half. Grade treated was lower due to the processing
of more stockpiled ore during the second half of the year.
Plant reliability, although improved, did not meet expectations
during the 2013 financial year.

– Hidden Valley results during the year remain unacceptable.
Production decreased by 3,797 ounces or 4% in the current
year primarily due to lower volume and grade of ore processed.
Volumes were impacted by poor plant availability and impaired
access to higher grade ore. Focus remains on improving the
material movement performance (to be assisted by the June
2013 commissioning of the overland conveyor) and reducing
costs. Hidden Valley’s physical performance improved in the
June 2013 quarter.

– Bonikro production decreased 1,752 ounces or 2% during the

2013 financial year, reflecting lower gold grade ore and a rebuild
of the main crushing system.

– Cracow and Mt Rawdon production in 2012 was 47,985 ounces

of gold. Both assets were sold on 2 November 2011 and
consequently did not contribute to production in the 2013
financial year.

44(cid:14)NEWCREST MINING ANNUAL REPORT 2013

3.3 Total Cash Costs(1)

A$ million

2013

2012

Change

Change %

For the year ended 30 June

Cadia
Telfer
Lihir
Gosowong
Bonikro
Hidden Valley

559
740
448
203
89
162

560
678
339
186
83
140

Continuing operations 2,201

1,986

Mt Rawdon
Cracow

–
–

25
20

Total cash costs

2,201

2,031

(1)
62
109
17
6
22

215

(25)
(20)

170

–
9
32
9
7
16

(100)
(100)

(1) Total cash costs represent cost of sales minus finished goods inventory

movements and depreciation.

Total cash costs were A$170 million or 8% higher in the 2013
financial year compared with the prior year. Excluding assets
divested in the prior year, cash costs were A$215 million or 11%
higher than the prior year.

Cash costs at Cadia Valley were in line with the prior year. Ridgeway
production was at a lower cost than the prior year and the Cadia
Valley operation continues to be the lowest cost producer across
the Group. Open pit mining costs ceased with suspension of the
Cadia Hill pit in June 2012, but were partly replaced by the inventory
charge and reclaim costs attached to the stockpiles processed
in the current year. The commencement of commercial production
from January 2013 at Cadia East and the expansion of the processing
facilities increased costs.

Telfer cash costs were A$62 million or 9% higher in the 2013
financial year, driven by an increase in ore sourced from higher
strip ratio sources. The introduction of the carbon tax regime
increased fuel costs in the mine, as well as the cost of on-site gas
generated power by A$9 million. Treatment costs also increased
due to the commissioning of new equipment to deal with the
higher sulphur ore sources.

Lihir cash costs increased by A$109 million or 32%, driven primarily
by a 15% increase in mill throughput and a higher level of plant
maintenance during the current year. These activities contributed
to delivery of a 35% increase in gold production in the second half
of the 2013 financial year. The commissioning of the expanded
processing plant in February 2013 and subsequent increase in
ore treated through the plant, resulted in higher consumption
of power and ore processing consumables. Energy costs increased
by A$36 million with the incremental power consumption
generated from heavy fuel oil. Operating consumable costs were
A$30 million higher in the current year associated with increased
freight and consumption of reagents, explosives and tyres, and
explosives prices. A maintenance program aimed at improving the
reliability of the original process plant resulted in an A$8 million
increase in maintenance costs while expenditure on local
community programs and camp accommodation also contributed
to higher cash costs. A stronger US dollar and PNG Kina against
the Australian dollar during the current year increased costs by
A$7 million.

Gosowong cash costs increased by A$17 million or 9%, reflecting
the higher operating cost of sourcing ore from the Gosowong
open pit, increased ore production from the Toguraci underground
mine, costs associated with addressing Kencana ground stability
in high grade stope areas and a 23% increase in mill throughput.
A weaker Indonesian rupiah against the Australian dollar reduced
costs by A$5 million.

Bonikro cash costs increased by A$6 million or 7% compared with
the prior year, driven primarily by costs associated with the hiring
of temporary crushing facilities to maintain throughput rates
while the primary crushing facility was refurbished.

Hidden Valley cash costs increased by A$22 million, reflecting
increased investment in maintenance activity to improve
equipment availability, increased total material moved and mill
throughput but also increasing costs in those areas. The high cost
of the Hidden Valley operation continues to be unacceptable, and
the improvement program to reduce costs remains a priority.

No cash costs were reported for Cracow and Mt Rawdon in the
current year, due to their divestment to Evolution Mining Limited
(‘Evolution’) on 2 November 2011.

3.4 Cost of Sales

A$ million

Employee costs
Maintenance incl. contract labour
Mining contracts
Fuel and lubes
Utilities and power
Liners and grinding media
Operating consumables
Other input costs

Mine production costs

Deferred mining costs
Ore inventory movements
Royalties
Treatment and realisation

Total cash costs

Finished goods
Depreciation

Cost of sales(2)(3)

For the year ended
30 June

% Change
Increase/
(Decrease)

% Change
attributable
to price

% Change
attributable
to activity

5
(4)
–
1
6
(3)
5
1

7
12
3
5
25
3
6
2

2013

396
513
336
170
274
120
307
312

2,428

(346)
(128)
106
141

2,201

(37)
589

2,753

2012(1)

355
473
326
161
209
119
276
302

2,221

(178)
(282)
130
140

2,031

34
542

2,607

12
8
3
6
31
–
11
3

94
(55)
(18)
–

(1) The prior year comparatives have been restated in line with any cost classification adjustments made for the 12 months ended 30 June 2013.
(2) Costs of Cracow and Mt Rawdon included to the date of divestment on 2 November 2011.
(3) Cost of sales excludes write-down of inventory of A$177 million (pre-tax). Refer to section 6.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)45

Directors’ Report
OPERATING AND FINANCIAL REVIEW

3. DISCUSSION AND ANALYSIS OF OPERATIONS AND
THE INCOME STATEMENT (continued)

3.4 Cost of Sales (continued)
Total cost of sales for the 2013 financial year of A$2,753 million
increased by 6% or A$146 million compared to the prior year,
reflecting a 9% increase in mine production costs and higher
depreciation charges, partly offset by an increase in finished goods
inventory associated with the timing of shipments in the June 2013
quarter and lower royalties due to reduced sales revenue.

Mine production costs of A$2,428 million were A$207 million
higher than the prior year reflecting elevated mobile fleet and plant
maintenance activity and the 13% increase in ore processed across
the Group. Lower gold grade and associated recoveries resulted
in reduced gold production in the 2013 financial year, compared
to the prior year, as the Company transitioned to new ore sources
at Cadia Valley, Lihir and Gosowong. Material movements increased
at Telfer and Bonikro associated with a significant investment
in waste stripping to expose future ore sources.

Employee costs were A$41 million or 12% higher than the prior
year, reflecting both increased headcount and labour inflation.
Commissioning activities at the Cadia East and Lihir plant expansion
projects resulted in an increase in employees, particularly related
to expanded operating and maintenance activity. Actions taken
to address production and reliability issues at Hidden Valley, which
include the in-sourcing of previously contracted maintenance
work, has also resulted in an increase in employee costs for the
current year.

The average wage increase across the Group during the period
was 5%, with regional variation reflecting local market pressures:
the average increase in Indonesia was 9%, PNG 5%, West Africa 3%
and Australia 4%.

Maintenance costs (parts, contractor costs) were A$40 million or 8%
higher than the prior year as the result of higher levels of activity.
Addressing fleet and plant performance at Hidden Valley, Gosowong
and Lihir, and costs associated with the refurbishment of the primary
crusher at Bonikro, has elevated maintenance expenditure in the
current year. Costs were further increased by higher overall mill
throughput, and maintenance associated with Cadia East and the
new Telfer regrind mills, both commissioned in the current year.
These were partially offset by the divestment of Cracow and
Mt Rawdon and the suspension of Cadia Hill open pit mining.

Mining contract costs were A$10 million or 3% higher than the
prior year as a result of higher levels of activity. The increase is
mostly due to Telfer’s contract waste mining at Main Dome Stage 4,
which was completed ahead of schedule in June 2013, and increased
use of contract mining at Lihir with local landowner companies.
Increased drill metres at Toguraci following commercialisation
in the current year further increased mining contractor costs.

Fuel and lubes costs were A$9 million or 6% higher than the prior
year largely as a result of increased activity. The introduction of
a carbon tax in Australia on 1 July 2012 resulted in a reduced diesel
fuel rebate which increased costs by A$6 million at Telfer and Cadia.
The tax impact was partially offset by a lower underlying diesel
price. Total fuel and lubes consumed was marginally higher than
the prior year with higher fuel consumption at Telfer attributable
to an increase in waste stripping, partially offset by a reduction
in haulage from the cessation of the Cadia open pit mine.

Utilities and power costs were A$65 million or 31% higher than
the prior year. The increase was attributable to increased power
consumption, the introduction of the carbon tax in Australia
and higher energy market prices.

– A 25% increase in power consumed across the group was mainly
driven by a 13% increase in ore treated, from 57.9 million tonnes
to 65.4 million tonnes:
– Power consumption at Lihir was 32% higher than the prior year
and reflects a 15% increase in ore treated and commissioning
of the plant upgrade, in particular the new oxygen plant; and
– Power consumption at Cadia was 20% higher than the prior
year due to a 22% increase in mill throughput from higher
Ridgeway production, drawdown of open pit stockpiles
and higher Cadia East production.

46(cid:14)NEWCREST MINING ANNUAL REPORT 2013

– Price was 6% higher in the period, with regulatory and market
price impacts resulting in a A$15 million increase in power costs:
– The introduction of a carbon tax in Australia, effective from
1 July 2012, resulted in an additional A$9.5 million of costs
associated with the natural gas consumed in on-site power
generation at Telfer; and

– At Cadia, an 8.5% unit price increase of power from the

New South Wales grid compared to the prior year reflects the
pass-on of higher network costs, environmental levies and grid
prices, and resulted in a further A$5 million in power costs.

Operating consumable costs were A$31 million or 11% higher than
the prior year, primarily due to the aforementioned increase in
ore processing volume at Lihir and Cadia, as well as at Gosowong.
Increased dump leach processing at Telfer increased the consumption
of cyanide. Increased open pit mining activity during the current
period at Telfer resulted in higher consumption of explosives
while increased tyre costs were associated with the transition
to a new tyre type expected to result in an increased tyre lifespan.

Other input costs, including mine site overheads, were A$10 million
or 3% higher than the prior year. The increase was mainly at
Lihir and driven by an increase in FIFO (fly-in/fly-out) and village
accommodation costs and higher expenditure associated with
landowners and community relations.

General inflationary cost pressure in the mining industry is
moderating relative to recent periods. Newcrest’s transition to
recently negotiated contract rates and prices benefited contract
mining, maintenance and grinding media costs during the current
year. Prices for energy, cyanide and explosives remain elevated.

The relative weakening of the Australian dollar against the PNG kina
and US Dollar during the current year had a A$4 million unfavourable
translation impact when reporting costs in Australian dollars.

Deferred mining and ore inventory
The net cost associated with waste stripping capitalised as
deferred mining during the current year was A$346 million, which
is A$168 million higher than the amount capitalised in the prior
year. The major components of this deferred mining were:
– Telfer A$188 million (an increase of A$61 million over the prior
period), related to the waste stripping of Stages 4 and 6 of the
Main Dome open pit. Contractor waste stripping in Main Dome
Stage 4 was completed in June 2013; and

– Lihir A$110 million (an increase of A$106 million over the prior
period) related primarily to waste stripping of Stage 11 and
Stage 12 of the Minifie pit.

The total increase in inventory movement of A$165 million for the
2013 financial year (excluding A$177 million inventory writedown)
comprises an increase in ore inventory of A$128 million and an
increase in finished goods inventory of A$37 million.

The net increase in ore inventory of A$128 million in the 2013
financial year was due to:
– Additions to ore inventory at Lihir of A$117 million – resulting
from ore mined (13.7 million tonnes) exceeding ore milled
(6.9 million tonnes) by 6.8 million tonnes. At 30 June 2013,
Lihir had 106 million tonnes of ore inventory containing
6.16 million ounces of recoverable gold, at an average
carrying value of A$220 per ounce;

– Additions to ore inventory at Bonikro of A$18 million –

as 3.5 million tonnes of ore mined exceeded the 1.9 million
tonnes of ore milled in the period, at an average carrying value
of A$445 per ounce;

– Additions to ore inventory at Gosowong of A$19 million –

reflecting an increase in contained gold ounces from 28 thousand
tonne to 32 thousand tonne, at an average carrying value of
A$761 per ounce;

– Additions to ore inventory at Telfer of A$11 million – reflecting

an additional 3.8 million tonnes of open pit ore mined compared
with the prior year, while mill throughput remained broadly
unchanged; and

– Drawdown of ore inventory at Cadia Valley of A$37 million –

as ore stockpiles became the primary feed to the mill following
the suspension of Cadia Hill open pit mining on 30 June 2012.

An increase in finished goods inventory reduced cost of sales by
A$37 million in the 2013 financial year, and was primarily driven by
the timing of gold shipments from Telfer and Lihir in the June 2013
quarter. This compares to a A$34 million draw down in inventory
in the prior year, due to a difference in the timing of the shipping
of finished goods.

Treatment, realisation and royalty costs
Treatment and realisation costs of A$141 million were in line with
the prior year cost of A$140 million.

Royalty expense was A$24 million or 18% lower in the current year,
consistent with lower revenue.

Depreciation
Depreciation expense of A$589 million included in cost of sales was
A$47 million or 9% higher than the prior year. Key drivers for this
increase were:
– The commencement of commercial production from the

Cadia East underground mine in January 2013;

– Higher levels of production sourced from the Ridgeway

underground mine at Cadia Valley;

– Increased capital base at Gosowong following commercialisation

of Toguraci assets; and

– Completion and commencing of depreciation of the expanded

Lihir plant in February 2013.

Total depreciation costs of A$290 per ounce sold increased from
the A$233 per ounce in the prior year.

3.5 Corporate Administration Costs
Corporate administration costs of A$132 million were A$8 million
or 6% lower in the current year, primarily driven by a reduction in
labour costs. This comprises A$102 million in corporate cash costs,
A$22 million in corporate depreciation and A$8 million in equity
settled remuneration.

3.6 Exploration
Exploration expenditure decreased by 4% to A$152 million in the
2013 financial year.

The exploration focussed on drill testing a number of near mine
targets, advancing major projects such as Golpu, testing our
portfolio of greenfield prospects and converting existing Mineral
Resources into Ore Reserves.

Resource definition drilling completed during the year has
demonstrated the continuity of higher grade mineralisation within
the upper levels of the Golpu deposit and has extended it to the
north of the known resource. This drilling has also supported
an improved understanding of the structural framework of the
Wafi-Golpu porphyry copper-gold system. Exploration drilling
within the project area during the year confirmed the potential
for additional high grade epithermal precious metal mineralisation.

The near mine exploration programs have been successful in
defining a new zone of mineralisation at Lihir, at Kapit North East.
At Gosowong discovery drilling is ongoing, while at Telfer, drilling
is targeting the West Dome Deeps prospect and the prospective
gap located below the Telfer Deeps Sub-Level Cave mine and the
top of the Vertical Stockwork Corridor deposit. Near mine drilling
at Bonikro in Côte d’Ivoire has targeted resources extensions
within the mine district.

Away from operational sites, drilling recommenced at Namosi,
targeting higher grade mineralisation within the Waivaka Corridor.
The search for new discoveries focussed on greenfield projects
including the Morobe Exploration Joint Venture tenements, Manus
Island and Mt Andewa (all in PNG), Côte d’Ivoire regional tenement
package and the early stage joint venture at Tandai (Indonesia).
Consistent with strategy, exploration projects have been turned
over relatively quickly with the decisions made to exit the Tandai
Joint Venture (Sumatra) and the Mt Andewa Project.

Of the A$152 million spent in the current year, A$64 million was
expensed and A$88 million capitalised.

3.7 Other Income/Expenses

A$ million

Net foreign exchange gain/(loss)
Fair value gain/(loss)
on gold and copper derivatives
Legacy community contractual
settlements and negotiation costs
Other

Other income/(expense)

For the year ended
30 June

2013

2012

(45)

(37)
(9)

(82)

(14)

–
(16)

(14)

Other income/(expense) was a net expense of A$82 million in
the current period.

The fair value loss on gold and copper derivatives relates to
the movement in spot prices impacting the quotational period
adjustments on sales. Newcrest locks in the copper price for
concentrate shipments at the time of sale to minimise this impact.
Gold prices are not locked in at the time of shipment due to the
shorter quotational period for gold, usually one month for gold
versus three or four months for copper. The gold price fall during
the current period, particularly in the final quarter, contributed
to a net loss of A$45 million.

Expenditure of A$37 million was incurred in the current year for
various community project purposes in the context of long term
arrangements with Lihir landowners. Newcrest has progressed
plans for negotiation with landowners of the commercial and
community development agreements, known as the Lihir
Sustainable Development Plan.

3.8 Finance Costs
Net finance costs of A$109 million in the 2013 financial year were
A$68 million higher than the prior year.

Gross finance costs for the 2013 financial year of A$145 million
increased by A$62 million over the prior year due to a higher level
of average debt in the period.

Interest of A$35 million was capitalised for the current year in
relation to the Cadia East development project and the Lihir plant
expansion project, and was A$5 million lower than that capitalised
in the prior year.

3.9 Income Tax Expense
Income tax expense on Underlying profit for the 2013 financial year
was A$165 million resulting in an effective tax rate of 26%. This is
lower than the Australian company tax rate of 30%, primarily due
to research and development allowances across the group, and tax
concessions in relation to the deduction of exploration expenditure
in the Group’s Papua New Guinea operations. In the prior year
income tax expense on Underlying profit was A$407 million,
or A$242 million higher than the current period, due to the higher
level of profit before tax in that period. The effective tax rate in
the prior year was also 26%.

Income tax on Statutory profit in the current period was a benefit
of A$412 million, which included a tax benefit of A$577 million
relating to asset impairments, restructure provisions and asset
and inventory write-downs. Income tax expense on Statutory
profit in the prior period was A$402 million.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)47

Directors’ Report
OPERATING AND FINANCIAL REVIEW

3. DISCUSSION AND ANALYSIS OF OPERATIONS AND THE INCOME STATEMENT (continued)

3.10 Asset Impairments, Asset Write-Downs and Restructure Costs

The full year review of Newcrest’s asset carrying values in the context of the continuing lower gold price environment, combined with
a compression of valuations in the gold industry and other factors, has resulted in the impairment of the carrying value of some assets.
Newcrest has identified significant items totalling A$6,229 million after tax, comprising:
– Asset impairments of A$5,556 million after tax;
– Asset write-downs of A$349 million after tax;
– A write-down of its investment in Evolution Mining Limited of A$273 million after tax; and
– A charge for restructure costs of A$51 million after tax.

A$ million

Lihir
Telfer
West Africa
Hidden Valley
Corporate(1)

Total items by segment

Tax

Total impairment and restructure costs

Non-controlling interest

Total after non-controlling interest

Impairments(1)

Write-down
of non-current
assets

Write-down
of inventory

Subtotal –
impairment and
write-downs

Restructure

For the year ended 2013

3,492
1,674
575
406
273

6,420

(564)

5,856

(27)

5,829

146
19
1
–
–

166

221

–

221

50
106
21
–
–

177

(47)

130

(2)

128

3,688
1,799
597
406
273

6,763

(556)

6,207

(29)

6,178

5
17
1
–
49

(21)

–

Total

3,693
1,816
598
406
322

6,835

(577)

6,258

(29)

6,229

(1) Corporate impairment related to the Company’s investment in Evolution of A$273 million, comprising A$122 million share of the associate’s impairment

and a further impairment of A$151 million to recognise the investment at fair value at 30 June 2013. All amounts have no tax effect.

4.2 Cash Flow from Operations
Operating cash flow for the 2013 financial year was
A$707 million, A$1,019 million lower than the prior year cash
flow of A$1,726 million. The reduction was mainly driven by:
– A$641 million lower revenue primarily due to 12% lower gold
sales volume, a 4% lower realised gold price and a 6% lower
realised copper price;

– A$168 million unfavourable timing of debtor receipts compared

with the prior year; and

– A$189 million increase in cash outflows associated with mining

and treatment activity mainly attributable to:
– Increased waste stripping activity of A$168 million,

principally at Telfer, Lihir and Bonikro, to expose ore for
future gold production;

– Higher treatment costs of A$123 million attributable to a

13% increase in ore treated, commissioning of the expansion
projects at Lihir and Cadia and reliability maintenance
at Hidden Valley. In addition, the A$15 million increase in
power costs related to the introduction of a carbon tax and
a higher unit price from the New South Wales grid increased
treatment costs;

– Unfavourable A$71 million increase in finished goods due

to the timing of gold shipments;

– Partially offset by the value of the stockpile build in the period
being A$154 million lower than the prior year. The reduction
was mainly attributable to lower operating expenditure on
ore mining activities at Cadia, Lihir and Telfer, consistent with
a 23% (or 17.7 million tonnes) reduction in ore mined; and

– Further offset by A$24 million lower royalties expense,

consistent with lower sales volumes.

3.11 Hedge Restructure and Other Significant Items

A$ million

Losses on restructured and
closed-out hedge contracts
Business acquisition and integration costs
Gain on business divestment

Hedge restructure and other
significant items (pre-tax)

Income tax benefit/(expense)

Hedge restructure and other
significant items (post-tax)

For the year ended
30 June

2013

2012

–
–
–

–

(7)
(11)
46

Hedge restructure and other significant items had no impact
in 2013.

4. DISCUSSION AND ANALYSIS OF CASH FLOW

4.1 Cash Flow Overview

A$ million

2013

2012

Change Change %

For the year ended 30 June

Cash flow from operations
Cash flow related to
investing activities
Cash flow related to
financing activities

Net movement in cash
Cash at the beginning
of the period
Effects of exchange rate
changes on cash held

707

1,726

(1,019)

(59)

(2,124)

(2,755)

631

(23)

1,236

1,090

146

(181)

(242)

242

185

(4)

–

Cash at the end of the period

242

(173)

(71)

48(cid:14)NEWCREST MINING ANNUAL REPORT 2013

4.3 Cash Flows Related to Investing Activities

A$ million

2013

2012

Change Change %

For the year ended 30 June

(11)
176

(41)

(24)

(4)

Capital expenditure
– Sustaining
– Development
– Projects – construction

and studies

396
380

445
138

(49)
242

1,170

1,973

(803)

Total Capital Expenditure

1,946

2,556

(610)

Exploration
Payment/(proceed)
for investments
Interest capitalised
to development projects
Other

Total cash outflow from
investing activities

152

158

(6)

(9)

(12)

(400)

35
–

40
(2)

(5)
2

(13)
(100)

2,124

2,755

(631)

(23)

Net cash used in investing activities decreased by A$631 million,
or 23%, to A$2,124 million. The reduction reflects the delivery
of the Company’s two major expansion projects, Cadia East and
the Lihir plant expansion, in the middle of the 2013 financial year.

Sustaining capital
Total sustaining capital expenditure of A$396 million, was
A$49 million lower than the prior year. Lihir expenditure of
A$221 million, in line with the prior year, remains elevated,
while expenditure at Telfer of A$60 million was A$36 million
lower than the prior year. Sustaining capital was generally lower
across the other sites.

Activity at Lihir was predominantly associated with the program
to improve the reliability of the original plant. Lower expenditure
at Telfer reflects a significant reduction in the number of sustaining
capital projects undertaken during the 2013 financial year. Sustaining
capital at Cadia Valley (A$47 million) and Hidden Valley (A$25 million)
was consistent with the prior period. Lower expenditure at
Gosowong reflects the completion of a major fleet replacement in
the prior period.

Development capital and projects – construction
and studies capital
Total capital expenditure on development and major projects
and studies of A$1,550 million decreased by A$561 million during
the current year and was primarily associated with the following:
– The Cadia East project (A$525 million): commenced commercial
production in January 2013. Development has continued though
with less spend than the previous year. Expenditure in the 2013
financial year (establishment and expansionary) was primarily
related to Panel Cave 1 undercut development, Panel Cave 1
drawbell development and decline development to Panel Cave 2;
– The Lihir plant expansion project (US$253 million): commissioned
in January 2013 and handed over to operations in February 2013
with all major systems in full operation. The major components
(new crushing and grinding circuit; 450 tonne-per-hour autoclave;
70 tonne-per-hour oxygen plant) have performed well and have
operated at full design capability;

– The Lihir flotation expansion (US$89 million) and replacement
works in the NCA circuit (US$79 million) were completed in the
June 2013 quarter and are currently commissioning;

– The Wafi-Golpu project (US$79 million 50% share): the technical
pre-feasibility study on the Golpu ore body was completed in
August 2012 and the project has entered an optimisation phase.
Capital expenditure in this phase is restricted to road access,
camp construction, drilling and studies on capital reduction; and

– Hidden Valley crusher (US$21 million 50% share): The crusher
at the front end of the overland conveyor was completed late
in the June quarter and is now commissioning. The new crushing
system is expected to provide better utilisation of the overland
conveyor to reduce ore haulage costs and overall operating costs.

Exploration

A$ million

2013

2012

Change Change %

For the year ended 30 June

Expenditure by nature
Greenfields
Brownfields
Reserve definition

Telfer
Gosowong
Hidden Valley & Wafi-Golpu
Lihir
Côte d’lvoire
Other

Expenditure by region
Australia
Indonesia
Papua New Guinea
Bonikro
Fiji

37
33

22
8
26
9
8
9

152

39
28
58
22
5

44
42

17
5
25
14
10
1

158

41
32
57
21
7

152

158

(7)
(9)

5
3
1
(5)
(2)
8

(6)

(2)
(4)
1
1
(2)

(6)

(16)
(21)

29
60
4
(36)
(20)
800

(4)

(5)
(13)
2
5
(29)

(4)

Exploration activities focussed on near province and greenfields
opportunities, increasing existing Mineral Resource positions
and converting these Mineral Resources to Ore Reserves.
Refer to earlier comments on exploration activity.

4.4 Cash Flow Related to Financing Activities
Cash flows relating to financing activities were an inflow of
A$1,236 million, compared with an inflow of A$1,090 million in the
prior year. Key financing activities during the 2013 financial year were:
– Net proceeds from the October 2012 issue of US senior unsecured

notes of an A$ equivalent value of A$948 million;

– Net drawdown of A$431 million on the US bilateral bank facilities;
– Dividend payments of A$256 million; and
– A$117 million net proceeds from the sale of a 7.5% interest

in Gosowong.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)49

Directors’ Report
OPERATING AND FINANCIAL REVIEW

5. DISCUSSION AND CAPITAL ANALYSIS
OF THE BALANCE SHEET

5.1 Net Asset and Total Equity

A$ million

2013

2012

Change Change %

As at 30 June

Assets
Cash & cash equivalent
Receivables
Inventories
Other financial assets
Current tax asset
Property, plant & equipment
Exploration, feasibility
and development
Intangibles
Deferred tax assets
Investments in associates
Other assets

69
178
2,194
28
58
5,544

7,566
550
326
132
540

242
251
1,843
19
–
4,364

8,795
3,852
259
395
489

(173)
(73)
351
9
58
1,180

(1,229)
(3,302)
67
(263)
51

Total assets

17,185

20,509

(3,324)

Liabilities
Payables
Borrowings
Other financial liabilities
Provisions
Current tax liability
Deferred tax liabilities

(620)
(4,211)
(71)
(594)
–
(1,604)

(482)
(2,408)
(18)
(508)
(92)
(1,907)

(138)
(1,803)
(53)
(86)
(92)
303

Total liabilities

(7,100)

(5,415)

(1,685)

Net assets

10,085

15,094

(5,009)

Equity
Equity – Newcrest interest
Non-controlling interests

(9,945)
(140)

(14,975)
(119)

5,030
(21)

Total equity

(10,085)

(15,094)

5,009

(71)
(29)
19
47

(14)
(86)
26
(67)
10

(16)

29
75
294
17

(16)

(33)

(34)
18

(33)

Newcrest’s net assets and total equity decreased by A$5,009 million
during the year to A$10,085 million, primarily due to the asset
impairments and writedowns detailed earlier in this report.

5.2 Net Debt and Gearing
As at 30 June 2013 Newcrest had net debt, comprising total
borrowings less cash, of A$4,142 million, A$1,976 million higher
than the 30 June 2012 net debt position of A$2,166 million.
The changes in the net debt position are outlined in the table below.

A$ million

As at 30 June

Net debt at 30 June 2012
Issue of USD senior unsecured notes
Net drawdown on USD bilateral bank facilities
Retranslation of USD denominated debt
Movement in cash balances
Net movement in finance leases

Net movement in 2013

Net debt at 30 June 2013

2,166
948
431
427
173
(3)

1,976

4,142

The gearing ratio (net debt to net debt plus equity) as at
30 June 2013 was 29.1%, an increase from 12.5% as at 30 June 2012.
In addition to the issue of senior unsecured notes and drawdown
on the bilateral bank facilities during the year, the gearing
ratio increased due to higher A$ debt levels resulting from the
translation of the USD debt instruments at lower AUD:USD
exchange rates at 30 June 2013, plus a reduction in Newcrest’s
equity base resulting from the loss of A$6,207 million associated
with asset impairments and write-downs in the current period.

Newcrest seeks to maintain gearing at a low level so as to be
able to withstand extreme price volatility and be able to complete
approved major capital projects through such price volatility.
In the 2013 financial year, Newcrest experienced a severe fall
in the price of gold, which in turn adversely impacted earnings,
the carrying value of its assets and resulting gearing levels.

Newcrest believes that a low level of gearing is appropriate for
an unhedged gold producer and will be focussed on progressively
reducing gearing to the target level of around 15%, and returning
to paying dividends.

Following the large price shock in the 2013 financial year, delivery
of its two major capital project milestones in 2013, and having
focussed the business on maximising free cash flow, the Board
is comfortable with gearing being at higher than target levels in
the short to medium term, but will remain focussed on effecting
progressive reduction in gearing over time.

A$ million

Total debt
Less cash and cash equivalents

Net debt

Equity

Net debt and equity

As at 30 June

2013

2012

4,211
(69)

2,408
(242)

4,142

2,166

10,085

15,094

14,227

17,260

Gearing (net debt/net debt and equity)

29.1%

12.5%

Liquidity and debt facilities
In October 2012, Newcrest issued US$1,000 million in USD senior
unsecured notes. The notes were sold in accordance with Rule
144A and Regulation S of the Securities Act of the United States.
The notes consist of:
– US$750 million senior unsecured notes due 1 October 2022

with a coupon of 4.20%; and

– US$250 million senior unsecured notes due 15 November 2041

with a coupon of 5.75%.

These notes are additional to the issue of US$1,000 million
in notes in November 2011 comprising:
– US$750 million senior unsecured notes due 15 November 2021

with a coupon of 4.45%; and

– US$250 million senior unsecured notes due 15 November 2041

with a coupon of 5.75%.

Newcrest has US dollar bilateral bank facilities of US$2,500 million,
with US$1,675 million drawn down as at 30 June 2013. These are
committed unsecured revolving three and five year facilities with
maturities in September 2015 and September 2017. Interest is
based on LIBOR plus a margin which varies amongst the lenders.

Newcrest also has US$230 million of long-term senior unsecured
notes issued into the United States Private Placement market.
The notes comprise three tranches at an average fixed interest
rate of 5.7% per annum. The notes have a repayment profile
from May 2015 to May 2020, and have been classified as
non-current borrowings.

50(cid:14)NEWCREST MINING ANNUAL REPORT 2013

6. NON-IFRS FINANCIAL INFORMATION

Underlying profit, EBIT, EBITDA, and All-in Sustaining Costs are
non-IFRS financial measures which Newcrest employs in managing
the business. They have been included in the Operating and
Financial Review to provide additional insight and understanding
of business performance for users of this financial information.
When reviewing business performance this information should
be used in addition to, and not as a replacement of, measures
prepared in accordance with IFRS.

These measures do not have any standard definition under IFRS
and may be calculated differently by other companies. The tables
below reconcile these non-IFRS measures to the most appropriate
IFRS measure.

6.1 Reconciliation of Statutory Profit to Underlying Profit
Underlying profit is reported by Newcrest to provide greater
understanding of the underlying business performance of
its operations. Underlying profit excludes significant items of
income or expense which are, either individually or in aggregate,
material to Newcrest or to the relevant business segment and
are either outside the ordinary course of business or are part
of the ordinary activities of the business but unusual due to their
size and nature. Examples include gains/losses and other costs
incurred for acquisitions and disposals of mining interests, asset
impairment and write-down charges and gains/losses on the close
out and/or restructuring of hedge contracts. Underlying profit
and Statutory profit both represent amounts attributable to
Newcrest shareholders.

The following table provides a reconciliation of Statutory profit
to Underlying profit in the 2013 financial year:

The following table provides a reconciliation of Statutory profit
to Underlying profit in the 2012 financial year:

For the year ended 30 June 2012

Non-
controlling

A$million

Before tax

Tax

interest After tax

Profit after tax attributable
to Newcrest shareholders
‘Statutory profit/(loss)’
Losses on restructured and
closed out hedge contracts
Business acquisition
and integration costs
Gain on business divestment

Total of significant items

1,577

(402)

(58)

1,117

11
(46)

(28)

(2)

(3)
–

(5)

–

–
–

–

8
(46)

(33)

Underlying profit

1,549

(407)

(58)

1,084

6.2 Reconciliation of Underlying Profit to EBITDA

For the year ended 30 June

A$ million

Underlying Profit

Non-controlling interest in controlled entities

Income tax expense

Net finance costs

EBIT

2013

2012

451

1,084

165

109

407

756

1,590

611

1,367

561

2,151

For the year ended 30 June 2013

Non-
controlling

Depreciation and amortisation

EBITDA

A$million

Before tax

Tax

interest After tax

Profit after tax attributable
to Newcrest shareholders
‘Statutory profit/(loss)’
Asset impairments
Asset write-downs
Inventory write-downs
De-recognition of
deferred tax assets
Investment in Evolution –
share of associate’s impairment
Investment in Evolution
– investment impairment
Restructure costs

(6,188)
6,147
166
177

412
(564)
(50)
(47)

(2)
(27)
–
(2)

(5,778)
5 ,556
116
128

–

105

122

–

151
72

–
(21)

–

–
–

105

122

151
51

Total of significant items

6,835

(577)

(29)

6,229

Underlying profit

647

(165)

(31)

451

6.3 Reconciliation of All-in Sustaining Cost to Cost of Sales
‘All-in Sustaining Cost’ is a new non-IFRS measure which Newcrest
has adopted from 2013. This non-IFRS measure was developed
in conjunction with other members of the World Gold Council.
Newcrest believes the ‘All-in Sustaining Cost’ measure more
fully defines the costs associated with producing gold from
current operations.

For the year ended 30 June 2013

$A million $/oz sold

Cost of sales (refer section 3.4)

2,753

1,355

less Depreciation
plus By-products
plus Corporate costs
plus On-site exploration
plus Capitalised stripping and
underground mine development
plus Sustaining capital expenditure
plus Other(1)

(589)
(626)
110
32

346
572
9

(290)
(308)
54
16

170
281
5

All-in sustaining costs

2,607

1,283

Gold sales (excluding capitalised ounces sold) 2,032,228

(1) Other includes Rehabilitation – accretion and amortisation, and non-cash

finished goods stock valuation adjustments.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)51

Directors’ Report
OPERATING AND FINANCIAL REVIEW

7. OUTLOOK AND RISKS

7.1 Outlook
The 2014 budget was developed in the context of a volatile
market climate, including a sharp deterioration in the gold price.
Key outcomes of the planning for the 2014 financial year confirmed
actions to maximise free cash flow, optimise and reduce activity,
and remove high cost gold ounces from the production profile.

Newcrest’s key priorities in the 2014 financial year continue to be
optimisation of the Lihir process plant, the ramp up of Cadia East,
positioning Wafi-Golpu as a future production asset, achieving
consistent production, and reducing costs and capital across the
Company. Newcrest has long reserve and resource life positions
and has many growth options that can be progressed depending
on market conditions.

For the 2014 financial year, Newcrest provides the following
operational and financial outlook:
– Gold production is expected to be 2.0 to 2.3 million ounces.
– Copper production is expected to be 75 to 85 thousand tonnes.
– Capital expenditure is expected to be around A$1 billion and

exploration expenditure around A$85 million.

– The first quarter gold production for the 2014 financial year is

expected to be lower than the June 2013 quarter, with production
expected to progressively increase over the course of the
financial year.

Production and costs will continue to be actively managed
to target a free cash flow neutral or positive outcome for the
Company in the current market environment. At a gold price
of A$1,450 per ounce all operations are projected to be free
cashflow neutral or positive in the 2014 financial year.

The Company reiterates the position set out in its previous recent
releases, including that of 7 June 2013, regarding the Company’s
approach to focus on maximising free cash flow in the context
of the current market environment and outlook. Operating in this
manner will be a key determinant of future production levels and
the timing of future expansions. With the volatility in the current
market climate, Newcrest is not providing any general quantitative
commentary on its production profile beyond financial year 2014.
Newcrest has taken and will continue to progress a range of
actions to maximise free cash flow over the next three years.
These include:
– Cutting discretionary spend on projects and studies;
– A significant reduction in exploration activities;
– A continuous ‘cost out’ program across all operations;
– Increasing stockpile utilisation at Lihir and reducing open pit

material movements generally; and

– Removing higher cost ounces from the production profile.

7.2 Risks
Newcrest prepares forward estimates of production and financial
performance based on a business planning system and a range
of assumptions and expectations. There is a level of uncertainty
in each of these assumptions and expectations, and risk that
variation from them could result in actual performance being
different from expected outcomes. These uncertainties and
exposures arise from a range of factors including Newcrest’s
international operating scope, the nature of the mining industry
and external economic factors.

Set out below are those matters which the Company has assessed
as having the potential to have a material adverse effect on
the operating and financial performance of the Company as
at 30 June 2013.

The risks described below are not the only risks that Newcrest
faces. Additional risks and uncertainties not presently known
to management or that management currently believes to be
immaterial may adversely affect Newcrest’s business.

Commodity prices
Newcrest’s performance is dependent on the market prices of
gold and, to a lesser extent, copper and silver, which are volatile,
subject to sharp, short-term changes, and are affected by
numerous factors beyond Newcrest’s control.

Depending on the market prices of the relevant metal, Newcrest
may determine that it is not economically feasible to continue
commercial production, or to continue commercial production
at the current levels, at some or all of its operations or to proceed
with some or all of its development projects, which could have an
adverse impact on Newcrest’s financial performance and results
of operations. In such circumstances, Newcrest may also curtail
exploration activities, with the result that depleted reserves
may not be replaced, and the market value of Newcrest’s gold
or copper inventory may be reduced and existing reserves may
be reduced to the extent that ore cannot be mined and processed
economically at the prevailing prices.

Foreign exchange
Gold and copper are each sold globally based principally on the
US dollar price, and most of Newcrest’s revenues are realised in
or linked to US dollars. As most of Newcrest’s operating costs
are denominated in local currencies, in the absence of other
changes, if the various local currencies strengthen (particularly
the Australian dollar) in value relative to the US dollar, Newcrest’s
financial results are likely to be adversely affected.

Increased costs and production inputs
Production costs are frequently subject to variations from one
year to the next due to a number of factors, including changing
ore grade and metallurgy, revisions to mine plans in response
to the physical shape and location of an ore body, and/or changes
to meet external economic conditions. In addition, operating costs
and capital expenditure are, to a significant extent, driven by the
cost of commodity inputs consumed in mining (including fuel,
chemical reagents, explosives, tyres, electricity and steel), labour
costs and also by credits from by-products such as copper and
silver, each of which may be subject to volatile price movements.
Increases in costs may have a material adverse effect upon the
profitability of existing mining operations, Newcrest’s ability to
lower its cost profile and meet projected operating cost targets
at its mines and returns anticipated from new mining projects
and could make certain mines or projects uneconomic.

Project development
The profitability of mining companies depends partly on the actual
performance of developing and operating mines, which may differ
significantly from estimates determined at the time the relevant
project was approved following completion of its feasibility study.
Newcrest’s current or future development activities may not result
in expansion or replacement of current production, or one or more
new productions sites or facilities may be less profitable than
anticipated or may not be profitable at all. A failure to develop
and operate mining projects in accordance with, or in excess
of, Newcrest’s expectations could negatively impact its results
of operations, as well as its financial condition and prospects.

52(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Operating risks and hazards
Newcrest is susceptible to events that may adversely impact
upon its ability to produce gold and other metals to meet
production targets, including (without limitation) unanticipated
ground conditions, industrial incidents, infrastructure and
equipment under-performance or failure, shortage of principal
supplies, transportation and aviation issues, environmental
incidents, safety-related incidents, interruptions and delays due
to community issues, and natural events such as seismic activity
and severe weather conditions (including floods and drought).

A key operational risk for Newcrest is the availability of power
and water to support mining and mineral processing activities,
particularly at Newcrest’s remotely located assets. Even a
temporary interruption of power or water supply could adversely
affect an operation.

Newcrest’s operations in Indonesia and Papua New Guinea are
in areas known to be seismically active and are subject to the
risks of earthquakes and related risks of tidal surge and tsunami,
which are difficult to predict. Some of Newcrest’s operations may
also experience other specific operating challenges, such as the
underground risks at Gosowong relating to temperature and
ground conditions.

Political, economic, social and security risks
Newcrest has production, development and exploration
operations in developing countries that are subject to political,
economic and other risks and uncertainties. The formulation
and implementation of government policies in these countries
may be unpredictable. Risks associated with governments in
developing countries include (without limitation) the potential for
nationalisation of private assets without adequate compensation,
authorities seeking to review or re-open decisions, including
approvals, licences and the grant of tenements, or material
changes to the legal, ownership, fiscal (including taxes, royalties
and duties), exchange control, environmental and social laws
and regimes that currently apply, each of which could have
a material adverse effect on Newcrest’s operating results and
financial condition.

For example, mineral ownership under the Papua New Guinea
Mining Act remains a high profile social and political issue in Papua
New Guinea. In the context of the Ramu Nickel mine project and
the PNG LNG gas project (which are projects unrelated to Newcrest),
certain landowner clans sought, through proceedings in the Papua
New Guinea National Court, to question the constitutional validity
of the State of Papua New Guinea’s assertion of property rights
in petroleum and minerals, such as the State’s right to grant
petroleum and mining tenements over specified customary land
under petroleum and mining legislation. These proceedings, while
dismissed, highlight the risk of landowners in Papua New Guinea
taking action which could have a material adverse impact on
mining developments and operations.

There can be no certainty as to what changes, if any, will be made
to the Papua New Guinea Mining Act under the new government.
Changes to the Papua New Guinea Mining Act may have a
material adverse impact on Newcrest’s ability to own or operate
its respective properties and to conduct its business in Papua
New Guinea.

Law and regulation
Newcrest’s current and future mining, development and
exploration activities are subject to various national and local laws,
policies and regulations governing the development and mining
of mineral deposits, taxation and royalties, import and export
duties and restrictions, exchange controls, foreign investment
approvals, employee and community relations, and environmental
and other matters. No guarantee can be given that all necessary
permits, authorisations, agreements or licences will be issued
to Newcrest or, if they are issued, renewed, or that Newcrest will
be in a position to comply with all conditions that are imposed.

Any changes to legislation, regulations or government policies
in any of the jurisdictions in which Newcrest operates may
have an adverse impact on Newcrest’s results, operations
or financial position.

In particular, Newcrest is subject to extensive laws and regulation
in relation to the environment and health and safety.

Mining operations and development activities have inherent risks
and liabilities associated with harm to the environment and the
disposal of waste products. A key consideration in Newcrest’s
production operations is the management of tailings from the
processing of ore. Environmental laws and regulations require
significant expenditures for environmental protection equipment,
compliance and land rehabilitation. Newcrest is required to
close its operations and rehabilitate the lands that it mines in
accordance with applicable environmental laws and regulations.
Estimates of closure and rehabilitation liabilities are based
principally on current legal and regulatory requirements and actual
costs may vary materially. In addition, adverse or deteriorating
external economic conditions may bring forward mine closure
and associated closure and rehabilitation costs.

Certain NGOs, including increasingly international NGO and
ethical investment advisory bodies and other similar institutions,
are vocal critics of the mining industry and its practices, including
in relation to the use of cyanide (which is used by Newcrest
in gold processing at some of Newcrest’s operating sites), and
other hazardous substances in processing activities, and the
use of deep sea tailings placement (which is used by Newcrest
at the Lihir operation).

Environmental laws and regulations are continually changing
and are generally becoming more onerous. If Newcrest’s
environmental compliance obligations were to change as a
result of changes in the laws and regulations, or if unanticipated
environmental conditions or incidents were to arise at any of
Newcrest’s operations, its expenses and provisions may increase,
and its production may decrease, to reflect those changes.

Further, failure to comply with environmental laws and regulations
could result in enforcement action which, if successfully prosecuted,
could result in monetary penalties or suspension or closure of
Newcrest operations, in addition to reputational harm.

Newcrest’s production, development and exploration operations
are also subject to extensive generic and mining-specific health
and safety laws and regulations. Changes to these laws may result
in material additional expenditure or interruption to Newcrest’s
activities in order to comply with changing requirements. Failure
to comply with health and safety laws could result in enforcement
action which, if successfully prosecuted, could result in monetary
penalties or suspension or closure of Newcrest operations,
in addition to reputational harm.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)53

Directors’ Report
OPERATING AND FINANCIAL REVIEW

7. OUTLOOK AND RISKS (continued)

7.2 Risks (continued)
Community relations
A failure to adequately manage community and social
expectations within the communities in which Newcrest operates
– and/or elevated levels of community expectations – may lead
to local dissatisfaction, which, in turn, may lead to interruptions to
Newcrest’s production, development and explorations operations.

The compensation agreements in place with customary
landowners in relation to Newcrest’s Papua New Guinea operations
are subject to periodic review, with the compensation agreement
for the Lihir operation currently under review. There can be
no assurance that disputes will not arise with the customary
landowners in connection with these negotiations, which,
if prolonged, could lead to disruptions to Newcrest’s projects
and operations while Newcrest is negotiating these arrangements.

In addition, there is an increasing level of public concern relating
to the perceived effect of mining activities on the environment and
on the communities located near such activities. Adverse publicity
generated by non-government-organisation criticism or others
relating to extractive industries generally, or Newcrest specifically,
could have an adverse impact on Newcrest’s reputation or
financial condition and may impact on Newcrest’s relationships
with the communities in which it operates. No assurance can
be given that incidents will not arise that generate community
concerns associated with Newcrest’s operations and potentially
cause disruptions until resolved.

Recovery of resources and reserves
The estimation of mineral resources and ore reserves are necessarily
imprecise and involve subjective judgements regarding, among
other things, grade distribution or mineralisation, the ability
to economically extract and process mineralisation, and future
commodity prices and operating costs. Such estimates involve
statistical analysis which may subsequently prove to be unreliable
or flawed. Newcrest undertakes annual updates of its mineral
reserves and ore reserves based upon a number of factors,
including (without limitation) actual exploration drilling and
production results, economic assumptions (including, for example,
commodity prices and exchange rates), and operating and other
costs. These factors may result in reductions in Newcrest’s mineral
resources and ore reserves estimates, which could adversely
affect the life-of-mine plans and, consequently, the total value
of Newcrest’s asset base.

Reliance on contractors
Some aspects of Newcrest’s production, development and
exploration operations are conducted by contractors. As a result,
Newcrest’s results from production and financial conditions
are impacted upon by the performance of contractors and
the associated risks, some of which are outside of Newcrest’s
full control.

Future operating and capital cost requirements
Newcrest’s operating cash flows may not be sufficient to fund its
operations and capital expenditure, and Newcrest may from time
to time be required to draw down under its available debt facilities.
To the extent that Newcrest’s operating cash flows and debt
facilities are insufficient to meet its requirements for ongoing
operations and capital expenditure, Newcrest may need to seek
additional funding through asset divestitures, further equity or
debt issue, or additional bank debt, or Newcrest may need to defer
capital expenditure. Newcrest’s ability to raise and service further
additional funding will be a function of a number of factors,
including (without limitation) macroeconomic conditions, future
gold and copper prices, Newcrest’s credit rating and operational
cash flow and production performance. If Newcrest is unable
to obtain additional funding on acceptable terms in these
circumstances, its financial condition and ability to continue
operating may be adversely affected.

54(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Maintaining good title
Newcrest’s production, development and exploration
operations are subject to Newcrest maintaining good title to
the authorisations, permits and licences (together, ‘Authorities’)
which support those operations. There may be challenges
to Newcrest’s Authorities which, if successful, could impact
Newcrest’s exploration, development and/or mining operations.

New acquisitions
Newcrest’s ability to make successful acquisitions and any
difficulties or time delays in achieving successful integration
of any such acquisitions could have a material adverse effect on
its business, operating results and financial condition. Business
combinations and acquisitions entail a number of risks including
the effective integration of acquisitions to realise synergies,
significant one-time write-offs or restructuring charges and
unanticipated costs and liabilities including unforeseen plant
and equipment reliability issues. Newcrest may also be liable
for the acts or omissions of predecessors or otherwise exposed
to liabilities it has assumed that were unforseen or greater
than anticipated.

Human resources and industrial relations
Newcrest competes with mining and other companies to attract
and retain key employees and third party contractors with
appropriate technical skills and managerial experience necessary
to continue to operate its business. There can be no assurance
that Newcrest will be able to attract and retain skilled and
experienced personnel and, should Newcrest lose any of its key
personnel or fail to attract personnel, its business may be harmed
and its results of operations and financial condition could be
adversely affected.

Newcrest may be impacted by industrial relations issues in
connection with its employees and the employees of Newcrest’s
contractors and suppliers. Any such activity could cause
production delays, increased labour costs and adversely
impact Newcrest’s ability to meet its production forecasts.

Exploration, feasibility studies and other project
evaluation activities
Newcrest’s ability to sustain or increase its current level of
production in the longer term is in part dependent on the success
of its exploration activities in replacing gold and copper reserves
depleted by production, the development of new projects and
the expansion of existing operations.

Exploration activities are speculative in nature and often require
substantial expenditure on exploration drilling to establish
the presence, extent and grade (metal content) of mineralised
material. Newcrest undertakes feasibility studies to assess
the technical and economic viability of mining projects and
to determine appropriate mining methods and metallurgical
recovery processes.

Once mineralisation is discovered it may take several years to
determine whether adequate Ore Reserves exist, during which
time the economic viability of the project may change due to
fluctuations in factors that affect both revenue and costs, including
commodity prices, currency exchange rates, the required return
on capital and future cost of development and mining operations.

Feasibility studies also include estimates of anticipated grade and
metallurgical characteristics of the ore body, metal recovery rates,
and capital expenditure and operating costs.

These estimates depend on assumptions based on available data
which is usually limited. Further exploration and feasibility studies
can result in new data becoming available that may change
previous estimates which will impact the technical and economic
viability of development and mining operations. Changes in the
forecast prices of commodities, exchange rates, production costs
or recovery rates may impact upon depreciation and amortisation
rates, asset-carrying values, provisions for close-down, restoration
and environmental clean-up costs. In addition, Newcrest may
need to acquire expertise in areas of extraction that it currently
does not have, which may be costly and take time to acquire.

Newcrest competes with other mining companies
for projects to replace reserves
The increased demand for gold and other commodities,
combined with a declining rate of discovery of new gold deposits
has, in recent years, resulted in accelerated depletion of existing
mineral reserves across the global gold sector. Newcrest therefore
faces intense competition for the acquisition of attractive
exploration and mining properties to replace its reserves.
From time to time, Newcrest evaluates the acquisition of mineral
deposits, exploration or development properties and operating
mines, either as stand-alone assets or as parts of companies.
Newcrest’s decision to acquire these properties has been, and
will be, based on a variety of factors, including historical operating
results, estimates and assumptions regarding the extent of
mineralisation and mineral reserves, cash and other operating
costs, gold prices, projected economic returns and evaluations of
existing or potential liabilities associated with the relevant assets
and how these factors may change in future. Other than historical
operating results, these factors are uncertain and could have an
impact on revenue, cash and other operating costs, as well as
the process used to estimate mineral reserves. As a result of this
competition, exploration and acquisitions by Newcrest may not
result in it being able to maintain or increase its mineral reserves,
which could negatively impact its results of operations, as well
as its financial condition and prospects.

Geotechnical, geothermal and hydrological challenges
Newcrest faces continued geotechnical challenges, in particular
due to the trend toward mining deeper pits, more complex
deposits and the use of underground block and panel caving
methods. This leads to higher pit walls, more complex underground
environments and increased exposure to geotechnical instability
and hydrological impacts. As Newcrest’s operations are maturing,
the open pits at its sites are getting deeper and Newcrest is
pursuing mining of significant underground deposits and may
experience geotechnical failures at some of its mines.

There are a number of risks and uncertainties associated with
the block caving and panel caving mining methods, including that
a deposit may not cave as anticipated, the wide spans needed give
rise to a risk of unplanned ground movement due to changes in
stresses in the surrounding rock and the risk of unplanned release
of material and/or water through drawbells and ventilation shafts.
Block caving is used to mine Ridgeway Deeps and Newcrest is using
the panel caving mining method at Cadia East.

In addition, the success of Newcrest at some of its operations,
including the Lihir operation, depends, in part, upon the
implementation of Newcrest’s engineering solutions to particular
hydrological and geothermal conditions. Significant removal of
both groundwater and sea water inflow and geothermal control
is required before and during mining. A failure to resolve any
unexpected problems relating to these conditions at a commercially
reasonable cost could adversely affect the economics, safety or
feasibility of Newcrest’s operations.

No assurances can be given that unanticipated adverse
geotechnical and hydrological conditions will not occur in the
future or that such events will be detected in advance. Geotechnical
failures could result in limited or restricted access to mine sites,
suspension of operations, injury or death of employees or third
parties, government investigations, increased monitoring costs,
remediation costs, loss of ore and other impacts, which could
cause one or more of Newcrest’s projects or operations to be less
profitable than currently anticipated and could result in a material
adverse effect on its results of operations and financial position.

Joint venture arrangements
Newcrest has the following material joint venture interests
through its subsidiaries:
– A 50% interest in the Morobe Mining Joint Ventures, comprising
the Hidden Valley mine unincorporated joint venture, which holds
the Hidden Valley operation in Papua New Guinea, the Wafi-Golpu
unincorporated joint venture, which holds the Wafi-Golpu
exploration project and related exploration tenements in Papua
New Guinea, and the Morobe exploration unincorporated joint
venture, which holds a portfolio of exploration tenements in the
Morobe Province in Papua New Guinea. The other 50% interest in
each of the Morobe Mining Joint Ventures is held by subsidiaries
of Harmony Gold Mining Company Limited;

– A 75% interest in PTNHM, which is an incorporated joint venture

company that operates the Gosowong project in Indonesia.
PT Aneka Tambang holds the remaining 25% interest;

– An 89.89% interest in LGL Mines CI SA, which is an incorporated
joint venture company that owns and operates the Bonikro gold
mine. The government of Côte d’Ivoire has a 10% interest and
the remaining interest is held by a minority shareholder; and
– A 69.94% interest in the Namosi unincorporated joint venture,

which is a project to explore for porphyry copper-gold and
epithermal style gold mineralisation in the Namosi region of Fiji.
The remaining interests are held by a subsidiary of Mitsubishi
Materials Corporation and Nittetsu Mining Co. Ltd.

The existence or occurrence of one or more of the following
circumstances and events could have a material adverse impact
on Newcrest’s profitability or the viability of its interests held
through joint ventures, which could have a material adverse
impact on Newcrest’s future cash flows, earnings, results of
operations, financial condition and prospects: (i) disagreement
with joint venture partners on how to develop and operate
the mines or projects efficiently; (ii) inability of joint venture
partners to meet their obligations, including funding for capital
expenditure, to the joint venture or third parties; (iii) litigation
between joint venture partners regarding joint venture matters;
and (iv) the particular risks associated with joint ventures where
a sovereign State holds an interest, including the extent to which
the State intends to engage in project decision making and the
ability of the State to fund its proportionate share of project costs.

The occurrence of events for which Newcrest is not insured
or for which its insurance is inadequate may adversely affect
its cash flows and overall profitability
Newcrest maintains a comprehensive insurance program,
including policies for property damage and business interruption,
designed to protect it against events which could have a significant
adverse effect on its operations and profitability. Newcrest’s
insurances do not cover all potential risks associated with its
business. Newcrest may elect not to insure or to self-insure
against certain risks, where the premiums associated with
insuring against those risks are considered to be excessive
or for various other reasons, including an assessment that the
risks are remote. Further, Newcrest’s insurance policies carry
deductibles and limits which apply in the event of a claim which
may lead to Newcrest not recovering the full monetary impact
of an insured event. The occurrence of events for which Newcrest
is not insured may adversely affect Newcrest’s cash flows and
overall profitability.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)55

Directors’ Report
REMUNERATION REPORT

1. INTRODUCTION

1.1 About this Report
This Remuneration Report forms part of the Directors’ Report.
It outlines the overall remuneration strategy, framework and
practices adopted by the Company and the Group for the period
1 July 2012 – 30 June 2013 and has been prepared in accordance
with Section 300A of the Corporations Act 2001 and its regulations.
This entire Remuneration Report is designated as audited.

In accordance with the Corporations Act 2001, this Remuneration
Report discloses prescribed remuneration details for the Group’s
Key Management Personnel.

Key Management Personnel are those persons having authority
and responsibility for planning, directing and controlling the
activities of the Company and the Group, directly or indirectly,
being the Company’s Non-Executive Directors whose names appear
in Table 8, and the Executive Directors and Executive Managers
whose names appear in Table 7.

In this Report, the term Executive Directors refers to the Managing
Director and the Finance Director, and the term Executive Managers
refers to Key Management Personnel who are not Directors.

1.2 Overview of Contents

Section

Contents

Introduction

Newcrest Remuneration Framework 2012–13

Human Resources and Remuneration Committee

Non-Executive Directors’ Remuneration

Executive Director and Executive Manager Remuneration

Relationship of Incentives to Newcrest’s
Financial Performance

Executive Service Agreements

Remuneration Details

Rights held by Executive Directors and
Executive Managers

1.3 Executive Summary
Remuneration Strategy
In 2012–13, the Board continued to oversee implementation of its
remuneration strategy, supported by the Human Resources and
Remuneration Committee. The key elements of the remuneration
strategy are:
– market-competitive levels of remuneration to employees

having regard both to the level of work and to the impact those
employees could potentially have on the Company’s performance;

– appropriate levels of at-risk performance pay to encourage,

recognise and reward high performance;

– group performance measures which align performance

incentives with the interests of shareholders;

– attraction and retention of talented, high performing

employees; and

– a remuneration structure that provides the appropriate

balance in risk and reward sharing between each participant
and the Company.

Remuneration Outcomes for 2012–13
Remuneration outcomes for 2012–13 reflected the Company’s
financial performance during the same period. The year was
characterised by a volatile external environment, including the
steepest fall in the gold price for 30 years and a strong Australian
dollar, a challenging operating environment and its impact on
the Company’s balance sheet. A combination of application of
the Short Term Incentive measures and the exercise by the Board
of its discretion, resulted in a zero Short Term Incentive outcome
for the Managing Director and significantly reduced awards for
the Finance Director and Executive Managers, below 8% of the
maximum STI award in each case. Details of actual awards under
the 2013 Short Term Incentive are set out in Tables 9 and 14.
The Board also determined that Executive Directors and Executive
Managers would receive a zero salary increase in the Company’s
annual pay review in October 2013.

2. NEWCREST REMUNERATION FRAMEWORK 2012–13

2.1 Remuneration Policy
The Board’s remuneration policy continues to provide
market-competitive levels of remuneration for all employees,
and for Non-Executive Directors, Executive Directors and Executive
Managers, having regard to both the size and complexity of
the Company, and the level of work and the impact that those
employees can potentially have on Company performance.

The policy also seeks to align the interests of employees
and shareholders by ensuring an appropriate level of
at-risk performance pay across the Company, linking
incentives and performance measures to both Company
and individual performance.

Performance linked compensation includes both short- and
long-term incentives, and is designed to reward employees
for increasing shareholder value by meeting or exceeding
their Company and, where applicable, individual objectives.

2.2 Non-Executive Directors
Non-Executive Director fees are set based upon the need to
appropriately attract and retain individuals of suitable calibre,
reflecting the demands of the role and fairness in relation
to prevailing market conditions.

Non-Executive Directors’ fees are reviewed every two years and
were last adjusted in December 2010 (with effect from 1 January
2011). In 2012, the Board resolved that the two yearly review
of Non-Executive Directors’ fees should be postponed until
the following year. In June 2013, the Board again deferred
review of Non-Executive Directors’ fees. These remain at the
level set in December 2010 following benchmarking and review
by an independent remuneration consultant. Details of current
Non-Executive Directors’ fees are set out in section 4.

2.3 Executive Directors and Executive Managers
Executive Director and Executive Manager remuneration comprises
both fixed and variable components. Fixed remuneration is set
with reference to fixed remuneration paid by a comparator group
of companies for comparable roles.

Variable equity and cash remuneration in 2012–13 were offered
respectively under the Long Term Incentive Plan and the Short
Term Incentive Plan.

Details of the above incentive schemes are set out in sections
5.5 and 5.6.

56(cid:14)NEWCREST MINING ANNUAL REPORT 2013

3. HUMAN RESOURCES AND REMUNERATION COMMITTEE

3.1 Role of the Human Resources and
Remuneration Committee
The role of the Human Resources and Remuneration Committee
is to review, advise and formulate recommendations to the
Board in relation to matters within its Charter, to refer these
to the Board for determination, and to oversee implementation
and administration of major components of the Company’s
Board approved remuneration strategy. Further details of the
Human Resources and Remuneration Committee, its membership,
functions and operation, are set out in the Corporate Governance
section of the Annual Report. The Human Resources and
Remuneration Committee Charter is available on the Company’s
website: www.newcrest.com.au.

4. NON-EXECUTIVE DIRECTORS’ REMUNERATION

4.1 Policy – Independence and Impartiality
In order to maintain impartiality and independence, Non-Executive
Directors do not receive any performance-related remuneration
and are not entitled to participate in the Company’s employee
cash and equity remuneration schemes.

4.2 Fixed Fees
Non-Executive Directors, including the Chairman, are paid fixed
fees for their services to the Company. Those fees are inclusive of
any contribution to superannuation that a Non-Executive Director
wishes to make or which the Company is required by law to make
on behalf of a Non-Executive Director. The level and structure
of fees is based upon:

– the need for the Company to attract and retain Non-Executive

Directors of suitable calibre;
– the demands of the role; and
– prevailing market conditions.

The aggregate amount of fees paid is within the overall amount
approved by shareholders in the Annual General Meeting. The last
determination made was at the Annual General Meeting held on
28 October 2010, at which shareholders approved an aggregate
amount of $2,700,000 per annum. The Board considered this
aggregate amount during 2012, determined that no change to
it was required, and deferred any further review until June 2013.
In June 2013, the Board resolved that the aggregate amount
of Non-Executive Directors’ fees should remain at the level
approved by shareholders in December 2010.

Fixed fees paid to Non-Executive Directors in 2012–13 are set
out in Table 8.

4.3 Additional Services
Under the Company’s Constitution, Non-Executive Directors
may be remunerated for additional services, for example, if they
undertake specialist or consulting work on behalf of the Company
outside the scope of their normal Director’s duties. No fees
for additional services were paid to Non-Executive Directors
in 2012–13.

4.4 Committee Fees
Details of all Board Committee fees paid during 2012–13 are
included under the heading ‘Committee Fees’ in Table 8. No other
fees were paid to Non-Executive Directors during 2012–13.

4.5 Review of Non-Executive Director Fees
The Company’s practice is to review Non-Executive Director
remuneration every two years. A review by an independent
specialist remuneration consultant was undertaken in November
2010, including a process of benchmarking against independent
Non-Executive Director fees paid to other ASX Top 20, Top 25
and Top 30 companies respectively. The review concluded and
recommended that Board and Committee fees should be adjusted
to be positioned around the median for ASX Top 30 companies
and that recommendation was adopted. As noted in section 2.2,
the Board resolved to postpone review of the Non-Executive
Director fees in 2012 and further deferred that review in 2013.
As a result, Non-Executive Director fees remain at the level
set in December 2010.

Current Non-Executive Director remuneration, comprises:
– base fees payable to the Board Chairman of $600,000 and to

each Non-Executive Director of $200,000 per annum respectively;

– fees payable to Audit and Risk Committee Chair and Committee

members of $50,000 and $25,000 respectively;

– fees payable to the Safety, Health and Environment Committee

Chair and Committee members of $40,000 and $20,000
respectively; and

– fees payable to the Human Resources and Remuneration
Committee Chair and Committee members of $40,000
and $20,000 respectively.

4.6 Requirement for Directors to Hold Shares
All Directors are required to hold shares in the Company.
The number of shares to be held and the timeframe in which
they are to be acquired are determined by the Board.

4.7 Retirement Benefits
Non-Executive Directors are not entitled to receive
a retirement benefit.

5. EXECUTIVE DIRECTOR AND EXECUTIVE MANAGER
REMUNERATION

5.1 Executive Reward Structure
The Company’s executive reward structure consists
of the following three elements:

– fixed remuneration;
– at-risk cash remuneration; and
– at-risk equity-based remuneration.

5.2 Board Policy and Strategy on Executive Remuneration
In 2012–13 the Board retained the remuneration elements
outlined above for Executive Directors and Executive Managers.
The structure of remuneration arrangements for Executive
Directors and Executive Managers is, in broad terms, no different
from that for other members of management across the Company.
The main differences relate to the weighting for different
components of their remuneration, with the proportion
of at-risk remuneration increasing with seniority.

Newcrest’s policy is to offer a competitive total remuneration
package for Executive Directors and Executive Managers,
benchmarked against comparable companies in Australia
and global mining companies.

5.3 Remuneration Consultants
The Company engages the services of independent and specialist
remuneration consultants from time to time and as required
in formulating recommendations on fixed remuneration
for Executive Directors and Executive Managers. Under the
Corporations Act 2001, remuneration consultants must be
engaged by the Non-Executive Directors and reporting of
any remuneration recommendations must be made directly
to the Remuneration Committee.

With respect to 2012–13, the Board on the recommendation
of the Human Resources and Remuneration Committee resolved
to appoint Pricewaterhouse Coopers (PwC) as the Company’s
remuneration consultants for the 2012–13 reporting period.
Neither the Board nor the Human Resources and Remuneration
Committee has sought or received remuneration recommendations
from PwC or any other remuneration consultant during the
2012–13 reporting period.

5.4 Determining Fixed Remuneration
The Board annually reviews and determines fixed remuneration
for the Managing Director. The Managing Director does the same
with respect to his direct reports, the Executive Management
group, subject to the Board’s oversight. The Executive Management
group reviews and recommends fixed remuneration for other
senior management, for the Managing Director’s approval.
Fixed remuneration for Executive Directors and Executive
Managers as at 30 June 2013 is set out in Table 7.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)57

Directors’ Report
REMUNERATION REPORT

5. EXECUTIVE DIRECTOR AND EXECUTIVE MANAGER REMUNERATION (continued)

5.5 Determining Variable Cash Remuneration
The Board takes the view that employee incentive schemes are important elements of remuneration that provide tangible incentives
to employees to improve the Company’s performance in both the short term and the longer term. In turn, improved performance
benefits shareholders.

To ensure the remuneration policy fully supports the Company’s commitment to high performance and to continue to attract high calibre
talent, remuneration levels must be competitive, but oriented towards variable, performance-based incentives. These involve meeting
robust performance hurdles to increase shareholder value and deliver variable rewards depending on the achievement of those hurdles.

The STI Plan is a short-term incentive program, based on both Company and individual employee performance-related measures.
Incentive payments in relation to performance over the 1 July 2012 to 30 June 2013 performance period are to be made in October 2013.

The LTI Plan complements the STI Plan with measures that help further drive long-term performance within Newcrest.

5.5.1 Short Term Incentive (STI) Plan
The STI Plan is designed to help drive performance within the Company by providing a vehicle for rewarding senior management and
executives. The performance measures are a combination of Group and individual measures, chosen to directly align the individual’s
reward to the Company’s strategy, performance and resultant shareholder value.

The amount of the entitlement is based on a percentage range of each participant’s fixed remuneration. The total potential STI available
is set at a level so as to provide sufficient incentive to individuals to achieve and exceed operational targets and group objectives.

In 2012–13, the Board determined that, consistent with the Group’s practice in recent years, any STI offered for the 1 July 2012 to
30 June 2013 performance period would be ‘cash only’. Equity continues to be offered to senior management and Executive Managers
through the LTI Plan.

The Board also resolved to award the 2012–13 STI without a deferred component, consistent with changes made to the STI Plan in
2010–11. At that time, the Board reviewed the purpose and effectiveness of deferral under the STI and concluded that it created a temporal
disconnect for participating Executive Directors and Executive Managers between satisfaction of performance measures and receiving the
award, and also because the nature of the performance measures for the STI are such that the Board is able to measure the performance
accurately, shortly following the end of the relevant performance period.

Payment of the STI is not accelerated on cessation of employment, but instead is paid in the normal STI cycle. Pro-rata treatment extends
to all STI participants other than those who resign or are dismissed for cause. This is to ensure that STI is only paid where performance
over the period meets, or exceeds, the agreed performance measures.

In respect of the 2012–13 STI, at target performance for Executive Directors and Executive Managers was set at 60% of fixed remuneration
with a maximum possible award of up to 120% of fixed remuneration. Around 44% of the outcome depends on Group performance and
around 56% on personal performance. Personal performance is measured against a set of Key Performance Indicators established by
the Board for the Managing Director and by the Managing Director in consultation with the Board for the Finance Director and Executive
Managers. The Group performance measures and outcomes for 2012–13 are set out in Table 6.

Table 1 contains a summary of key features of the STI Plan.

Table 1: 2013 Short Term Incentive Plan

Summary of the 2013 Short Term Incentive Plan

What is the 2013 Short Term
Incentive Plan?

An incentive plan under which eligible employees are (subject to satisfaction of specified performance
measures) granted a cash amount, which is based on a percentage range of each participant’s fixed
remuneration (determined according to seniority and ability to influence the performance of the Group).
Performance is assessed against a combination of Group and individual measures, with a weighting towards
individual performance.

When is the 2013 STI grant paid
to eligible employees?

The STI amount will be paid to each participant who satisfies applicable performance measures
in October 2013, following assessment of performance against the applicable measures during the
2012–13 performance period.

Who participates in the 2013 STI?

The Executive Directors, Executive Managers, management and supervisory employees participate
in the 2013 STI. In 2012–13, the Board again determined to extend the STI to supervisor level employees
to encourage and reward high performance.

Why does the Board consider the
2013 STI an appropriate incentive?

An STI is a globally recognised form of reward for management, aimed at ensuring focus and alignment
with Group goals and strategy. Based on both Group and individual measures, and in conjunction with
other factors, the Board believes that it helps encourage and reward high performance.

In what circumstances are 2013
STI entitlements forfeited?

What happens to 2013 STI
entitlements upon a change
of control in the Group?

Where, prior to conclusion of the relevant performance period, a participant is dismissed for cause, or
resigns from employment, prior to conclusion of the performance period, the STI amount will be forfeited
upon cessation of employment. Where a participant ceases to be employed by the Group prior to the end
of the performance period, other than due to those reasons, payment of the STI is pro-rated for the portion
of the performance period completed prior to cessation.

Upon a change of control event (as described in the plan rules), the Board must determine the extent, if any,
to which early vesting on a full or a pro-rated basis is the appropriate outcome in all the circumstances.

58(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Table 1: 2013 Short Term Incentive Plan (continued)

Summary of the 2013 Short Term Incentive Plan

What are the performance
conditions under the 2013 STI?

What is the relationship
between Group performance
and allocation of STI?

What is the period over which Group
performance is assessed?

The performance conditions under the 2013 STI comprise Group performance measures and personal
performance measures.
Group performance measures relate to:
– safety;
– earnings;
– costs; and
– one further discretionary Group performance measure determined annually.
The ‘Safety’ measure is based 50% on Total Recordable Injury Frequency Rate (TRIFR) and 50%
on actioning of the safety risk list. The measures quantify how much of the primary and secondary
safety risk lists must be actioned to achieve the measures. The safety measure is seen as critical
to the successful operation of the Group’s business.
‘Earnings’ relates to targets for net profit after tax and minority interests before significant items.
The earnings target is a direct financial measurement of the Company’s performance. The results are
adjusted for the effect of commodity prices, foreign exchange rates, significant items and other items
determined by the Board.
‘Costs’ relates to unit production costs before credits, being total production costs before by-product
revenue credits divided by total gold production. The cost measurement is intended to improve the
profitability of the business. The results are adjusted for the effect of commodity prices, foreign exchange
rates, significant items and other items determined by the Board.
Personal performance measures relate to:
– three objectives in key areas of the executive’s broader area of responsibility; and
– a fourth discretionary objective.
The key area objectives aim to encourage exceptional performance in the areas that will help drive the
Company’s longer-term strategy. The discretionary component is based on achievement of personal goals
and overall work performance. Each performance measure (other than the discretionary measure) has
an upper limit that caps the performance measure and a minimum threshold below which the measured
performance is zero.
The personal performance measures for the Executive Directors and Executive Managers in 2012–13 included
role specific elements relating to matters such as delivery of key corporate objectives, delivery of capital
projects, development of processes and building capacity, productivity, cost measures and positioning
future growth opportunities.

Performance against Group objectives is measured in the range of 0% to 125% and a minimum performance
threshold must be exceeded to achieve a positive outcome. Overall Group performance is measured as the
simple average of achieved performance against the four Group objectives.
Performance against each personal performance objective is measured on a scale of 0% to 160% and
the overall personal performance is measured as the simple average of the outcomes on the above
four personal measures.
Overall performance is calculated as Group performance multiplied by personal performance. The actual award
of STI is calculated by multiplying the overall performance rating by a participating employee’s target STI.

The assessment period is the financial year preceding the payment date of the STI (i.e. 1 July to 30 June).

5.6 Equity-Based Remuneration
The Board reviews and adjusts on an annual basis the content and balance of equity-based remuneration to ensure the effectiveness
of equity incentives and to recognise the potential impact on the Company of the Executive Directors and Executive Managers.

The amount of equity remuneration ultimately awarded is performance-dependent and will vary according to the extent to which the
related Group performance measures are met.

All equity-based remuneration is ‘at risk’ and will lapse or be forfeited if the prescribed performance conditions are not met by the Group.

The Company’s Securities Dealing Policy, in compliance with the requirements of the Corporations Act and the ASX, prohibits the use by
employees of derivatives such as caps, collars, warrants or similar products in relation to Newcrest securities, including shares acquired
under the Company’s equity incentive schemes, whether or not they are vested. The policy also prohibits the entry into transactions
in associated products that operate to limit the economic risk of their security or interest holdings in the Company. The Directors and
the Company Secretary are not permitted to enter into margin loans in relation to Newcrest securities at any time and other designated
employees must seek approval from the Company Secretary if they intend to enter into such transactions. The Securities Dealing Policy
forms part of each employee’s terms of employment. The Securities Dealing Policy is available on the Company’s website.

Table 2: Equity-based Remuneration as a percentage of Fixed Remuneration
for Executive Directors and Executive Managers in 2012–13

Managing
Director

Finance
Director

Executive
Managers

Total equity-based remuneration (maximum award)

100%

60%

NEWCREST MINING ANNUAL REPORT 2013(cid:14)59

Directors’ Report
REMUNERATION REPORT

5. EXECUTIVE DIRECTOR AND EXECUTIVE MANAGER REMUNERATION (continued)

5.6 Equity-Based Remuneration (continued)
5.6.1 Long Term Incentive (LTI)
An LTI grant was made in September 2012 with a performance period ending on 30 June 2015. This will vest, subject to satisfaction
of applicable performance conditions, on 23 September 2015. Rights granted in the financial years 2009–13 are set out in Table 13.

The Group performance measures, assessed over a three-year performance period, are three equally weighted performance measures, being:
– Comparative Cost Position;
– Reserves Growth; and
– Return on Capital Employed (ROCE).

Each LTI measure was chosen by the Board as it is a key driver of Group performance, Reserves Growth and Comparative Cost Position
being drivers of shareholder value in a gold mining company, and ROCE being a direct measure of capital efficiency.

Following completion of Newcrest’s acquisition by Scheme of Arrangement of Lihir Gold Limited in September 2010, the Board undertook
a full review of the suitability of these measures going forward, given Newcrest’s increased size and changed financial and production
profile. The Board concluded that the Comparative Cost Position and ROCE measures remained appropriate in their present form, but that
the Reserves Growth measure should:
– be based on an absolute increase in reserves after depletions as opposed to the previous measure of a percentage increase in reserves; and
– allow a proportion of the reserves growth to be contributed by copper reserve growth (in gold equivalent ounces).

The Board is currently reviewing the LTI performance measures for future grants to ensure they continue to deliver outcomes which align
reward with Group performance.

Table 3: Long Term Incentive Plan (LTI)

Summary of Long Term Incentive Plan

What is the LTI?

An incentive plan under which eligible employees are granted rights to receive ordinary fully paid shares
in the Company (Performance Rights). Vesting and exercise of the Performance Rights is contingent
on the Group achieving certain performance hurdles over a set performance period.

Who participates in the LTI?

The Executive Directors, Executive Managers and management participate in the LTI.

Why does the Board consider
the LTI an appropriate incentive?

The LTI is designed to reward participants for Group performance and to align the long-term interests
of shareholders, participating Executive Directors, Executive Managers and management and the Group,
by linking a significant proportion of at-risk remuneration to the Group’s future performance, currently
assessed over a three-year period from the date of grant of the Performance Rights.

What are the key features
of the LTI?

– Performance Rights issued under the LTI are conditional rights for the holder to subscribe for fully

paid ordinary shares in the Company.

– No amount is payable by a participant upon grant of the Performance Rights (unless the Board

determines otherwise), or upon the exercise of the Performance Rights once vested.

– Each Performance Right entitles the holder to subscribe for one ordinary share.
Performance Rights do not vest (and are not exercisable) if the minimum performance conditions
are not met.

The LTI amount will be forfeited upon cessation of employment prior to conclusion of the performance
period in circumstances where a participant is either dismissed for cause, resigns from employment,
or is guilty of fraud.

Performance Rights issued under the LTI Plan are subject to three performance measures based on:
– Comparative Cost Position;
– Reserves Growth; and
– Return on Capital Employed (ROCE).
Performance against each of these measures over the three-year vesting period accounts for one third
of any grant made to participants.
Comparative Cost Position is a relative measure of the Group’s cash cost of production after any by-product
credits, compared to other global producers. The GFMS Precious Metals Cost Service is an independent
web-based service, updated quarterly, which offers access to industry cost and production data. The gold
section of the GFMS Service captures cost and production data for around 200 operating mines controlled
by 90 companies, accounting for 1,400 tonnes of annual gold mine production (approximately two thirds of
global gold production annually). GFMS data is used for performance measurement over the LTI’s three-year
vesting period. The comparison is made by ranking the Group’s performance against all other producers
included in the GFMS Precious Metals Cost Service in accordance with their cash costs of production.
Reserves Growth is an absolute performance measure that refers to the growth in total in situ ore reserves at
the end of each performance period, net of mining depletion. Reserves growth is an absolute and objective
measure, based on the Company’s reserves figures. Broadly, the increase in reserves will determine the
number of rights granted. See below for further information on the Reserves Growth measure.
Return on Capital Employed (ROCE) is an absolute measure, defined as underlying earnings before interest
and tax (EBIT), divided by average capital employed, being shareholders’ equity plus net debt. ROCE for each
of the three years of the performance period is averaged to determine the number of Performance Rights
that may be exercised in relation to this performance measure.
All outcomes of the three LTI performance measures are independently reviewed and verified. The methods
for assessing satisfaction of these performance measures were selected because they provide an accurate
tool by which to assess performance against the relevant measure.

In what circumstances are
LTI entitlements forfeited?

What are the performance
conditions under the LTI?

60(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Table 3: Long Term Incentive Plan (LTI) (continued)

Summary of Long Term Incentive Plan

What is the relationship between
Group performance and allocation
of Performance Rights?

Comparative Cost Position
Performance against this measure accounts for one third of a participant’s Performance Rights
which may vest in any grant of LTI entitlements:
– at or above the 50th percentile leads to a zero award of these Performance Rights;
– less than the 50th percentile but at or above the 25th percentile leads to a 50% award of these

Performance Rights;

– below the 25th percentile but at or above the 10th percentile leads to an 80% award of these

Performance Rights;

– below the 10th percentile leads to a 100% award of these Performance Rights; and
– straight line vesting occurs between each of these thresholds.

Reserves Growth
Performance against this measure accounts for one third of Performance Rights, which may vest
in any grant of LTI entitlements.
The performance measure for Reserves Growth applicable for the 2009 LTI was:
– Less than 10% growth leads to a zero award of these Performance Rights.
– 10% growth leads to a 50% award of these Performance Rights.
– Greater than 10% growth up to 30% growth. Award of these Performance Rights is calculated pro-rata

with an additional 2.5% of Rights vesting for each percentage point above 10% growth.

– 30% growth or more leads to a 100% award.
The performance measure for Reserves Growth applicable for the 2010 and subsequent LTI grants allows
a proportion of the Reserves Growth to be contributed by growth in copper reserves after depletion (in gold
equivalent ounces). The contribution from copper reserves growth is capped at 30% of the applicable total
Reserves Growth performance target of 15 million ounces (or 4.5 million ounces). The performance measure
is based on absolute growth in reserves (as opposed to a percentage increase).
– Zero Reserves Growth after depletion leads to a zero award of these Rights.
– Reserves Growth after depletions at or above 15 million ounces leads to a 100% vesting of these

Performance Rights.

– Straight line vesting occurs between these thresholds.

Return on Capital employed (ROCE)
Performance against this measure accounts for one third of Rights, which may vest in any grant
of LTI entitlements.
– ROCE below 7% leads to a zero award of these Performance Rights.
– ROCE from 7% and below 17% leads to an award of 10% of these Performance Rights per percentage

point above 7%.

– ROCE at or above 17% leads to 100% of these Performance Rights vesting.

When do the Performance
Rights vest?

Performance Rights vest (i.e. may be exercised) three years after the date of grant, provided performance
conditions are met. Under the 2012 LTI grant, Performance Rights will be exercised automatically upon vesting.

What is the period over which
Group performance is assessed?

How are shares provided to
participants under the LTI?

The assessment period is the three financial years commencing on 1 July in the year the grant is issued.

Once Performance Rights have vested and are exercised, shares are either issued by the Company
to eligible LTI participants as new capital, or transferred from the Company’s share plan trust, having
previously been bought on market by the trustee.

Why did the Board choose the
above performance hurdles?

The Board considers that these performance measures are key factors which impact on the Company’s
share price and which drive the value of the Group over the long term.

Is the benefit of participation
in the LTI affected by changes
in the share price?

Are the performance conditions
re-tested?

What is the maximum number
of Performance Rights that may
be granted to an LTI participant?

Table 4: LTI Performance Hurdles

Yes, participants in the LTI will be affected in the same way as all other shareholders by changes in the
Company’s share price. The value participants receive through participation in the LTI will be reduced
if the share price falls during the performance period and will increase if the share price rises over the
performance period.

No, the performance conditions are only tested once at the end of the three-year performance period.

The maximum number of Performance Rights that may be granted is determined by the level of
equity based remuneration applicable to each participant. See Table 2.

The following is a summary of Performance Hurdles that relate to Share Plan awards that are yet to vest. Table 13 provides detail
of all Share Plan awards, including those that have vested, but have not yet been exercised.

Calendar Year

Grant Date

Performance Hurdle

2012 (LTI)

23 Sep 2012

The performance hurdles are based on Reserves Growth, Comparative Cost Position and ROCE.
(Refer to Table 3 for details).

2011 (LTI)

23 Sep 2011

The performance hurdles are based on Reserves Growth, Comparative Cost Position and ROCE.
(Refer to Table 3 for details).

2010 (LTI)

10 Nov 2010

The performance hurdles are based on Reserves Growth, Comparative Cost Position and ROCE.
(Refer to Table 3 for details).

NEWCREST MINING ANNUAL REPORT 2013(cid:14)61

Directors’ Report
REMUNERATION REPORT

5. EXECUTIVE DIRECTOR AND EXECUTIVE MANAGER
REMUNERATION (continued)

5.7 Medium Term Incentive (MTI)
The MTI scheme offered participants restricted rights to receive
ordinary fully paid shares in the Company after a three-year
vesting period – based on the Company’s Total Shareholder
Return performance against a comparator group of companies
in the financial year immediately prior to the date of grant of those
rights. The MTI has not been offered to Executive Directors and
Executive Management since 2007 and has been discontinued
as an incentive scheme. All Restricted Rights issued to Executive
Directors and Executive Managers under the MTI in prior periods
have now vested. The exercise period for these Restricted Rights
expired on 9 November 2012.

6. RELATIONSHIP OF INCENTIVES TO NEWCREST’S
FINANCIAL PERFORMANCE

Significant external challenges during 2012–13, including the
steepest fall in the gold price for 30 years; the strong Australian
dollar over an extended period and further increases in labour,
energy and other commodity costs, compression of values in the
gold industry and a challenging operating environment, impacted
on the Company’s performance, balance sheet and share price.

For 2012–13, STI outcomes were negatively impacted, as were
general remuneration outcomes. The Board also determined a zero
salary increase for Executive Directors and Executive Managers
in the October 2013 annual remuneration review.

STI outcomes (based on safety, earnings, costs and a discretionary
measure based on other overall company performance) were
significantly lower, with a Group performance outcome of 15.6%
in 2012–13 compared with 71.5% in 2011–12 and 89.0% for 2010–11.
For 2012–13 the Board determined a zero discretionary measure
score for the Company, compared with a target of 100%.

In relation to the STI awarded for 2012–13, the performance
against the Group performance objectives for Executive Directors
and Executive Managers is set out in Table 6. It shows that overall,
the Group performance was at 15.6% of the target, reflecting an
above-target performance for one of the two safety measures;
below target for earnings, costs and the remaining safety
measure; and a zero discretionary score. Performance above or
below target results in a percentage of target outcome based on
a scale of pro-rating pre-determined by the Board. The outcome
for each of the Executive Directors and Executive Managers has
been determined by the overall personal performance multiplied
by the Group’s overall performance and is set out in Table 14.

The following chart shows the relationship between STI Business
outcomes and the Newcrest average annual share price since 2009.

Newcrest Share Price
Business STI Outcome

120

100

e
m
o
c
t
u
O

I
T
S
s
s
e
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i
s
u
B

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

Year Ended 30 June

$
42

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r
a
e
Y
r
o
f
e
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a
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e
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A
(
e
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i
r
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e
N

LTI performance measures since November 2008 have been based
on a combination of the Group’s Reserves Growth, Comparative
Cost Position and Return on Capital Employed (ROCE) over
a three-year performance period.

The LTI performance measures are based on key business
drivers intended to result in superior financial performance over
the long term. Each measure was selected after an extensive
consultation process with shareholders, which produced strong
general agreement on which measures should create long-term
shareholder value.

The 2009 LTI vesting outcome in November 2012 was 78% against
the applicable performance measures compared with vesting
of 93.5% in the prior year. This measured performance against
the applicable performance measures over the period 1 July 2009
to 30 June 2012. The share price increased strongly from 2008 to
2011, but faced significant downward pressures in 2012 and 2013.
Table 5 illustrates the financial performance of the Company for
the period 30 June 2009 to 30 June 2013.

The 2012–13 Group performance will impact unvested and future
LTI outcomes. This is because the LTI performance measures, and
thus the proportion of LTI awarded, incorporates performance of
the Group in three consecutive years including the current year.

Table 5: Newcrest’s Financial Performance

Year Ended 30 June

2013

2012

2011

2010

2009

Basic Earnings/(Loss)
Per Share (EPS)(1) (cents)

(754.5)

146.0

126.4

115.2

53.0

Dividends (cents)(2)

12.0

35.0

30.0

25.0

15.0

Special Dividends (cents)

–

20.0

–

Share Price at 30 June ($)

9.87

22.61

37.71

35.10

30.51

Share Price
Increase/(decrease) ($)(3)

(12.74)

(15.10)

2.61

4.59

1.21

(1) Basic EPS is calculated as net profit after tax and non-controlling

interests (statutory profit) divided by the weighted average number
of ordinary shares.

(2) Dividends exclude special dividends.
(3) Share price movement during the financial year.

62(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Table 6: Performance objective for year ended 30 June 2013 (Executive Directors and Executive Managers)

Performance Objective

Safety
Total Recordable Injuries and Frequency Rate (TRIFR) for Newcrest
as a whole (Total recordable injuries per million work hours)

Safety Risk List (% action)(1)

Earnings
(Adjusted Net Profit/(Loss) after Tax and Significant Items)(2)

Costs
(Total Production Costs per ounce before by-product
revenue credits divided by total gold production)(3)

Discretionary Component(4)

Overall Group Performance(5)
(including discretionary component)

Target

Outcome

Percentage of
Target Achieved

<3.0

90% Risk Reduction
Actions On Time

3.6

100%

0%
(50% weighting)

125%
(50% weighting)

A$1,062 million

A$695 million

A$1,174/oz

A$1,303/oz

15.6%

(1) The Safety Risk List comprises risk reduction actions that have been developed as part of the risk assessment process conducted on the major safety

hazards across the Group.

(2) Actual earnings are adjusted for the effect of commodity prices, foreign exchange rates, significant items and other items as determined by the Board.
(3) Actual costs are adjusted for the effect of commodity prices, foreign exchange rates, significant items and other items as determined by the Board.
(4) The discretionary component is a discretionary assessment by the Board of the overall performance of the Group in areas other than safety,

earnings and costs.

(5) The overall Group performance, including discretionary component, for 2013 STI participants below Executive Manager level was 40.0%.

7. EXECUTIVE SERVICE AGREEMENTS

7.1 Overview and Summary
Remuneration and other key terms of employment for the Executive Directors and Executive Managers are formalised in the Executive
Service Agreements. These may be terminated by each Executive Manager by three months’ notice and by the Company by twelve
months’ notice or payment in lieu of notice.

Subject to compliance with other conditions as set out in the Corporations Act 2001, the maximum termination payment for Executive
Directors and Executive Managers is calculated as being the employee’s average fixed annual remuneration over the previous three years.

Fixed annual remuneration, inclusive of the required superannuation contribution amount, is reviewed annually by the Board following
the end of the financial year.

Table 7 lists each of the executives who was party to an Executive Service Agreement during 2012-13 and each position held.

Table 7: Executive Service Agreements

Name

Positions held during 2012–13

Date Appointed
to Position

Date Ceased
Holding Position

Fixed Annual
Remuneration $
(30 June 2013)

Greg Robinson

Managing Director and Chief Executive Officer

July 2011

Not applicable

2,000,000

Gerard Bond

Finance Director and Chief Financial Officer

January 2012

Not applicable

Lawrie Conway

Executive General Manager Commercial and West Africa

July 2011

Not applicable

Stephen Creese(1)

Executive General Manager Corporate Affairs

November 2009

1 July 2013

Geoff Day

Executive General Manager Sustainability and External Affairs

April 2013

Not applicable

Brett Fletcher(2)

Executive General Manager Lihir Operations

March 2011

Not applicable

Craig Jones(3)

Executive General Manager Projects and Asset Management

July 2012

Not applicable

Scott Langford

General Counsel and Company Secretary

Andrew Logan(4)

Executive General Manager Technology

Colin Moorhead

Executive General Manager Minerals

July 2012

Not applicable

July 2011

Not applicable

January 2008

Not applicable

Peter Smith(2)(5)

Executive General Manager Australian and Indonesian Operations

August 2010

2 August 2013

Debra Stirling

Executive General Manager People and Communication

January 2008

Not applicable

918,000

728,280

836,400

728,280

811,512

728,280

801,108

811,512

780,300

Former
Executive Managers

Fixed Annual
Remuneration $
(As at cessation date)

Ron Douglas

Executive General Manager Projects

Greg Jackson(6)

Chief Operating Officer

May 2007

13 July 2012

January 2010

28 March 2013

795,600

936,360

(1) Stephen Creese retired from the Company on 1 July 2013.
(2) In February 2013, Brett Fletcher’s title changed from EGM PNG and Indonesian Operations to EGM Lihir, following the transfer of accountability for the

Indonesian operation to Peter Smith. As a result, Peter Smith’s title changed from EGM Australian Operations to EGM Australian and Indonesian Operations.
(3) In March 2013, Craig Jones assumed accountability for Asset Management and his title changed from EGM Projects to EGM Projects and Asset Management.
(4) In July 2013, Andrew Logan’s title changed from EGM Strategy, Innovation and Technology to EGM Technology.
(5) Peter Smith, who was based in Brisbane, left the Company on 2 August 2013 as a result of redundancy. He will receive payment in lieu of notice

in accordance with his contract. He will not be eligible for an STI award or a grant under the LTI for 2013–14. His non-vested LTI share rights will vest
pro-rata subject to satisfaction by the Group of applicable performance measures in accordance with the LTI Plan Rules.
(6) Greg Jackson is on secondment as Acting CEO of Morobe Mining Joint Venture (50% owned by Newcrest Mining Limited).

NEWCREST MINING ANNUAL REPORT 2013(cid:14)63

The terms of remuneration payable to Scott Langford include:
– Base salary – refer Table 7.
– STI of 60% at target with a maximum of up to 120% of base

salary dependent upon meeting specified personal and Group
performance targets, where 120% is achievable only for
‘outstanding’ performance.

– LTI in accordance with the Company’s LTI plan, equal to 60%

of base salary.

Compensation for statutory entitlements of accrued annual and
long service leave and any superannuation benefits, are payable
upon termination of employment.

7.3 Executive Retention Arrangements
In 2010–11, following the acquisition of Lihir Gold Limited, the
growth of the Company and the departure of Ian Smith meant
the Board was concerned with retaining a number of key executives.
At that time, Stephen Creese, Ron Douglas, Colin Moorhead and
Debra Stirling were each offered a retention payment in three
parts comprising $75,000 paid in June 2011; $100,000 paid in
June 2012; and $125,000 payable in June 2013. The entitlement
to receive each tranche of the retention payment was conditional
on each executive maintaining at least a ‘satisfactory’ rating in
his or her performance reviews, throughout the relevant periods,
as well as continuing to be employed at least at their current level
by the Company at the relevant payment date.

7.4 Executive Director Service Agreements
7.4.1 Greg Robinson
Greg Robinson commenced employment with the Company
as Executive General Manager Finance and Chief Financial Officer
on 3 November 2006 and was appointed to the Board as Director
Finance on 23 November 2006.

Effective 1 July 2011, Greg Robinson was appointed Managing
Director and Chief Executive Officer. The terms of the Service
Agreement under which Greg Robinson is employed in that
capacity are summarised below.

The appointment is for an indefinite duration. Greg Robinson
may resign at any time giving three months written notice,
and the Company may terminate his employment on giving
twelve months written notice, or payment in lieu of notice.

The Service Agreement sets out Greg Robinson’s duties
and responsibilities.

The terms of remuneration payable to Greg Robinson include:
– Base salary – refer Table 7.
– STI of 60% at target with a maximum of up to 120% of

base salary dependent upon meeting specified personal and
Group performance targets, where 120% is achievable only
for ‘outstanding’ performance.

– LTI in accordance with the Company’s LTI plan, equal to 100%

of base salary.

Compensation for statutory entitlements of accrued annual and
long service leave and any superannuation benefits, are payable
upon termination of employment.

Directors’ Report
REMUNERATION REPORT

7. EXECUTIVE SERVICE AGREEMENTS (continued)

7.2 Executive Service Agreements entered
into in 2012–13
7.2.1 Geoff Day
Geoff Day commenced in the role of Executive General Manager
Sustainability and External Affairs on 9 April 2013.

The appointment is for an indefinite duration. Geoff Day may
resign at any time by first giving three months written notice,
and the Company may terminate his employment on giving
twelve months written notice, or payment in lieu of notice.

The Agreement sets out Geoff Day’s duties and responsibilities.

The terms of remuneration payable to Geoff Day include:
– Base salary – refer Table 7.
– STI of 60% at target with a maximum of up to 120% of

base salary dependent upon meeting specified personal and
Group performance targets, where 120% is achievable only
for ‘outstanding’ performance.

– LTI in accordance with the Company’s LTI plan, equal to 60%

of base salary.

Compensation for statutory entitlements of accrued annual and
long service leave and any superannuation benefits, are payable
upon termination of employment.

7.2.2 Craig Jones
Craig Jones commenced in the role of Executive General Manager
Projects and Studies on 17 July 2012, having previously been
employed with the Company in a number of roles including
General Manger – Cadia Valley Operations.

The appointment is for an indefinite duration. Craig Jones may
resign at any time giving three months written notice, and the
Company may terminate his employment on giving twelve months
written notice, or payment in lieu of notice.

The Agreement sets out Craig Jones’ duties and responsibilities.

The terms of remuneration payable to Craig Jones include:
– Base salary – refer Table 7.
– STI of 60% at target with a maximum of up to 120% of

base salary dependent upon meeting specified personal and
Group performance targets, where 120% is achievable only
for ‘outstanding’ performance.

– LTI in accordance with the Company’s LTI plan, equal to 60%

of base salary.

Compensation for statutory entitlements of accrued annual and
long service leave and any superannuation benefits, are payable
upon termination of employment.

Craig Jones has subsequently been appointed to the role of
Executive General Manager Australia and Indonesia Operations,
based in Melbourne, effective 25 July 2013.

7.2.3 Scott Langford
Scott Langford commenced in the role of General Counsel
and Company Secretary on 1 July 2012.

The appointment is for an indefinite duration. Scott Langford
may resign at any time by first giving three months written notice,
and the Company may terminate his employment on giving twelve
months written notice, or payment in lieu of notice.

The Agreement sets out Scott Langford’s duties
and responsibilities.

64(cid:14)NEWCREST MINING ANNUAL REPORT 2013

7.4.2 Gerard Bond
Gerard Bond commenced employment with the Company as Finance Director and Chief Financial Officer on 1 January 2012 and
was appointed to the Board on 8 February 2012.

The appointment is for an indefinite duration. Gerard Bond may resign at any time giving three months written notice, and the
Company may terminate his employment on giving twelve months written notice, or payment in lieu of notice.

The Agreement sets out Gerard Bond’s duties and responsibilities.

The terms of remuneration payable to Gerard Bond include:
– Base salary – refer Table 7.
– STI of 60% at target with a maximum of up to 120% of base salary dependent upon meeting specified personal and Group performance

targets, where 120% is achievable only for ‘outstanding’ performance.

– LTI in accordance with the Company’s LTI plan, equal to 100% of base salary.
– Two equity grants of $750,000 (market value) in Newcrest ordinary shares, to be provided as compensation for equity foregone upon
Gerard Bond resigning from his previous employment to take up his role as Finance Director and Chief Financial Officer with Newcrest.
The first of these grants was made in October 2012 and the second is due in October 2013, subject to Gerard Bond’s ongoing satisfactory
performance and continuing employment at the relevant grant dates.

Compensation for statutory entitlements of accrued annual and long service leave and any superannuation benefits, are payable upon
termination of employment.

8. REMUNERATION DETAILS

8.1 Non-Executive Directors
Details of the nature and amount of each major element of the remuneration of each Non- Executive Director of the Company are as follows:

Table 8: Non-Executive Directors Remuneration

Non-Executive Directors(1)

FY2013
Don Mercer
Philip Aiken(2)
Vince Gauci
Winifred Kamit
Richard Knight
Rick Lee
Tim Poole
John Spark

FY2012
Don Mercer
Vince Gauci
Winifred Kamit
Richard Knight
Rick Lee
Tim Poole
John Spark

(1) Peter Hay was appointed as a Non-Executive Director on 8 August 2013.
(2) Philip Aiken was appointed as a Non-Executive Director on 12 April 2013.

Short Term

Post-Employment

Salary & Fees
(A)
$’000

Committee Fees
(B)
$’000

Superannuation
(F)
$’000

600
52
200
184
200
184
184
184

–
–
40
40
65
65
45
70

–
4
–
16
–
16
16
16

Total
$’000

600
56
240
240
265
265
245
270

1,788

325

2,181

600
184
184
200
184
184
184

–
40
40
65
65
45
70

–
16
16
–
16
16
16

600
240
240
265
265
245
270

1,720

325

2,125

NEWCREST MINING ANNUAL REPORT 2013(cid:14)65

Directors’ Report
REMUNERATION REPORT

8. REMUNERATION DETAILS (continued)

8.2 Executive Directors and Executive Managers
Details of the nature and amount of each major element of remuneration for the Executive Directors and Executive Managers
are as follows:

Table 9: Executive Directors and Executive Manager’s Remuneration

Short Term

Post-
Employment

Share-
Based
Payments

Executive Directors
and Executive Managers

Salary
& Fees
(A)
$’000

Salary
at Risk
(C)
$’000

Other
Cash
Benefits
(D)
$’000

Other
Benefits/
Services
(E)
$’000

Super-
annuation
(F)
$’000

Value of
Rights
(G)
$’000

Equity
Compensation
Value
(H)
%

Total
$’000

Performance
Related
Remuneration
(I)
%

FY2013
Executive Directors
Greg Robinson
Gerard Bond
Executive Managers
Lawrie Conway
Stephen Creese
Geoff Day
Brett Fletcher
Craig Jones
Scott Langford
Andrew Logan
Colin Moorhead
Peter Smith
Debra Stirling
Former Executive Managers
Ron Douglas(1)
Greg Jackson

1,984
897

708
816
162
791
695
708
708
781
791
760

372
677

–
78

46
78
–
33
48
51
43
52
56
59

–
–

–
125
–
–
–
–
–
125
–
125

–
–

10
11

8
9
2
10
9
6
10
10
13
5

3
10

16
16

16
16
4
16
16
16
16
16
16
16

5
12

721
729

113
209
–
170
79
45
125
205
168
198

2,731
1,731

891
1,253
168
1,020
847
826
902
1,189
1,044
1,163

(428)
180

(48)
879

FY2012
Executive Directors
Greg Robinson
Gerard Bond
Executive Managers
Lawrie Conway
Stephen Creese
Ron Douglas
Brett Fletcher
Greg Jackson
Andrew Logan
Colin Moorhead
Peter Smith
Debra Stirling

10,850

544

375

116

197

2,514

14,596

1,984
442

695
812
776
776
898
695
766
776
745

686
221

306
387
273
273
315
306
317
273
328

65
–

6
114
130
–
7
9
131
–
131

8
4

8
7
8
8
8
8
8
8
8

16
8

16
16
16
16
16
16
16
16
16

936
966

125
250
294
167
276
149
292
168
278

3,695
1,641

1,156
1,586
1,497
1,240
1,520
1,183
1,530
1,241
1,506

26.4
42.1

12.7
16.7
–
16.7
9.3
5.4
13.9
17.2
16.1
17.0

n/a
20.5

25.3
58.9

10.8
15.8
19.6
13.5
18.2
12.6
19.1
13.5
18.5

26.4
14.1

17.8
22.9
–
19.9
15.0
11.6
18.6
21.6
21.5
22.1

n/a
20.5

43.9
20.9

37.3
40.2
37.9
35.5
38.9
38.5
39.8
35.5
40.2

9,365

3,685

593

168

3,901

17,795

(1) The remuneration for 2012–13 for Ron Douglas includes the notice period as detailed in Table 7. The share based payments credit for 2012–13 represents

forfeited of the non-vested rights for the 2009, 2010 and 2011 LTI plans.

Notes to Tables 8 and 9:
(A) Salary & Fees comprise cash salary and available salary package options grossed-up by related fringe benefits tax, where applicable.
The Company’s minimum required superannuation contributions made on behalf of Key Management Personnel are disclosed under
‘Post Employment’.

(B) Represents fees paid to Non-Executive Directors for participation in Board Committees and other Committees.
(C) ‘Salary at risk’ refers to awards under the Short Term Incentive.
(D) Comprises:

– Amounts paid to Executive Managers as retention payments, as outlined in section 7.3.
– Interest in respect to the deferred component of the 2008–09 and 2009–10 STI plans.

66(cid:14)NEWCREST MINING ANNUAL REPORT 2013

(E) Represents non-monetary benefits such as parking, insurance and applicable fringe benefits tax payable on benefits.
(F) Represents Company contributions to superannuation under the Superannuation Guarantee legislation (SGC).
(G) The fair value of rights, comprising rights over unissued shares, granted under the LTI plan has been valued using a Black-Scholes

option pricing model. The following factors and assumptions were used in determining the fair value of rights on the grant date:

Table 10: Fair Value of Rights

Fair Value(1)

Exercise price

Estimated volatility

Risk-free interest rate

Dividend yield

LTI
Sep 2012

LTI
Sep 2011

LTI
Nov 2010

LTI
Nov 2009

LTI
Nov 2008

$27.85

–

35%

2.81%

1.50%

$31.83

–

30%

3.16%

1.50%

$41.66

$34.63

$22.00

–

30%

5.09%

0.50%

3 years

–

40%

5.04%

0.50%

3 years

–

40%

3.97%

0.20%

3 years

Expected life of award/option

3 years

(1) Fair Value has been calculated by an independent third party.

The Fair Value of Rights for Gerard Bond also includes a pro-rata of the equity grants as outlined in section 7.4.2.

(H) Represents the value of rights included in remuneration as a percentage of total remuneration.
(I) Represents performance-related remuneration as a percentage of total remuneration.

9. RIGHTS HELD BY EXECUTIVE DIRECTORS AND EXECUTIVE MANAGERS

All conditional entitlements refer to Restricted Rights and Performance Rights over fully paid ordinary shares of the Company,
which are exercisable on a one-for-one basis. As noted in section 5, no payment is required by a participant on the grant or exercise
of any such conditional entitlement.

The movements in the reporting period in the number of Rights over ordinary shares in the Company held by each Executive Director
and Executive Manager, as part of their remuneration, are as follows:

Table 11: Movement in Rights for Executive Directors and Executive Managers 2012–13

Executive Directors
and Executive
Managers(1)

G. Robinson

G. Bond

L. Conway

S. Creese

R. Douglas(4)

B. Fletcher

G. Jackson(5)

Grant Date

Type

Share Price at
Grant Date

Balance at
1 July 2012

Rights
Granted

Rights
Exercised

Rights
Lapsed

Balance at
30 June 2013

Vested and
Exercisable(2)

Non-
vested(3)

Movements During the Year

As at 30 June 2013

9-Nov-07
9-Nov-07
11-Nov-08
10-Nov-09
10-Nov-10
23-Sep-11
23-Sep-12

23-Sep-11
23-Sep-12

11-Nov-08
10-Nov-09
10-Nov-10
23-Sep-11
23-Sep-12

10-Nov-09
10-Nov-10
23-Sep-11
23-Sep-12

10-Nov-09
10-Nov-10
23-Sep-11

10-Nov-10
23-Sep-11
23-Sep-12

10-Nov-09
10-Nov-10
23-Sep-11
23-Sep-12

MTI
LTI
LTI
LTI
LTI
LTI
LTI

LTI
LTI

LTI
LTI
LTI
LTI
LTI

LTI
LTI
LTI
LTI

LTI
LTI
LTI

LTI
LTI
LTI
LTI

$35.85
$35.85
$22.13
$35.15
$42.29
$33.18
$29.12

$33.18
$29.12

$22.13
$35.15
$42.29
$33.18
$29.12

$35.15
$42.29
$33.18
$29.12

$35.15
$42.29
$33.18

$42.29
$33.18
$29.12

$35.15
$42.29
$33.18
$29.12

4,915
8,508
46,772
31,988
33,793
58,406
–

–
–
–
–
–
–
79,506

(4,915)
(8,508)
–
–
–
–
–

–
–
–
(7,037)
–
–
–

–
–
46,772
24,951
33,793
58,406
79,506

184,382

79,506

(13,423)

(7,037)

243,428

23,884
–

23,884

4,076
2,787
2,662
12,510
–

22,035

11,864
10,814
14,368
–

–
36,493

36,493

–
–
–
–
17,371

17,371

–
–
–
19,950

37,046

19,950

11,864
10,964
13,940

36,768

9,845
13,940
–

23,785

11,864
12,766
16,085
–

40,715

–
–
–

–

–
–
19,356

19,356

–
–
–
22,334

22,334

–
–

–

(4,076)
(2,174)
–
–
–

(6,250)

–
–
–
–

–

–
–
–

–

–
–
–

–

–
–

–

–
(613)
–
–
–

(613)

(2,610)
–
–
–

(2,610)

(11,864)
(10,964)
(13,940)

(36,768)

–
–
–

–

(9,254)
–
–
–

(2,610)
–
–
–

(9,254)

(2,610)

23,884
36,493

60,377

–
–
2,662
12,510
17,371

32,543

9,254
10,814
14,368
19,950

54,386

–
–
–

–

9,845
13,940
19,356

43,141

–
12,766
16,085
22,334

51,185

–
–
46,772
24,951
–
–
–

71,723

–
–

–

–
–
–
–
–

–

9,254
–
–
–

9,254

–
–
–

–

–
–
–

–

–
–
–
–

–

–
–
–
–
33,793
58,406
79,506

171,705

23,884
36,493

60,377

–
–
2,662
12,510
17,371

32,543

–
10,814
14,368
19,950

45,132

–
–
–

–

9,845
13,940
19,356

43,141

–
12,766
16,085
22,334

51,185

NEWCREST MINING ANNUAL REPORT 2013(cid:14)67

Directors’ Report
REMUNERATION REPORT

9. RIGHTS HELD BY EXECUTIVE DIRECTORS AND EXECUTIVE MANAGERS (continued)

Table 11: Movement in Rights for Executive Directors and Executive Managers 2012–13 (continued)

Share Price at
Grant Date

Balance at
1 July 2012

Rights
Granted

Rights
Exercised

Rights
Lapsed

Balance at
30 June 2013

Vested and
Exercisable(2)

Non-
vested(3)

Movements During the Year

As at 30 June 2013

Executive Directors
and Executive
Managers(1)

C. Jones

Grant Date

Type

10-Nov-10
23-Sep-11
23-Sep-12

LTI
LTI
LTI

$42.29
$33.18
$29.12

S. Langford

23-Sep-12

LTI

$29.12

A. Logan

C. Moorhead

P. Smith

D. Stirling

9-Nov-07
9-Nov-07
11-Nov-08
10-Nov-09
10-Nov-10
23-Sep-11
23-Sep-12

11-Nov-08
10-Nov-09
10-Nov-10
23-Sep-11
23-Sep-12

10-Nov-10
23-Sep-11
23-Sep-12

9-Nov-07
9-Nov-07
11-Nov-08
10-Nov-09
10-Nov-10
23-Sep-11
23-Sep-12

MTI
LTI
LTI
LTI
LTI
LTI
LTI

LTI
LTI
LTI
LTI
LTI

LTI
LTI
LTI

MTI
LTI
LTI
LTI
LTI
LTI
LTI

$35.85
$35.85
$22.13
$35.15
$42.29
$33.18
$29.12

$22.13
$35.15
$42.29
$33.18
$29.12

$42.29
$33.18
$29.12

$35.85
$35.85
$22.13
$35.15
$42.29
$33.18
$29.12

2,647
3,667
–

6,314

–

1,937
958
5,732
3,920
3,642
12,510
–

28,699

17,348
11,864
10,814
13,762
–

53,788

10,964
13,940
–

24,904

3,097
5,360
16,073
10,992
10,513
13,404
–

–
–
17,371

17,371

–
–
–
–
–
–
17,371

17,371

–
–
–
–
19,108

19,108

–
–
19,356

19,356

–
–
–
–
–
–
18,612

–
–
–

–

(1,937)
(958)
–
–
–
–
–

(2,895)

–
–
–
–
–

–

–
–
–

–

(3,097)
(5,360)
–
–
–
–
–

–
–
–

–

–
–
–
(862)
–
–
–

(862)

–
(2,610)
–
–
–

(2,610)

–
–
–

–

–
–
–
(2,418)
–
–
–

59,439

18,612

(8,457)

(2,418)

2,647
3,667
17,371

23,685

17,371

–
–
5,732
3,058
3,642
12,510
17,371

42,313

17,348
9,254
10,814
13,762
19,108

70,286

10,964
13,940
19,356

44,260

–
–
16,073
8,574
10,513
13,404
18,612

67,176

–
–
–

–

–
–
5,732
3,058
–
–
–

8,790

17,348
9,254
–
–
–

2,647
3,667
17,371

23,685

17,371

–
–
–
–
3,642
12,510
17,371

33,523

–
–
10,814
13,762
19,108

26,602

43,684

–
–
–

–

–
–
16,073
8,574
–
–
–

10,964
13,940
19,356

44,260

–
–
–
–
10,513
13,404
18,612

24,647

42,529

(1) G. Day was appointed on 9 April 2013 and was not entitled to the 2013 financial year LTI Plan.
(2) During the year, the November 2009 LTI Plan vested. Refer to Table 13 for details.
(3) All Equity-based Remuneration is ‘at risk’ and will lapse or be forfeited, in the event that minimum prescribed performance conditions are not met

by the Company or individual employees, as applicable.

(4) R. Douglas forfeited the non-vested share rights at 30 June 2012 upon his resignation on 13 July 2012.
(5) G. Jackson’s closing balance represents his holdings at 28 March 2013.

9.1 Performance Conditions for Rights

Table 12: Value of Rights

Key Management Personnel

G. Robinson
G. Bond
L. Conway
S. Creese
R. Douglas
B. Fletcher
G. Jackson
C. Jones
S. Langford
A. Logan
C. Moorhead
P. Smith
D. Stirling

Value at
Grant Date

Value at
Exercise Date

Value at
Lapse Date

$’000
(A)

2,213
1,016
483
555
–
539
622
483
483
483
532
539
518

$’000
(B)

$’000
(C)

351
–
157
–
–
–
91
–
–
79
–
–
205

186
–
16
69
778
–
69
–
–
23
69
–
64

Table 12 shows the total value of any Rights granted, exercised and lapsed in 2012–13 in relation to Executive Directors and Executive
Managers based on the following assumptions:

(A) The value of Rights at grant date reflects the fair value of a right multiplied by the number of Rights granted during 2012–13.

(Refer footnote G to Tables 8 & 9).

(B) The value at exercise date has been determined by the Company’s share price at the close of business on the exercise date less

the exercise price multiplied by the number of rights exercised during 2012–13.

(C) The value at lapse date has been determined by the share price at the close of business on the date the Restricted Right
or Performance Right lapsed, less the exercise price multiplied by the number of Rights that lapsed during the year.

68(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Table 13: Executive Directors and Executive Managers – Rights Granted between 2008–09 and 2012–13

Grant Date(1)

Expiry Date

Comparator Group

Vesting Date

Performance Achieved

Percentage Vested(2)

23 Sep 2012
(LTI)

23 Sep 2011
(LTI)

10 Nov 2010
(LTI)

10 Nov 2009
(LTI)

23 Sep 2015

23 Sep 2014

10 Nov 2015

10 Nov 2014

Performance conditions
referred to in the Plan Rules

23 Sep 2015

To be determined

23 Sep 2014

To be determined

10 Nov 2013

To be determined

10 Nov 2012

N/A

78.0%

93.5%

Cost: 73.6%
Reserves Growth: 100%
ROCE: 60.4%

Cost: 85%
Reserves Growth: 100%
ROCE: 96%

11 Nov 2008
(LTI)

11 Nov 2013

Performance conditions
referred to in the Plan Rules

11 Nov 2011

(1) The strike price for all plans for all years is nil.
(2) The percentage vested is the same for all Executive Directors and Executive Managers.

Refer to Table 4 for a summary of the applicable Performance Hurdles.

Table 14: 2012–13 Short Term Incentive Grant

Executive Directors and Executive Managers

G. Robinson
G. Bond
L. Conway
S. Creese
G. Day(1)
B. Fletcher
G. Jackson
C. Jones
S. Langford
A. Logan
C. Moorhead
P. Smith
D. Stirling

STI (A)

As a percentage
of maximum STI

Percentage
Awarded

Percentage
Forfeited

0.0%
7.1%
5.3%
7.8%
n/a
3.4%
0.0%
5.7%
5.9%
4.9%
5.4%
5.8%
6.3%

100.0%
92.9%
94.7%
92.2%
n/a
96.6%
100.0%
94.3%
94.1%
95.1%
94.6%
94.2%
93.7%

(1) G. Day was appointed on 9 April 2013 and was therefore not entitled to participate in the 2013 financial year STI.

(A) To be awarded a maximum STI of 120% an Executive has to have met outstanding personal performance and Group performance

must be at or above the maximum level pre-determined by the Board. Personal performance and Group performance each at target
will result in an award of 50% of the maximum STI.

Table 15: Allocation of the September 2012 LTI Equity Grant

Executive Directors and Executive Managers

G. Robinson
G. Bond
L. Conway
S. Creese
B. Fletcher
G. Jackson
C. Jones
S. Langford
A. Logan
C. Moorhead
P. Smith
D. Stirling

LTI (A)

Estimates of the maximum remuneration amounts which could be
received under the 2012 performance rights grants in future years

2013–14
$’000

2014–15
$’000

2015–16
$’000

Maximum Total
$’000

738
339
161
185
180
207
161
161
161
177
180
173

185
85
40
46
45
52
40
40
40
44
45
43

1,661
763
362
416
405
466
362
362
362
398
405
389

(A) The maximum value in future years has been determined in relation to the grant of performance rights in September 2012,

based on the valuation performed at grant date and amortised in accordance with applicable accounting standard requirements.
The minimum value of the grant is nil if the performance conditions are not met. This grant is exercisable in September 2015.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)69

Directors’ Report

this report is signed in accordance with a resolution of the Directors.

Don Mercer
chairman

12 august 2013
melbourne

Greg Robinson
managing Director and
chief executive officer

70 newcrest mining annual report 2013

Auditor’s Independence Declaration

newcrest mining annual report 2013 71

Consolidated Income Statement
For the year ended 30 June 2013

Operating sales revenue
Cost of sales

Gross profit

Exploration expenses
Corporate administration expenses
Other income/(expenses)
Share of (loss)/profit of associate
Losses on restructured and closed-out hedge contracts
Business acquisition and integration costs
Gain on business divestment
Restructure costs
Write-down of non-current assets
Impairment losses
Impairment of associate

(Loss)/profit before interest and income tax

Finance income
Finance costs

(Loss)/profit before income tax

Income tax benefit/(expense)

(Loss)/profit after income tax

(Loss)/profit after tax attributable to:
Non-controlling interests
Owners of the parent

Earnings per share (cents per share)
Basic (loss)/earnings per share
Diluted (loss)/earnings per share

The above Statement should be read in conjunction with the accompanying notes.

Note

4(a)
4(b)

14
4(c)
4(d)
18
4(i)
4(j)
4(k)
5(a)
5(b)
5(c)
5(d)

4(e)

6(a)

26
26

2013
$M

3,775
(2,930)

845

(64)
(132)
(82)
(110)
–
–
–
(72)
(166)
(6,147)
(151)

(6,079)

1
(110)

(6,188)

412

(5,776)

2
(5,778)

(5,776)

(754.5)
(754.5)

2012
$M

4,416
(2,607)

1,809

(80)
(140)
(14)
15
(7)
(11)
46
–
–
–
–

1,618

2
(43)

1,577

(402)

1,175

58
1,117

1,175

146.0
145.8

72(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Consolidated Statement of Comprehensive Income
For the year ended 30 June 2013

(Loss)/profit after income tax

Other comprehensive income/(loss)
Items that may be reclassified subsequently to the Income Statement

Cash flow hedges
Losses on restructured hedge contracts transferred to the Income Statement
Foreign exchange gains on US dollar borrowings transferred to the Income Statement
Other cash flow hedges deferred in equity
Income tax expense/(benefit)

Investments
Net loss on available-for-sale financial assets transferred to the Income Statement
Net loss on available-for-sale financial assets deferred in equity
Share of other comprehensive income/(loss) of associate

Foreign currency translation
Foreign currency translation

Other comprehensive income/(loss) for the year, net of tax

Total comprehensive income/(loss) for the year

Total comprehensive income/(loss) attributable to:
Non-controlling interests
Owners of the parent

The above Statement should be read in conjunction with the accompanying notes.

Note

4(i)
25(c)

2013
$M

(5,776)

2012
$M

1,175

–
–
(2)
–

(2)

1
–
(2)

(1)

896

893

(4,883)

17
(4,900)

(4,883)

7
(10)
(1)
2

(2)

–
(2)
–

(2)

488

484

1,659

63
1,596

1,659

NEWCREST MINING ANNUAL REPORT 2013(cid:14)73

Consolidated Statement of Financial Position
As at 30 June 2013

Note

8(a)
9
10
11

10
11
13
14
15
17
6
18
12

19
20
21

20
21
6

23
24
25

2013
$M

69
178
946
18
58
156

2012
$M

242
251
748
11
–
212

1,425

1,464

1,248
10
5,544
7,566
436
114
326
132
384

15,760

17,185

620
1
241
–
71

933

4,210
353
1,604

6,167

7,100

1,095
8
4,364
8,795
3,759
93
259
395
277

19,045

20,509

482
1,200
200
92
18

1,992

1,208
308
1,907

3,423

5,415

10,085

15,094

13,592
(3,064)
(583)

9,945
140

10,085

13,561
2,890
(1,476)

14,975
119

15,094

Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Current tax asset
Other assets

Total current assets

Non-current assets
Inventories
Other financial assets
Property, plant and equipment
Exploration, evaluation and development
Goodwill
Other intangible assets
Deferred tax assets
Investment in associate
Other assets

Total non-current assets

Total assets

Current liabilities
Trade and other payables
Borrowings
Provisions
Current tax liability
Other financial liabilities

Total current liabilities

Non-current liabilities
Borrowings
Provisions
Deferred tax liabilities

Total non-current liabilities

Total liabilities

Net assets

Equity
Issued capital
Retained earnings/(accumulated losses)
Reserves

Equity attributable to owners of the parent
Non-controlling interests

Total equity

The above Statement should be read in conjunction with the accompanying notes.

74(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Consolidated Statement of Cash Flows
For the year ended 30 June 2013

Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income taxes paid

Net cash provided by operating activities

Cash flows from investing activities
Payments for property, plant and equipment
Mine under construction, development and feasibility expenditure
Exploration and evaluation expenditure
Information systems development
Proceeds from non-participation in rights issue
Payments for business divestment transaction costs
Payment for investments
Proceeds from sale of investments
Interest capitalised to development projects

Net cash used in investing activities

Cash flows from financing activities
Proceeds from borrowings:
– US dollar bilateral debt
– US dollar corporate bonds
Repayment of borrowings:
– US dollar bilateral debt
– US dollar private placement
Net repayment of finance lease principal
Share buy-back
Payment for treasury shares
Proceeds from partial sale of shares in subsidiary to non-controlling interests, net of withholding tax
Dividends paid:
– Members of the parent entity
– Non-controlling interests

Net cash provided by financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash held

Cash and cash equivalents at the end of the year

The above Statement should be read in conjunction with the accompanying notes.

Note

2013
$M

2012
$M

3,815
(2,849)
1
(98)
(162)

707

(466)
(1,440)
(152)
(40)
–
–
–
9
(35)

(2,124)

2,054
948

(1,623)
–
(3)
–
(1)
117

(230)
(26)

1,236

(181)

242
8

4,624
(2,648)
2
(33)
(219)

1,726

(436)
(2,075)
(158)
(45)
10
(8)
(3)
–
(40)

(2,755)

1,785
963

(1,086)
(119)
(4)
(35)
(9)
–

(362)
(43)

1,090

185
(4)

242

8(b)

35
35

8(a)

NEWCREST MINING ANNUAL REPORT 2013(cid:14)75

Consolidated Statement of Changes in Equity
For the year ended 30 June 2013

Attributable to Owners of the Parent

2013

Issued
Capital
$M

FX
Translation

Equity
Hedge Settlements

Reserve*

Fair
Value
Reserve*

Retained
Earnings
$M

Non-
controlling
Interests
$M

Total
$M

Balance at 1 July 2012

13,561

(1,543)

Profit/(loss) for the year
Other comprehensive
income/(loss) for the year

Total comprehensive
income/(loss) for the year

Transactions with owners
in their capacity as owners
Share-based payments
Shares issued –
Dividend reinvestment plan
Treasury shares
Changes in equity interests
held by the parent (Note 36)
Dividends paid

–

38
(7)

–
–

–

881

–

–
–

7
–

Balance at 30 June 2013

13,592

(655)

* Refer Note 25 for description of reserves.

Balance at 1 July 2011

13,569

(2,026)

Profit for the year
Other comprehensive
income for the year

Total comprehensive
income for the year

Transactions with owners
in their capacity as owners
Share-based payments
Shares issued –
Dividend reinvestment plan
Share buy-back
Treasury shares
Dividends paid

–

36
(35)
(9)
–

–

483

–

–
–
–
–

Balance at 30 June 2012

13,561

(1,543)

* Refer Note 25 for description of reserves.

–

(2)

–

–
–

–

(2)

–

–
–
–
–

–

–
–

–

–
–
–
–

2,890

14,975

119

15,094

(5,778)

–

878

(1)

(5,778)

(4,900)

–

–
–

(5,776)

893

(4,883)

38
(7)

129
(294)

–

–
–

38
(7)

92
(268)

99
(268)

30
(26)

(3)

(3,064)

9,945

140

10,085

Total
$M

13,776

1,117

479

2,171

1,117

–

1,117

1,596

–

–
–
–
(398)

36
(35)
(9)
(398)

Non-
controlling
Interests
$M

–

–
–
–
(43)

119

Total
$M

13,875

1,175

484

1,659

36
(35)
(9)
(441)

15,094

(2)

2,890

14,975

(2)

–

(1)

–

–
–

–

(2)

–

–
–
–
–

The above Statement should be read in conjunction with the accompanying notes.

Attributable to Owners of the Parent

2012

Issued
Capital
$M

FX
Translation

Equity
Hedge Settlements

Reserve*

Fair
Value
Reserve*

Retained
Earnings
$M

The above Statement should be read in conjunction with the accompanying notes.

76(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Notes to the Financial Statements
For the year ended 30 June 2013

1. CORPORATE INFORMATION

Newcrest Mining Limited is a company limited by shares,
domiciled and incorporated in Australia, whose shares are publicly
traded on the Australian Securities Exchange (ASX), the Port
Moresby Stock Exchange (PoMSOX) and the Toronto Stock
Exchange (TSX). The registered office of Newcrest Mining Limited
is Level 9, 600 St Kilda Road, Melbourne, Victoria, 3004, Australia.

The nature of operations and principal activities of Newcrest
Mining Limited and its controlled entities are exploration, mine
development, mine operations and the sale of gold and gold/
copper concentrate.

The financial report of Newcrest Mining Limited for the year ended
30 June 2013 was authorised for issue in accordance with a
resolution of the Directors on 12 August 2013.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation
of this financial report are:

(a) Basis of Preparation and Statement of Compliance
The financial report is a general purpose financial report,
prepared by a for-profit entity, in accordance with the
requirements of the Corporations Act 2001, Australian Accounting
Standards and other authoritative pronouncements of the
Australian Accounting Standards Board (AASB). The financial
report has been prepared on a historical cost basis, except for
derivative financial instruments and available-for-sale assets
which have been measured at fair value.

The financial report also complies with International Financial
Reporting Standards (IFRS) including interpretations as issued
by the International Accounting Standards Board.

The financial report has been presented in Australian dollars
and all values are rounded to the nearest $1,000,000 unless
otherwise stated.

The accounting policies have been consistently applied by all
entities included in the Group and are consistent with those
applied in the prior year.

(b) Basis of Consolidation
The consolidated financial statements include the financial
statements of the parent entity, Newcrest Mining Limited,
and its controlled entities (referred to as ‘the Consolidated Entity’
or ‘the Group’ in these financial statements). A list of significant
controlled entities is presented in Note 31.

Controlled entities are all those entities over which the Group
has the power to govern the financial and operating policies so
as to obtain benefits from their activities. Controlled entities are
consolidated from the date on which control commences until
the date that control ceases. All intercompany balances and
transactions, including unrealised gains and losses arising from
intra-group transactions, have been eliminated in preparing the
consolidated financial statements.

Non-controlling interest in the results and equity of the entities
that are controlled by the Group is shown separately in the
Income Statement, Statement of Comprehensive Income,
Statement of Financial Position and Statement of Changes
in Equity respectively.

A change in the ownership interest of a subsidiary that
does not result in a loss of control, is accounted for as an
equity transaction.

(c) Interest in Jointly Controlled Assets
Where the Group’s activities are conducted through
unincorporated joint ventures that are jointly controlled assets,
its share of the assets, liabilities, gold production and related
operating costs are included in the financial statements.
Details of the Group’s interests in jointly controlled assets
are shown in Note 34.

(d) Foreign Currency
Functional and Presentation Currency
Both the functional and presentation currency of Newcrest Mining
Limited and its Australian controlled entities is Australian dollars
($). Each entity in the Group determines its own functional
currency and items included in the financial statements of each
entity are measured using that functional currency. The functional
currency of the Group’s foreign operations is US dollars (US$).

Transactions and Balances
Transactions in foreign currencies are initially recorded in the
functional currency at the exchange rates ruling at the date
of the transaction. The subsequent payment or receipt of funds
related to a transaction is translated at the rate applicable on
the date of payment or receipt. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate
of exchange ruling at the reporting date. Non-monetary items
that are measured in terms of historical cost in a foreign currency
are translated using the exchange rate as at the date of the
initial transaction.

All exchange differences in the consolidated financial report
are taken to the Income Statement with the exception of
differences on certain US dollar denominated borrowings where
the foreign currency components are designated as either cash
flow hedges of future US dollar denominated sales or hedges of
a net investment in a foreign operation. These are taken directly
to a reserve in equity until the forecast sales used to repay the
debt occur (for cash flow hedges) or the foreign operation is
disposed (for net investment hedges), at which time they are
recognised in the Income Statement.

Translation of Foreign Operations
The assets and liabilities of controlled entities incorporated
overseas with functional currencies other than Australian dollars
are translated into the presentation currency of Newcrest Mining
Limited (Australian dollars) at the rates of exchange ruling at
the reporting date and the income statements are translated
at the weighted average exchange rates for the period. Exchange
differences arising on translation are taken directly to the foreign
currency translation reserve in equity.

On consolidation, exchange differences arising from the
translation of net investments in foreign operations and of the
borrowings designated as hedges of the net investment are taken
to the foreign currency translation reserve (refer Note 2(w)). If the
foreign operation were sold, the proportionate share of exchange
differences would be transferred out of equity and recognised in
the Income Statement.

(e) Cash and Cash Equivalents
Cash and cash equivalents in the Statement of Financial Position
comprise cash at bank and in hand, and short-term deposits.

For the purpose of the Statement of Cash Flows, cash and cash
equivalents consist of cash and cash equivalents as defined above,
net of outstanding bank overdrafts.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)77

Notes to the Financial Statements
For the year ended 30 June 2013

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)

(f) Trade and Other Receivables
Trade receivables comprising Metal in Concentrate receivables
and Bullion Awaiting Settlement are initially recorded at the fair
value of contracted sale proceeds expected to be received only
when there has been a passing of significant risks and rewards
of ownership to the customer. Collectability of debtors is
reviewed on an ongoing basis. Receivables which are known
to be uncollectible are written off, and an allowance for doubtful
debts is raised where objective evidence exists that the debt
will not be collected.

Other receivables are initially measured at fair value then
subsequently at amortised cost, less an allowance for impairment.

(g) Inventories
Gold in solution form, ore and work in progress is physically
measured or estimated and valued at the lower of cost and
net realisable value. Cost represents the weighted average cost,
and includes direct costs and an appropriate portion of fixed
and variable production overhead expenditure, including
depreciation and amortisation, incurred in converting materials
into finished goods.

By-products inventory on hand, obtained as a result of the
production process to extract gold, are valued at the lower
of cost and net realisable value.

Materials and supplies are valued at the lower of cost and net
realisable value. Any allowance for obsolescence is determined by
reference to specific stock items identified. A regular and ongoing
review is undertaken to establish the extent of surplus items, and
an allowance is made for any potential loss on their disposal.

Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and
estimated costs necessary to make the sale.

Ore stockpiles which are not scheduled to be processed in the
12 months after the reporting date are classified as ‘Non-current
Inventory’. The Group believes the processing of these stockpiles
will have a future economic benefit to the Group, and accordingly
values these stockpiles at the lower of cost and net realisable value.

(h) Deferred Mining Expenditure
The Group defers mining costs incurred during the production
stage of its operations, as part of determining the cost of
inventories. This is generally the case where there are fluctuations
in deferred mining costs over the life of the mine, and the effect
is material. The amount of mining costs deferred is based on the
ratio obtained by dividing the amount of waste tonnes mined
by the quantity of gold ounces contained in the ore. Mining costs
incurred in the year are deferred to the extent that the current
year waste to contained gold ounce ratio exceeds the life-of-mine
(or pit/stage) waste to ore ratio (‘life-of-mine (pit/stage)’) ratio.
Deferred mining costs are then charged against reported profits
to the extent that, in subsequent years, the current year ratio
falls below the life-of-mine (pit/stage) ratio. The life-of-mine
(pit/stage) ratio is based on economically recoverable reserves
of the operation.

The life-of-mine (pit/stage) ratio is a function of an individual
mine’s design, and therefore changes to that design will generally
result in changes to the ratio. Changes in other technical or
economic parameters that impact reserves will also have an
impact on the life-of-mine ratio even if they do not affect the
mine’s design. Changes to the life-of-mine ratio are accounted
for prospectively.

In the production stage of some operations, further developments
of the mine require a phase of unusually high overburden removal
activity that is similar in nature to pre-production mine development.
The costs of such unusually high overburden removal activity
are deferred and charged against reported profits in subsequent
years on a unit-of-production basis. This accounting treatment is
consistent with that for overburden removal costs incurred during
the development phase of a mine, before production commences.

In some operations underground mining occurs progressively
on a level by level basis. In these operations an estimate is made
of the life-of-level average underground mining cost per tonne
of ore mined to expense underground mining costs in the Income
Statement. Underground mining costs incurred during the year
are deferred to the extent that the actual cost per tonne of ore
mined on a level in the year, exceeds the life-of-level average.
Previously deferred underground mining costs are released to
the Income Statement to the extent that the actual cost per tonne
of the ore mined in the year is less than the life-of-level average.

Deferred mining costs that relate to the production phase of the
operation are included in ‘Other Assets’. These costs form part
of the total investment in the relevant cash generating unit to
which they relate, which is reviewed for impairment in accordance
with the accounting policy described in Note 2(o). The release
of deferred mining costs is included in site operating costs.

(i) Property, Plant and Equipment
Cost
Property, plant and equipment is carried at cost less accumulated
depreciation and any accumulated impairment losses. Financial
costs incurred directly in relation to major capital works are
capitalised up to the time of commissioning the asset. Freehold
land is held for extractive industry operations and its value
is wholly dependent upon those operations. The net carrying
values of property, plant and equipment are reviewed at a
cash-generating unit level half-yearly to determine whether
there is any indication of impairment (refer Note 2(o)).

Depreciation and Amortisation
Items of property, plant and equipment, including buildings but
excluding freehold land, are depreciated over their estimated
useful lives.

The Group uses the unit-of-production basis when depreciating
mine specific assets, which results in a depreciation/amortisation
charge proportional to the depletion of the anticipated remaining
life-of-mine production. Each item’s economic life has due regard
to both its physical life limitations and to present assessments of
economically recoverable reserves of the mine property at which
it is located.

For the remainder of assets the straight line method is used,
resulting in estimated useful lives between 3 and 20 years,
the duration of which reflects the useful life depending on the
nature of the asset. Estimates of remaining useful lives and
depreciation methods are reviewed annually for all major items
of plant and equipment.

Major spares purchased specifically for particular plant are
capitalised and depreciated on the same basis as the plant
to which they relate. Assets are depreciated or amortised from
the date they are installed and are ready for use, or in respect
of internally constructed assets, from the time the asset is
completed and deemed ready for use.

The cost of improvements to leasehold properties is amortised
over the unexpired period of the lease or the estimated useful
life of the improvement, whichever is the shorter.

78(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Leases
The determination of whether an arrangement is or contains a
lease is based on the substance of the arrangement and requires
an assessment of whether the fulfilment of the arrangement
is dependent on the use of a specific asset or assets and the
arrangement conveys a right to use the asset.

Leases of plant and equipment under which the Group assumes
substantially all the risks and benefits incidental to ownership
are classified as finance leases. Other leases are classified as
operating leases.

Finance leases are capitalised, with a lease asset and a lease
liability equal to the fair value of the leased asset or, if lower,
at the present value of the minimum lease payments determined
at the inception of the lease. Lease payments are apportioned
between the finance charges and reduction of the lease liability.
The finance charge component within the lease payments is
expensed. Capitalised leased assets are depreciated over the
shorter of the estimated useful life of the asset and the lease
term if there is no reasonable certainty that the Group will
obtain ownership by the end of the lease term.

Payments made under operating leases are expensed on a
straight-line basis over the lease term, except where an alternative
basis is more representative of the pattern of benefits to be
derived from the leased property.

(j) Exploration, Evaluation and Feasibility Expenditure
Exploration and Evaluation
Exploration and evaluation expenditure related to areas of interest
is capitalised and carried forward to the extent that:
(i) Rights to tenure of the area of interest are current; and
(ii) (a) Costs are expected to be recouped through successful

development and exploitation of the area of interest
or alternatively by sale; or

(b) Where activities in the area of interest have not yet

reached a stage which permits a reasonable assessment
of the existence or otherwise of economically recoverable
reserves, and active and significant operations in, or in
relation to, the area of interest are continuing.
Such expenditure consists of an accumulation of acquisition
costs and direct net exploration and evaluation costs incurred
by or on behalf of the Group, together with an appropriate
portion of directly related overhead expenditure.

Deferred Feasibility
Feasibility expenditure represents costs related to the preparation
and completion of a feasibility study to enable a development
decision to be made in relation to an area of interest and
capitalised as incurred.

At the commencement of production, all past exploration,
evaluation and feasibility expenditure in respect of an area
of interest that has been capitalised is transferred to mine
development where it is amortised over the life of the area
of interest to which it relates on a unit-of-production basis.

When an area of interest is abandoned or the Directors decide it is
not commercial, any accumulated costs in respect of that area are
written off in the year the decision is made. Each area of interest is
reviewed at the end of each reporting period and accumulated
costs written off to the extent they are not expected to be
recoverable in the future.

(k) Mine Construction and Development
Mines Under Construction
Expenditure incurred in constructing a mine by, or on behalf of,
the Group is accumulated separately for each area of interest
in which economically recoverable reserves have been identified.
This expenditure includes net direct costs of construction, borrowing
costs capitalised during construction and an appropriate allocation
of attributable overheads. Once a development decision has
been taken, all aggregated costs of construction are transferred
to non-current assets as either mine development or buildings,
plant and equipment as appropriate.

Mine Development
Mine development represents expenditure in respect of exploration,
evaluation, feasibility and development incurred by or on behalf of
the Group, including overburden removal and construction costs,
previously accumulated and carried forward in relation to areas
of interest in which mining has now commenced. Such expenditure
comprises net direct costs and an appropriate allocation of directly
related overhead expenditure.

All expenditure incurred prior to commencement of production
from each development property is carried forward to the
extent to which recoupment out of future revenue from
the sale of production, or from the sale of the property,
is reasonably assured.

When further development expenditure is incurred in respect
of a mine property after commencement of production, such
expenditure is carried forward as part of the cost of the mine
property only when future economic benefits are reasonably
assured, otherwise the expenditure is classified as part of the
cost of production and expensed as incurred. Such capitalised
development expenditure is added to the total carrying value
of mine development being amortised.

Depreciation and Amortisation
Amortisation of costs is provided using the unit-of-production
method. The net carrying values of mine development expenditure
carried forward are reviewed half-yearly by Directors to determine
whether there is any indication of impairment (refer Note 2(o)).

(l) Mineral Rights
Mineral rights comprise identifiable exploration and evaluation
assets, mineral resources and ore reserves, which are acquired as
part of a business combination or a joint venture acquisition and
are recognised at fair value at date of acquisition. Mineral rights
are attributable to specific areas of interest and are classified
within Exploration, Evaluation and Development.

Mineral rights attributable to each area of interest are amortised
when commercial production commences on a unit-of-production
basis over the estimated economic reserve of the mine to which
the rights relate.

(m) Goodwill
Goodwill acquired in a business combination is initially measured
at cost of the business combination being the excess of the
consideration transferred over the fair value of the Group’s
net identifiable assets acquired and liabilities assumed. If this
consideration transferred is lower than the fair value of the
net identifiable assets of the subsidiary acquired, the difference
is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any
accumulated impairment losses.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)79

Notes to the Financial Statements
For the year ended 30 June 2013

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)

(m) Goodwill (continued)
For the purpose of impairment testing, goodwill acquired in a
business combination is, from the acquisition date, allocated
to each of the Group’s Cash-Generating Units (CGU), or groups
of CGUs, that are expected to benefit from the synergies of the
combination, irrespective of whether other assets or liabilities
of the Group are assigned to those units or groups of units.
Each unit or group of units to which the goodwill is allocated
represents the lowest level within the entity at which the
goodwill is monitored for internal management purposes,
and is not larger than an operating segment determined in
accordance with AASB 8.

Impairment is determined by assessing the recoverable amount
of the CGU (group of CGUs), to which the goodwill relates.
The recoverable amount is the higher of the CGUs:
– Fair value less costs to sell; and
– Value in use. In assessing value in use, the estimated future

cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the
time value of money and the risks specific to the CGU.

The Group performs impairment testing on goodwill annually
as at 30 June each year.

When the recoverable amount of the CGU (group of CGUs)
is less than the carrying amount, an impairment loss is recognised.
When goodwill forms part of a CGU (group of CGUs) and an
operation within that unit is disposed of, the goodwill associated
with the operation disposed of is included in the carrying amount
of the operation when determining the gain or loss on disposal
of the operation. Goodwill disposed of in this manner is measured
based on the relative values of the operation disposed of and
the portion of the CGU retained.

Impairment losses recognised for goodwill are not
subsequently reversed.

(n) Other Intangible Assets
Costs incurred in developing information technology systems
and acquiring software are capitalised as intangible assets. Costs
capitalised include external costs of materials and services and the
cost of employee benefits. Amortisation is calculated on a straight
line basis over the useful life, ranging from three to seven years.

(o) Impairment of Non-Financial Assets
The carrying amounts of all non-financial assets (including
goodwill) are reviewed half-yearly to determine whether there
is an indication of impairment. Where an indicator of impairment
exists, a formal estimate of the recoverable amount is made.
Recoverable amount is the higher of fair value less costs to
sell and value in use.

If the carrying amount of an asset exceeds its estimated
recoverable amount, the asset is written down to its recoverable
amount and an impairment loss is recognised in the Income
Statement. Individual assets are grouped for impairment purposes
at the lowest level for which there are separately identifiable
cash inflows that are largely independent of the cash inflows from
other assets or groups of assets (CGUs). Generally, this results in
the Group evaluating its mine properties on a geographical basis.

Non-current assets other than goodwill that have recognised
impairment are tested for possible reversal of the impairment
whenever events or changes in circumstances indicate that the
impairment may have been reversed.

(p) Available-for-Sale Financial Assets
The Group’s investment in listed equity securities are designated
as available-for-sale financial assets. Subsequent to initial
recognition, available-for-sale financial assets are measured
at fair value with gains or losses being recognised as a separate
component of equity until the investment is derecognised or until
the investment is determined to be impaired, at which time the
cumulative gain or loss previously reported in equity is recognised
in the Income Statement.

The fair values of listed equity securities are determined by
reference to quoted market price.

(q) Investment in Associate
The Group’s investment in an associate is accounted for using
the equity method. An associate is an entity in which the Group
has significant influence.

Under the equity method, the investment in the associate
is carried on the Statement of Financial Position at cost plus
post-acquisition changes in the Group’s share of net assets
of the associate. Goodwill relating to the associate is included
in the carrying amount of the investment and is neither
amortised nor individually tested for impairment.

The Income Statement reflects the Group’s share of the results
of operations of the associate. When there has been a change
recognised directly in the equity of the associate, the Group
recognises its share of any changes and discloses this, when
applicable, in the Statement of Changes in Equity. Unrealised
gains and losses resulting from transactions between the Group
and the associate are eliminated to the extent of the interest
in the associate.

The Group’s share of profit of an associate is included in
the Income Statement. This is the profit attributable to equity
holders of the associate and, therefore, is profit after tax and
non-controlling interests in the subsidiaries of the associate.

After application of the equity method, the Group determines
whether it is necessary to recognise an additional impairment loss
on its investment in its associate. The Group determines at each
reporting date whether there is any objective evidence that the
investment in the associate is impaired. If this is the case, the
Group calculates the amount of impairment as the difference
between the recoverable amount of the associate and its carrying
value and recognises the amount in the Income Statement.

Upon loss of significant influence over the associate, the Group
measures and recognises any retaining investment at its fair
value. Any difference between the carrying amount of the
associate upon loss of significant influence and the fair value
of the retained investment and proceeds from disposal is
recognised in profit or loss.

(r) Non-Current Assets and Disposal Groups held for Sale
Non-current assets and disposal groups are classified as held for
sale and measured at the lower of their carrying amount and fair
value less costs to sell if their carrying amount will be recovered
principally through a sale transaction instead of use. They are not
depreciated or amortised. For an asset or disposal group to be
classified as held for sale, it must be available for immediate sale
in its present condition and its sale must be highly probable.

An impairment loss is recognised for any initial or subsequent
write-down of the asset (or disposal group) to fair value less costs
to sell. A gain is recognised for any subsequent increases in fair
value less costs to sell of an asset (or disposal group), but not in
excess of any cumulative impairment loss previously recognised.
A gain or loss not previously recognised by the date of the sale
of the non-current asset (or disposal group) is recognised at
the date of derecognition.

80(cid:14)NEWCREST MINING ANNUAL REPORT 2013

(s) Trade and Other Payables
Liabilities for trade and other payables are initially recorded at
the fair value of the consideration to be paid in the future for
goods and services received, whether or not billed to the Group,
and then subsequently at amortised cost.

(t) Borrowings and Borrowing Costs
Borrowings are initially recognised at fair value and subsequently
at amortised cost.

Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for
their intended use, are added to the cost of those assets, until
such time as the assets are substantially ready for their intended
use. The capitalisation rate used to determine the amount of
borrowing costs to be capitalised is the weighted average interest
rate applicable to the Group’s outstanding borrowings during
the year used to develop the qualifying asset.

All other borrowing costs are recognised as expenses in the period
in which they are incurred.

(u) Employee Benefits
Wages, Salaries, Salary at Risk, Annual Leave and Sick Leave
Liabilities arising in respect of wages and salaries, salary at risk,
annual leave and any other employee benefits expected to be
settled within 12 months of the reporting date are measured at
their nominal amounts based on remuneration rates which are
expected to be paid when the liabilities are settled. These amounts
are recognised in ‘Trade and Other Payables’ (for amounts other
than annual leave and salary at risk) and ‘Current Provisions’
(for annual leave and salary at risk) in respect of employees’
services up to the reporting date. Costs incurred in relation to
non-accumulating sick leave are recognised when leave is taken
and are measured at the rates paid or payable.

Long Service Leave and Retention Initiative Payments
The liabilities for long service leave and retention initiative
payments are measured at the present value of the estimated
future cash outflows to be made by the Group resulting from
employees’ services provided up to the reporting date.

Liabilities for long service leave benefits and retention initiative
payments not expected to be settled within 12 months are
discounted using the rates attaching to national government
securities at the reporting date, which most closely match the
terms of maturity of the related liabilities. In determining the
liability for these long term employee benefits, consideration
has been given to expected future increases in wage and salary
rates, the Group’s experience with staff departures, and periods
of service. Related on-costs have also been included in the liability.

Defined Contribution Superannuation Plan
Contributions to defined contribution superannuation plans
are expensed when incurred.

Share-Based Payments
The Group provides benefits to employees (including Executive
Directors) in the form of share based compensation, whereby
employees render services in exchange for shares or rights over
shares (equity-settled transactions).

Currently the Group operates the Executive Performance Share
Plan and the Employee Share Acquisition Plan. The cost of these
equity-settled transactions with employees is measured by
reference to the fair value of the equity instruments at the date
at which they are granted. The fair value is determined using an
option pricing model, further details of which are given in Note 27.

The fair value of the rights granted is adjusted to reflect market
vesting conditions, but excludes the impact of non-market
vesting conditions, such as performance conditions. Non-market
conditions are included in the assumptions about the number of
rights that are expected to become exercisable. At each reporting
date the Group revises its estimate of the number of rights that
are expected to become exercisable. The cumulative expense
recognised for equity-settled transactions at each reporting
date until vesting date reflects the extent to which the vesting
period has expired and the Group’s best estimate of the number
of equity instruments that will ultimately vest. The Income
Statement charge or credit for a period represents the movement
in cumulative expense recognised at the beginning and end of
that period. The cost of equity-settled transactions is recognised,
together with a corresponding increase in equity, over the period
in which the performance and/or service conditions are fulfilled,
ending on the date on which the relevant employees become
fully entitled to the award (vesting period).

Upon the exercise of rights, the balance of the equity settlements
reserve relating to those rights remains in the Equity Settlements
Reserve and the proceeds received, net of any directly attributable
transaction costs, are credited to Share Capital.

Under the Newcrest Employee Share Acquisition Plan, shares
are issued to employees for no cash consideration and vest
immediately on grant date. On this date, the market value of
the shares issued is recognised as an employee benefits expense.

(v) Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event,
it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.

Provision for Rehabilitation
The Group records the present value of the estimated cost
of legal and constructive obligations (such as those under the
Group’s Environmental Policy) to restore operating locations
in the period in which the obligation is incurred. The nature
of restoration activities includes dismantling and removing
structures, rehabilitating mines, dismantling operating facilities,
closure of plant and waste sites, and restoration, reclamation
and revegetation of affected areas.

Typically the obligation arises when the asset is installed or
the ground/environment is disturbed at the production location.
When the liability is initially recorded, the present value of the
estimated cost is capitalised by increasing the carrying amount
of the related mining assets. Over time, the discounted liability
is increased for the change in the present value based on
a discount rate that reflects current market assessments.
Additional disturbances or changes in rehabilitation costs
will be recognised as additions or changes to the corresponding
asset and rehabilitation liability when incurred.

The unwinding of the effect of discounting the provision is recorded
as a finance cost in the Income Statement. The carrying amount
capitalised as a part of mining equipment is depreciated/amortised
over the life of the related asset.

Costs incurred that relate to an existing condition caused by
past operations but do not have a future economic benefit
are expensed as incurred.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)81

Notes to the Financial Statements
For the year ended 30 June 2013

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)

(w) Derivative Financial Instruments and Hedging
The Group uses derivative financial instruments to manage its risk
to commodity prices. The instruments used by the Group include
forward sale contracts, diesel forward contracts and foreign
currency forward contracts.

Derivatives are initially recognised at fair value on the date a
derivative contract is entered into and are subsequently remeasured
to their fair value at each reporting date. The resulting gain or
loss is recognised in the Income Statement immediately unless
the derivative is designated and effective as a hedging instrument,
in which event, the timing of recognition in the Income Statement
depends on the nature of the hedge relationship.

The fair value of forward sale contracts, diesel forward contracts
and foreign currency forward contracts are calculated by reference
to current forward commodity prices.

At the inception of the transaction, the Group formally designates
and documents the relationship between hedging instruments
and hedged items, as well as its risk management objective and
strategy for undertaking various hedge transactions. The Group
also documents its assessment, both at hedge inception and
on an ongoing basis, of whether the derivatives that are used
in hedging transactions have been and will continue to be highly
effective in offsetting changes in fair values or cash flows of
hedged items.

For the purposes of hedge accounting, hedges are classified as:
– Fair value hedges, when they hedge the exposure to changes

in the fair value of a recognised asset or liability;

– Cash flow hedges, when they hedge exposure to variability
in cash flows that are either attributable to a particular risk
associated with a recognised asset or liability or a highly
probable forecast transaction; or

– Hedges of a net investment in a foreign operation.

Cash Flow Hedges
The effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges are recognised
directly in equity in the Hedge Reserve. The gain or loss relating
to the ineffective portion is recognised immediately in the Income
Statement. Amounts accumulated in equity are transferred to the
Income Statement in the periods when the hedged item affects
the Income Statement; for instance when the forecast sale that
is hedged takes place.

Hedge accounting is discontinued when the hedging instrument
expires or is sold, terminated or exercised, or no longer qualifies
for hedge accounting. At that point in time, any cumulative gain
or loss on the hedging instrument recognised in equity remains
deferred in equity until the original forecasted transaction occurs.
When the forecasted transaction is no longer expected to occur,
the cumulative gain or loss that was deferred in equity is recognised
immediately in the Income Statement.

If a hedging instrument being used to hedge a commitment for
the purchase or sale of gold or copper is redesignated as a hedge
of another specific commitment and the original transaction is still
expected to occur, the gains and losses that arise on the hedging
instrument prior to its redesignation are deferred and included
in the measurement of the original purchase or sale when it
takes place. If the hedging instrument is redesignated as a hedge
of another commitment because the original purchase or sale
transaction is no longer expected to occur, the gains and losses
that arise on the hedge prior to its redesignation are recognised
in the Income Statement at the date of the redesignation.

Copper Forward Sales Contracts
Copper forward sales contracts are entered into by the Group to
provide certainty of cash flows from certain copper concentrate
sales. These derivative instruments are not designated into hedge
relationships and as such changes in fair value are immediately
recognised as ‘Other Income/Expenses’ in the Income Statement.

Hedges of a Net Investment
Hedges of a net investment in a foreign operation, including
a hedge of a monetary item that is accounted for as part of the
net investment, are accounted for in a similar way to cash flow
hedges. Gains or losses on the hedging instrument relating to the
effective portion of the hedge are recognised directly in equity in
the Foreign Currency Translation Reserve, while any gains or losses
relating to the ineffective portion are recognised in the Income
Statement. On disposal of the foreign operation, the cumulative
value of any such gains or losses recognised directly in equity
is transferred to the Income Statement.

(x) Issued Capital
Issued ordinary share capital is classified as equity and is
recognised at the fair value of the consideration received by
the Group. Any transaction costs arising on the issue of ordinary
shares and the associated tax are recognised directly in equity
as a reduction of the share proceeds received.

Treasury Shares
The Group’s own equity instruments, which are reacquired
on market for later use in employee share-based payment
arrangements (treasury shares), are deducted from equity.
No gain or loss is recognised in profit or loss on the purchase,
sale, issue or cancellation of the Group’s own equity instruments.

(y) Earnings Per Share (EPS)
Basic EPS is calculated as net profit attributable to members,
adjusted to exclude costs of servicing equity (other than
dividends) and preference share dividends, divided by the
weighted average number of ordinary shares, adjusted for
any bonus element.

Diluted EPS is calculated as net profit attributable to members,
adjusted for:
– costs of servicing equity (other than dividends) and preference

share dividends;

– the after tax effect of dividends and interest associated with
dilutive potential ordinary shares that have been recognised
as expenses;

– other non-discretionary changes in revenues or expenses
during the period that would result from the dilution of
potential ordinary shares;

divided by the weighted average number of ordinary shares and
dilutive potential ordinary shares, adjusted for any bonus element.

(z) Revenue Recognition
Revenue from the sale of goods is recognised when there has
been a transfer of risks and rewards to the customer and no
further processing is required by the Group, the quality and
quantity of the goods has been determined with reasonable
accuracy, the price is fixed or determinable, and collectability
is probable. The point at which risk and title passes for the
majority of the Group’s commodity sales is upon receipt of
the bill of lading when the commodity is delivered for shipment.
Revenue is measured at the fair value of the consideration
received or receivable.

Gold and Silver Bullion Sales
Revenue from gold and silver bullion sales, is brought to account
when the significant risks and rewards of ownership have
transferred to the buyer and selling prices are known or can
be reasonably estimated.

82(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Gold, Copper and Silver in Concentrate Sales
Contract terms for the Group’s sale of gold, copper and silver in
concentrate (‘metal in concentrate’) allow for a price adjustment
based on final assay results of the metal in concentrate by the
customer to determine content. Recognition of sales revenue
for these commodities is based on the most recently determined
estimate of metal price in concentrate with a subsequent
adjustment made upon final determination and presented
as part of ‘Other Income’.

The terms of metal in concentrate sales contracts with third
parties contain provisional pricing arrangements whereby the
selling price for metal in concentrate is based on prevailing spot
prices on a specified future date after shipment to the customer
(quotation period). Adjustments to the sales price occur based
on movements in quoted market prices up to the date of final
settlement The period between provisional invoicing and final
settlement is typically between one and six months.

The provisionally priced sales of metal in concentrate contain
an embedded derivative that is required to be separated
from the host contract for accounting purposes. Accordingly
the embedded derivative, which does not qualify for hedge
accounting, is recognised at fair value, with subsequent changes
in fair value recognised in the Income Statement each period
until final settlement and presented as ‘Other Income’. Changes
in fair value over the quotation period and up until final settlement
are estimated by reference to forward market prices.

Interest Revenue
Interest revenue is recognised as it accrues, using the effective
interest method.

(aa) Government Royalties
Royalties under existing regimes are payable on sales and
are therefore recognised as the sale occurs.

(bb) Income Taxes
Current Income Tax
Current tax assets and liabilities for the current and prior year
are measured at the amount expected to be recovered from
or paid to the taxation authorities based on the current year’s
taxable income. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively enacted
by the reporting date.

Deferred Income Tax
Deferred income tax is provided on all temporary differences
(except as noted below) at the reporting date between the
tax bases of assets and liabilities and their carrying amounts
for financial reporting purposes.

Deferred tax assets and liabilities are not recognised if the
temporary differences giving rise to them:
– Arise from the initial recognition of an asset or liability in

a transaction that is not a business combination and that,
at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss.

– Are associated with investments in subsidiaries, associates
or interests in joint ventures, and the timing of the reversal
of the temporary difference can be controlled and it is
probable that the temporary difference will not reverse
in the foreseeable future.

Deferred tax assets are recognised for deductible temporary
differences, carry-forward of unused tax credits and unused
tax losses to the extent that it is probable that taxable profit
will be available against which the deductible temporary
differences and the carry-forward of unused tax credits and
unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to
allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred tax assets are reassessed at each reporting
date and are recognised to the extent that it has become probable
that future taxable profit will allow the deferred tax asset to
be recovered.

Deferred tax assets and liabilities are measured at the tax rates
that are expected to apply to the year when the asset is realised
or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the reporting date.

Current and deferred taxes attributable to amounts recognised
directly in equity are also recognised directly in equity.

(cc) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount
of GST except:
– where the GST incurred on a purchase of goods and services is
not recoverable from the taxation authority, in which case the
GST is recognised as part of the cost of acquisition of the asset
or as part of the expense item as applicable; and

– receivables and payables are stated with the amount of

GST included.

The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables
in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross
basis, and the GST component of cash flows arising from investing
and financing activities, which is recoverable from, or payable to,
the taxation authority, is classified as part of operating cash flows.

Commitments and contingencies are disclosed net of the amount
of GST recoverable from, or payable to, the taxation authority.

(dd) Business Combinations
Business combinations are accounted for using the acquisition
method. The consideration transferred in a business combination
is measured at fair value, which is calculated as the sum of the
acquisition date fair values of the:
– assets transferred by the Group;
– liabilities incurred by the acquirer to former owners of

the acquiree;

– equity issued by the Group;

and the amount of any non-controlling interest in the acquiree.
For each business combination, the Group measures the
non-controlling interest in the acquiree either at fair value or at
the proportionate share of the acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic
conditions, the Group’s operating or accounting policies and
other pertinent conditions as at the acquisition date. This includes
the separation of embedded derivatives in host contracts by
the acquiree.

If the business combination is achieved in stages, the acquisition
date fair value of the acquirer’s previously held equity interest in
the acquiree is remeasured at fair value as at the acquisition date
through profit or loss.

Any contingent consideration to be transferred by the Group will
be recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration which is
deemed to be an asset or liability will be recognised in accordance
with AASB 139 either in profit or loss or in other comprehensive
income. If the contingent consideration is classified as equity,
it is not remeasured.

(ee) New Accounting Standards, Amendments
and Interpretations
Adoption of New Standards and Interpretations
The Group did not adopt any new and/or revised standards,
amendments and interpretations from 1 July 2012 which had
a material effect on the financial position or performance
of the Group.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)83

Notes to the Financial Statements
For the year ended 30 June 2013

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(ee) New Accounting Standards, Amendments and Interpretations (continued)
New Accounting Standards and Interpretations Not Yet Adopted
The following standards, amendments to standards and interpretations have been identified as those which may impact the Group in the
period of initial application. They have been issued but are not yet effective, and are available for early adoption at 30 June 2013, but have
not been applied in preparing this financial report.

Reference & Title

Details of New Standard/Amendment/Interpretation

AASB 9
Financial Instruments
AASB 2010-7 and AASB
2012-6
Amendments to AAS’s
arising from AASB 9

The revised standard introduces a number of changes to the accounting for
financial assets, the most significant of which includes:
– two categories for financial assets being amortised cost or fair value;
– removal of the requirement to separate embedded derivatives in financial assets;
– reclassifications between amortised cost and fair value no longer permitted

unless the entity’s business model for holding the asset changes; and

– changes to the accounting and additional disclosures for equity instruments

classified as fair value through other comprehensive income.

AASB 10
Consolidated Financial
Statements

AASB 10 establishes a new control model that applies to all entities. The new control
model broadens the situations when an entity is considered to be controlled by
another entity.

AASB 11
Joint Arrangements

AASB 11 replaces AASB 1031. The standard uses the principle of control in AASB 10
to define joint control, and therefore the determination of whether joint control exists
may change.

AASB 12
Disclosure of Interests
in Other Entities

AASB 12 includes all disclosures relating to an entity’s interests in subsidiaries,
joint arrangements, associates and structured entities. New disclosures have been
introduced about the judgements made by management to determine whether
control exists, and to require summarised information about these entities.

Impact
on Group

Application Date
for the Group

(ii)

1 July 2015

(i)

1 July 2013

(iii)

1 July 2013

AASB 13
Fair Value Measurement

AASB 13 establishes a single source of guidance under AASB for determining the fair
value of assets and liabilities. It includes guidance on how to determine fair value
under AASB, and expands the disclosure requirements for all assets or liabilities carried
at fair value.

(iii)

1 July 2013

AASB 1053
Application of Tiers of
Australian Accounting
Standards

This standard establishes a differential financial reporting framework consisting
of two tiers of reporting requirements for preparing general purpose financial
statements.

AASB 119
Employee Benefits

This revised standard amends the:
– definition of short-term benefits, meaning some annual entitlements may

(i)

1 July 2013

Interpretation 20
Stripping Costs in
the Production Phase
of a Surface Mine

become long-term in nature with a revised measurement

– timing for recognising a provision for termination benefits, such that provisions

can only be recognised when the offer cannot be withdrawn.

This interpretation applies to stripping costs incurred during the production phase
of a surface mine. Production stripping costs (also known as deferred mining costs)
are to be capitalised as part of an asset if:
– an entity can demonstrate that is it probable future economic benefits will be realised;
– the costs can be reliably measured; and
– the entity can identify the component of an ore body for which access has

been improved.

The stripping activity asset shall be amortised on a systematic basis, over the expected
useful life of the identified component of the ore body that becomes more accessible
as a result of the stripping activity.

(iv)

1 July 2013

(i) The adoption of this new standard, amendment or interpretation will not have a material impact on the Group’s financial statements.
(ii) The Group has not yet determined the extent of the impact, if any.
(iii) This new standard will result in additional disclosures in the financial statements.
(iv) This interpretation will have an impact on the Group’s financial statements. The recognition and measurement of this asset under

the interpretation differs from the Group’s current accounting policy.
IFRIC 20 specifies the accounting for post-production stripping costs. The Group currently defers stripping costs incurred during
the production stage of its operations, for those operations where this is the most appropriate basis for matching the costs against
the related economic benefits and the effect is material. At 1 July 2012, which will be the earliest period presented in the Group’s
2014 financial statements, the net book value carried forward in ‘Other Assets’ was $331 million (pre-tax). Under the interpretation,
this balance can only be carried forward if it can be identified with a remaining component of the orebody. The Group is currently
finalising its analysis but expects that between $80 and $100 million (pre-tax) of that balance will be written off to retained earnings
at 1 July 2012.

Apart from the above, other accounting standards, amendments and interpretations that will be applicable in future periods have been
considered; however, their impact is considered insignificant to the Group.

84(cid:14)NEWCREST MINING ANNUAL REPORT 2013

(f) Recovery of Deferred Tax Assets
Deferred tax assets, including those arising from un-utilised
tax losses, require management to assess the likelihood that
the Group will comply with the relevant tax legislation and will
generate sufficient taxable earnings in future periods in order
to recognise and utilise those deferred tax assets. Estimates
of future taxable income are based on forecast cash flows
from operations and existing tax laws in each jurisdiction.
These assessments require the use of estimates and assumptions
such as exchange rates, commodity prices and operating
performance over the life of the assets. To the extent that cash
flows and taxable income differ significantly from estimates,
the ability of the Group to realise the net deferred tax assets
reported at the reporting date could be impacted.

Additionally, future changes in tax laws in the jurisdictions in
which the Group operates could limit the ability of the Group
to obtain tax deductions in future periods.

(g) Ore Reserve Estimates
The Group estimates its Ore Reserves and Mineral Resources
annually in December each year, and reports in the following
February, based on information compiled by Competent Persons
as defined in accordance with the Australasian code for reporting
Exploration Results, Mineral Resources and Ore Resources
of December 2004 (JORC code). The estimated quantities of
economically recoverable reserves are based upon interpretations
of geological models and require assumptions to be made
regarding factors such as estimates of short and long-term
exchange rates, estimates of short and long-term commodity
prices, future capital requirements and future operating
performance. Changes in reported reserves estimates can impact
the carrying value of property, plant and equipment, provision for
rehabilitation obligations, the recognition of deferred tax assets,
as well as the amount of depreciation and amortisation charged
to the Income Statement.

(h) Investment in Associates
Included in the carrying value of the investment in Evolution
Mining Limited (Evolution) is the Group’s share of loss of the
associate for the year ended 30 June 2013. As at the date of this
report, Evolution has not released its full financial statements
for the year ended 30 June 2013. The Group’s share of loss of
the associate has been estimated based on publically available
information, including the associate’s half-year accounts for the
period ended 31 December 2012, quarterly production reports
to 30 June 2013 and the market announcement on 29 July 2013
relating to the expected impairment to be recognised by Evolution
in respect of 30 June 2013. This estimate may change when full
financial statements become available and this may impact the
carrying value of the investment.

Judgment is required in assessing whether there is objective
evidence that the investment in Evolution is impaired or that
a prior period impairment should be reversed. At the reporting
date, the Group impaired its investment in Evolution to the
market value at 30 June 2013. Refer Note 18.

(i) Share-Based Payments
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of equity instruments
at the date at which they are granted. The fair value is determined
by an external valuer using an option pricing model, using the
assumptions detailed in Note 27.

3. CRITICAL ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS

Judgements, estimates and assumptions are continually evaluated
and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances. The Group makes assumptions
concerning the future. All judgements, estimates and assumptions
made are believed to be reasonable based on the most current
set of circumstances available to management. The resulting
accounting estimates will, by definition, seldom equal the related
actual results. The judgements, estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial
year are discussed below.

(a) Mine Rehabilitation Provision
The Group assesses its mine rehabilitation provision annually
in accordance with the accounting policy Note 2(v). Significant
judgement is required in determining the provision for mine
rehabilitation, as there are many transactions and other factors
that will affect the ultimate liability payable to rehabilitate the
mine sites. Factors that will affect this liability include future
disturbances caused by further development, changes in
technology, changes in regulations, price increases and changes
in discount rates. When these factors change or become known
in the future, such differences will impact the mine rehabilitation
provision in the period in which they change or become known.

(b) Unit-of-Production Method of Depreciation/
Amortisation
The Group uses the unit-of-production basis when depreciating/
amortising specific assets, which results in a depreciation/
amortisation charge proportional to the depletion of the
anticipated remaining life-of-mine production. Each item’s
economic life, which is assessed annually, has due regard to
both its physical life limitations and to present assessments
of economically recoverable reserves of the mine property
at which it is located. These calculations require the use of
estimates and assumptions.

(c) Impairment of Assets
The Group assesses each Cash-Generating Unit (CGU), including
CGUs with Goodwill as listed in Note 15, at least annually,
to determine whether there is any indication of impairment
or reversal. Where an indicator of impairment or reversal exists,
a formal estimate of the recoverable amount is made, which
is deemed as being the higher of the fair value less costs to sell
and value in use calculated in accordance with accounting policy
Note 2(o). These assessments require the use of estimates and
assumptions such as discount rates, exchange rates, commodity
prices, gold multiple values, future operating development and
sustaining capital requirements and operating performance
(including the magnitude and timing of related cash flows).

(d) Deferred Mining Expenditure
The Group defers mining costs incurred during the production
stage of its operations which are calculated in accordance with
accounting policy Note 2(h). Changes in an individual mine’s
design will generally result in changes to the life-of-mine waste
to contained gold ounce (life-of-mine (pit/stage)) ratio. Changes
in other technical or economic parameters that impact reserves
will also have an impact on the life-of-mine (pit/stage) ratio even
if they do not affect the mine’s design. Changes to deferred
mining resulting from a change in life-of-mine (pit/stage) ratios
are accounted for prospectively.

(e) Capitalisation of Exploration and Evaluation Costs
The Group’s accounting policy for exploration and evaluation
expenditure is set out in Note 2(j). The application of this
policy requires management to make certain estimates and
assumptions as to future events and circumstances, in particular,
the assessment of whether economic quantities of reserves
will be found. Any such estimates and assumptions may change
as new information becomes available.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)85

Notes to the Financial Statements
For the year ended 30 June 2013

4. REVENUE AND EXPENSES

Specific items
Profit/(loss) before income tax includes the following revenues, income and expenses
whose disclosure is relevant in explaining the performance of the Group:

(a) Operating Sales Revenue
Gold
Copper
Silver

Total operating sales revenue

Total revenue

(b) Cost of Sales
Mine production costs
Royalty
Concentrate treatment and realisation
Deferred mining adjustment
Inventory movements

Write-down of inventory
Depreciation

Total cost of sales

Total corporate administration expenses

(d) Other Income/(Expenses)
Net foreign exchange gain/(loss)
Net fair value gain/(loss) on gold and copper derivatives
Legacy community contractual settlements and negotiation costs
Other

Total other income/(expenses)

(e) Finance Costs
Interest Costs:

Interest on loans

Other:

Facility fees and other costs
Discount unwind on provisions

Less: Capitalised borrowing costs

Total finance costs

(f) Depreciation and Amortisation
Property, plant and equipment
Mine development
Intangible assets

Less: Capitalised to inventory on hand or assets under construction

Total depreciation and amortisation expense

Included in:
Cost of sales depreciation
Corporate depreciation

Total depreciation and amortisation expense

86(cid:14)NEWCREST MINING ANNUAL REPORT 2013

2013
$M

2012
$M

3,149
573
53

3,775

2,428
106
141
(346)
(165)

2,164
177
589

2,930

102
22
8

132

9
(45)
(37)
(9)

(82)

120

15
10

145
(35)

110

344
345
19

708
(97)

611

589
22

611

3,740
613
63

4,416

2,221
130
140
(178)
(248)

2,065
–
542

2,607

112
19
9

140

(14)
16
–
(16)

(14)

17
8

83
(40)

316
291
19

626
(65)

561

542
19

561

4. REVENUE AND EXPENSES (continued)

(g) Employee Benefits Expense
Defined contribution plan expense
Equity-settled share-based payments
Redundancy expense
Other employment benefits

Total employee benefits expense

(h) Other Items
Operating lease rentals

(i) Losses on Restructured and Closed-Out Hedge Contracts
Losses on restructured and closed-out hedge contracts transferred from reserves
Applicable income tax/(benefit)

Total losses on restructured and closed-out hedges (after tax)

(j) Business Acquisition and Integration Costs
Integration costs(1)
Applicable income tax expense/(benefit)

Total business acquisition and integration costs (after tax)

(1) Represents costs associated with the acquisition of Lihir Gold Limited on 30 August 2010.

(k) Gain on Business Divestment
Consideration received
Written down value of net assets sold
Disposal costs
Applicable income tax expense/(benefit)

Gain on business divestment(1)

(1) Represents gain on the divestment of Cracow and Mt Rawdon operations on 2 November 2011. Refer Note 35.

2013
$M

41
8
50
511

610

–
–

–

–
–

–

–
–
–
–

–

2012
$M

37
9
–
458

504

7
(2)

11
(3)

390
(336)
(8)
–

NEWCREST MINING ANNUAL REPORT 2013(cid:14)87

Notes to the Financial Statements
For the year ended 30 June 2013

5. IMPAIRMENT AND RESTRUCTURE COSTS

Items by Nature

(a) Restructure Costs(1)
Redundancy costs
Office closure and other costs

Total Restructure costs

(b) Write-down of Non-Current Assets(2)
Property, plant and equipment
Exploration, evaluation and mine development

Total operational asset write-downs
De-recognition of deferred tax assets

Total write-down of non-current assets

(c) Impairment Losses(3)
Deferred mining
Property, plant and equipment
Exploration, evaluation and mine development
Goodwill(3)

Total impairment losses

(d) Impairment of Associate(4)
Investment in associate

Total impairment of associate

(e) Items by Segment
Lihir
Telfer
West Africa(6)
Hidden Valley
Corporate(1)(4)

Total items by segment

Tax

Total items by segment (after tax)

Attributable to:
Non-controlling interests
Owners of the parent

Gross
$M

50
22

87
79

166
–

166

341
979
1,132
3,695

6,147

151

2013

Tax
$M

(15)
(6)

(21)

(26)
(24)

(50)
105

(90)
(236)
(238)
–

(564)

–

Net
$M

35
16

61
55

116
105

221

251
743
894
3,695

5,583

151

Impairments(5)

Write-down
of Assets
$M

Subtotal –
Impairment
and
Write-downs
$M

Restructure
$M

Total
$M

3,492
1,674
575
406
151

6,298

(564)

5,734

146
19
1
–
–

166

221

3,638
1,693
576
406
151

6,464

(509)

5,955

5
17
1
–
49

(21)

3,643
1,710
577
406
200

6,536

(530)

6,006

29
5,977

6,006

(1) Represents rationalisation of corporate and support functions, and the closure of the Brisbane office.
(2) As a result of the completion of a review of its business plan and 2014 financial year budget, the Group confirmed its focus to maximise free cash flow,

including a reduction in open pit material movement, an increase in the utilisation of existing stockpiles and the removal of high cost gold ounces from the
production profile. This approach has contributed to write-downs across various asset categories.

The write-down of these non-current assets is in addition to the write-down of inventory, which has been recognised in Cost of Sales ($177 million pre-tax,

$130 million post-tax) as disclosed in Note 4(b).

(3) The Group has recognised impairments of goodwill and other assets as a result of its annual impairment testing. These impairments have been recognised
as a result of lower gold prices, the compression of earnings multiples in the gold industry and other market factors. Refer to Note 16 for further details.

(4) As a result of the Group’s impairment review, the investment in Evolution Mining Limited has been impaired. This impairment is in addition to an

impairment of $122 million included in the share of loss of associate. Refer to Note 18 for further details.

(5) Includes goodwill impairment of $3,492 million in respect of Lihir, and $203 million in respect of West Africa. Refer to Note 16 for further details.
(6) A total of $29 million is attributable to non-controlling interests.

There were nil impairment and restructure costs in respect of the financial year ended 30 June 2012.

88(cid:14)NEWCREST MINING ANNUAL REPORT 2013

6. INCOME TAX

(a) Reconciliation of Prima Facie Income Tax Expense to Income Tax Expense per the Income Statement
Accounting profit/(loss) before tax

Income tax expense/(benefit) calculated at 30% (2012: 30%)
Research, development and other allowances – current year
Research, development and other allowances – prior year
Recognition of tax losses
(Over) provided in prior years
Gain on business divestment
Other

Adjustments on impairment and restructure costs:
Impairment – Goodwill
Impairment – Associates
Write-downs and impairments – Other assets
De-recognition of deferred tax assets

Income tax (benefit)/expense per the Income Statement

(b) Income Tax Expense Comprises:
Current income tax
Current income tax expense
(Over) provision in respect of prior years

Deferred tax
Relating to origination and reversal of temporary differences
Under provision in respect of prior years

Income tax (benefit)/expense per the Income Statement

2013
$M

(6,188)

(1,856)
(14)
(14)
–
(3)
–
2

(29)

1,108
82
178
105

1,473

(412)

(8)
(27)

(35)

(387)
10

(377)

(412)

2012
$M

1,577

473
(4)
(27)
(35)
(9)
(14)
18

(71)

–
–
–
–

–

402

278
(94)

184

195
23

218

402

NEWCREST MINING ANNUAL REPORT 2013(cid:14)89

Notes to the Financial Statements
For the year ended 30 June 2013

6. INCOME TAX (continued)

(c) Movement in Deferred Taxes
2013
Deferred tax assets
Carry forward revenue losses recognised:
– Australian entities
– Overseas entities

Deferred tax liabilities
Temporary differences:
– Fixed assets(1)
– Deferred mining
– Financial instruments
– Provisions
– Other

Net deferred taxes

2012
Deferred tax assets
Carry forward revenue losses recognised:
– Australian entities
– Overseas entities

Deferred tax liabilities
Temporary differences:
– Fixed assets(1)
– Deferred mining
– Financial instruments
– Provisions
– Other

Net deferred taxes

Balance
at 1 July
$M

Acquisitions &
Divestments
$M

(Charged)/
Credited
to Income
$M

(Charged)/
Credited
to Equity
$M

Translation
$M

Balance
at 30 June
$M

229
30

259

(1,715)
(154)
3
63
(104)

(1,907)

(1,648)

205
25

230

(1,595)
(70)
(3)
56
(62)

(1,674)

(1,444)

–
–

–

–
–
–
–
–

–

–
–

–

34
17
–
(1)
1

97
(34)

292
75
(56)
7
59

377

440

24
4

(88)
(99)
4
7
(42)

(218)

(190)

–
–

–

–
–
69
–
–

–
–

–

–
–
2
–
–

–
4

(136)
(4)
–
1
(4)

(143)

(139)

–
1

(66)
(2)
–
1
(1)

(68)

(67)

326
–

326

(1,559)
(83)
16
71
(49)

(1,604)

(1,278)

229
30

259

(1,715)
(154)
3
63
(104)

(1,907)

(1,648)

(i) Comprises property, plant and equipment; exploration, evaluation and development; and other intangible assets.

(d) Unrecognised Deferred Tax Assets
Deferred tax assets have not been recognised in respect of:
– capital losses of $83 million tax effected (2012: $86 million tax effected); and
– revenue losses and temporary differences of $105 million tax effected (2012: nil);

because it is not probable that the Group will have sufficient future assessable income and/or capital gains available against which the
deferred tax asset could be utilised.

90(cid:14)NEWCREST MINING ANNUAL REPORT 2013

7. DIVIDENDS

(a) Dividend Determined and Paid
The following dividends on ordinary shares were determined and paid:
2013 financial year
Final – In respect to the year ended 30 June 2012
(15% franked)
Interim – In respect to the year ended 30 June 2013 (unfranked)

2012 financial year
Final – In respect to the year ended 30 June 2011 (unfranked)
Special – In respect to the year ended 30 June 2011 (unfranked)
Interim – In respect to the year ended 30 June 2012 (unfranked)

Cents
per Share

Total
Amount
$M

Date of
Payment

23.0
12.0

35.0

20.0
20.0
12.0

52.0

19 Oct 2012
16 Apr 2013

21 Oct 2011
16 Dec 2011
17 Apr 2012

176
92

268

153
153
92

398

Participation in the Dividend Reinvestment Plan reduced the cash amount paid to owners of the parent to $230 million (2012: $362 million).

(b) Dividend Franking Account Balance
Franking credits at 30% as at 30 June 2013, available for the subsequent financial year is $1 million (2012: $20 million).

8. CASH AND CASH EQUIVALENTS

(a) Components of Cash and Cash Equivalents
Cash at bank
Short-term deposits

Total cash and cash equivalents

2013
$M

35
34

2012
$M

100
142

242

(b) Reconciliation of Net Profit/(Loss) after Income Tax to Net Cash Flow from Operating Activities
Profit/(loss) after income tax

(5,776)

1,175

Non-cash items:
Depreciation and amortisation
Impairment and write-down of assets
Write-down of inventory
Hedge restructure and close-out expense
Share-based payments
Discount unwind on provisions
Share of profit/(loss) of associate
Non-cash component of gain on business divestment
Foreign exchange and other non-cash items

Items presented as investing or financing activities:
Exploration expenditure written off

Changes in assets and liabilities, net of effects from business acquisitions and divestments:
(Increase)/decrease in:

Trade and other receivables
Inventories
Prepayments
Current tax asset
Deferred tax assets
Other financial assets
Deferred mining

(Decrease)/increase in:

Trade and other payables
Provisions
Current tax liabilities
Deferred tax liabilities
Other financial liabilities

Net cash from operating activities

(c) Non-Cash Financing and Investing Activities
Dividends paid by the issue of shares under the Dividend Reinvestment Plan

611
6,464
177
–
8
10
110
–
142

73
(528)
(22)
(58)
(67)
1
(370)

138
72
(92)
(303)
53

707

561
–
–
7
9
8
(15)
(54)
(11)

190
(452)
(35)
–
(29)
4
(177)

50
120
–
284
11

1,726

NEWCREST MINING ANNUAL REPORT 2013(cid:14)91

Notes to the Financial Statements
For the year ended 30 June 2013

9. TRADE AND OTHER RECEIVABLES

Current
Bullion awaiting settlement(1)
Metal in concentrate receivables(2)
GST receivable(3)
Other receivables(3)

Total current receivables

(1) Are non-interest bearing and are generally expected to settle within seven days, refer Note 2(f).
(2) Are non-interest bearing and are generally expected to settle within one to six months, refer Note 2(f).
(3) Recorded at amortised cost, are non-interest bearing and are generally expected to settle within one to two months.

10. INVENTORIES

Current
Ore
Gold in circuit
Concentrate
Materials and supplies

Total current inventories

Non-Current
Ore

Total non-current inventories

$57 million of inventory is held at net realisable value (2012: $129 million).

11. OTHER FINANCIAL ASSETS

Current
Copper forward sales contracts
Other financial derivatives

Total current other financial assets

Non-Current
Available-for-sale financial assets(1)
Other financial asset(2)

Total non-current other financial assets

(1) Represents investments in listed companies.
(2) Represents the contingent consideration receivable on the partial sale of a subsidiary. Refer Note 36.

2013
$M

12
77
57
32

178

2013
$M

269
52
129
496

946

1,248

2012
$M

46
100
61
44

251

2012
$M

240
32
94
382

748

1,095

2013
$M

2012
$M

16
2

–
10

10
1

8
–

92(cid:14)NEWCREST MINING ANNUAL REPORT 2013

12. OTHER ASSETS

Current
Prepayments
Deferred mining

Total current other assets

Non-Current
Prepayments
Deferred mining

Total non-current other assets

13. PROPERTY, PLANT AND EQUIPMENT

At 30 June
Cost
Accumulated depreciation and impairment

Year ended 30 June
Carrying amount at 1 July
Business divestment (Note 35)
Expenditure during the year
Depreciation for the year
Disposals and write-down of assets
Foreign currency translation
Reclassifications/transfers(1)

Impairment losses for the year (Note 5)

Carrying amount at 30 June(2)

(1) Represents reclassification/transfer from Exploration, Evaluation and Development upon utilisation of the asset.
(2) Included in property, plant and equipment, are leased assets with a carrying amount of $10 million (2012: $12 million).

2013
$M

107
49

156

11
373

384

2013
$M

9,087
(3,543)

5,544

4,364
–
466
(344)
(94)
384
1,747

6,523
(979)

5,544

2012
$M

91
121

212

5
272

277

2012
$M

6,516
(2,152)

4,364

3,310
(52)
436
(316)
–
31
955

4,364
–

4,364

NEWCREST MINING ANNUAL REPORT 2013(cid:14)93

Notes to the Financial Statements
For the year ended 30 June 2013

14. CAPITALISED EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURES

At 30 June 2013
Cost
Accumulated depreciation and impairment

Year ended 30 June 2013
Carrying amount at 1 July 2012
Expenditure during the year(2)
Expenditure written off during the year
Depreciation for the year
Disposals and write-down of assets
Foreign currency translation
Reclassifications/transfers(3)

Impairment losses for the year (Note 5)

Carrying amount at 30 June 2013

At 30 June 2012
Cost
Accumulated depreciation

Year ended 30 June 2012
Carrying amount at 1 July 2011
Business divestment (Note 35)
Expenditure during the year(2)
Expenditure written off during the year
Depreciation for the year
Foreign currency translation
Reclassifications/transfers(3)

Carrying amount at 30 June 2012

Exploration &
Evaluation
Expenditure
$M

Deferred
Feasibility
Expenditure
$M

Mines
Under
Construction
$M

Mine

Development(1)

885
(212)

673

797
152
(64)
–
–
77
(77)

885
(212)

673

797
–

797

775
(16)
158
(80)
–
36
(76)

797

323
–

323

174
132
–
–
(8)
23
2

323
–

323

174
–

174

74
–
130
–
–
2
(32)

174

218
–

218

1,731
947
–
–
–
28
(2,488)

218
–

218

1,731
–

1,731

1,376
–
1,815
–
–
56
(1,516)

1,731

9,199
(2,847)

6,352

6,093
436
–
(345)
(71)
343
816

7,272
(920)

6,352

7,532
(1,439)

6,093

5,450
(213)
249
–
(291)
235
663

6,093

(1) Includes acquired Mineral Rights.
(2) Borrowing costs were capitalised on qualifying assets at a weighted average interest rate of 3% (2012: 3%).
(3) Expenditure included in mines under construction has been reclassified from/to mine development or property, plant and equipment upon

utilisation of the asset.

Areas of interest in the exploration phase at cost:
Cadia Valley, NSW
Telfer, WA
Marsden, NSW
Gosowong, Indonesia
Namosi, Fiji
Hidden Valley, PNG
Wafi-Golpu, PNG
Morobe Province, PNG
Lihir, PNG
West Africa

Recoverability of the carrying amount of the exploration and evaluation assets is dependent upon the successful
development and continuing commercial exploitation, or alternatively, sale of the respective area of interest.

2013
$M

5
92
5
18
22
–
184
7
228
112

673

Total
$M

10,625
(3,059)

7,566

8,795
1,667
(64)
(345)
(79)
471
(1,747)

8,698
(1,132)

7,566

10,234
(1,439)

8,795

7,675
(229)
2,352
(80)
(291)
329
(961)

8,795

2012
$M

6
69
5
28
20
5
143
6
227
288

797

94(cid:14)NEWCREST MINING ANNUAL REPORT 2013

15. GOODWILL

Opening balance
Divestments (Note 35)
Foreign currency translation
Impairment loss for the year(1)

Closing balance

(1) Impairment losses of $3,695 million (2012: nil) have been recognised in respect of Lihir: $3,492 million

and West Africa: $203 million. Refer to Note 5.

(a) Allocation of Goodwill to Cash Generating Units
Goodwill arose through the acquisition of Lihir Gold Limited on 30 August 2010
and was allocated to the following cash generating units (CGUs):
West Africa
Lihir

2013
$M

3,759
–
372
(3,695)

436

2012
$M

3,621
(53)
191
–

3,759

–
436

436

184
3,575

3,759

16. IMPAIRMENT OF GOODWILL AND NON-CURRENT ASSETS

In accordance with the Group’s accounting policies and processes, the Group performs its impairment testing annually at 30 June.
Goodwill and non-financial assets are reviewed at each reporting period to determine whether there is an indication of impairment.
Where an indicator of impairment exists, a formal estimate of the recoverable amount is made.

The significant and sustained decline in gold price and resulting fall in market value of gold company share prices, reflected in the market
capitalisation of Newcrest, in the latter part of the 2013 financial year represented indicators of impairment. As a result, the Group
assessed the recoverable amounts of each of its cash-generating units (‘CGUs’), including goodwill where applicable.

Unless otherwise identified, the following discussion of (a) Impairment testing and (b) Sensitivity analysis, is applicable to the assessment
of the Fair Value of all of the Group’s CGUs, inclusive of those CGUs in which Goodwill is recognised.

a) Impairments Testing
i) Methodology
Impairment is recognised when the carrying amount exceeds the recoverable amount. The recoverable amount of each CGU has been
determined on its fair value less costs to sell (‘Fair Value’). The costs to sell have been estimated by management based on prevailing
market conditions.

Fair Value is estimated based on discounted cash flows using market based commodity price and exchange assumptions, estimated
quantities of recoverable minerals, production levels, operating costs and capital requirements, based on CGU life-of-mine (‘LOM’) plans.
When LOM plans do not fully utilise the existing mineral resource for a CGU, and options exist for the future extraction and processing of
all or part of those resources, an estimate of the value of unmined resources, in addition to an estimate of value of exploration potential,
is included in the determination of Fair Value. The Group considers this valuation approach to be consistent with the approach taken by
market participants.

Estimates of quantities of recoverable minerals, production levels, operating costs and capital requirements are sourced from Newcrest’s
planning process documents, including LOM plans, five-year plans and one-year budgets. The 2014 budget and five-year plan were
developed in the context of the current market environment and outlook, including a sharp deterioration in the gold price and as
previously announced, the Group’s focus on maximising free cash flow. As a result, the Group’s latest plans reflect reduced and deferred
capital expenditures and operating cost reduction initiatives.

In previous Fair Value assessments, the Group applied a gold multiple to the discounted cash flow valuation, as gold companies typically
traded at a market capitalisation that was based on a multiple of their underlying discounted cash flow valuation. In determining the
appropriate gold multiples for CGUs, the Group took into consideration the gold price assumption, the mine life, reserve/resource addition
potential, average annual production level and operating cost profile. In the current year, a gold multiple of 1.0 has been applied to all
CGUs, resulting in no impact on the determination of Fair Value.

Significant judgements and assumptions are required in making estimates of Fair Value. This is particularly so in the assessment of long
life assets (for example, Lihir which has a LOM plan of approximately 50 years). It should be noted that the CGU valuations are subject to
variability in key assumptions including, but not limited to, long-term gold prices, currency exchange rates, discount rates, CGU specific
gold multiples, production and operating costs. An adverse change in one or more of the assumptions used to estimate Fair Value could
result in a reduction in a CGU’s Fair Value.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)95

Notes to the Financial Statements
For the year ended 30 June 2013

16. IMPAIRMENT OF GOODWILL AND NON-CURRENT ASSETS (continued)

a) Impairments Testing (continued)
ii) Key Assumptions
The table below summarises the key assumptions used in the 2013 end of year carrying value assessments, and for illustration also
provides the equivalent assumptions used in 2012:

2013

2012

Gold (US$ per ounce)

2014–2019

Long term
(2020+)

$1,300

Copper (US$ per pound)

$3.00

Long term
(2019+)

$1,100

$2.70

$0.80

2013–2018

$1,615
declining
to $1,211

$3.78
declining
to $2.88

$1.00
declining
to $0.85

$0.91
declining
to $0.81

$0.80

US$ assets 5.25 to 5.75%
A$ assets 5.5%

US$ assets 5.5 to 6.0%
A$ assets 6.0%

1.0

1.1 – 1.4

AUD:USD exchange rate

Discount rate (%)

Gold multiple (times)

Commodity prices and exchange rates
Commodity price and foreign exchange rates are estimated with reference to external market forecasts, and updated at least annually.
The rates applied for the first two to three years of the valuation have regard to observable market data including spot and forward
values, thereafter the estimate is interpolated to the long term assumption, which is made having regard to market analysis including
equity analyst estimates.

Discount rate
In determining the Fair Value of CGUs, the future cash flows were discounted using rates based on the Group’s estimated real after tax
weighted average cost of capital, pursuant to the Capital Asset Pricing Model, for each functional currency used in the Group, with an
additional premium applied having regard to the geographic location of the CGU. The discount rates applied to individual CGUs that
recognised impairments were as follows:

CGU

Lihir
Hidden Valley
West Africa
Telfer

Functional
Currency

US$
US$
US$
A$

2013

5.25%
5.25%
5.75%
5.5%

2012

5.5%
5.5%
6.0%
6.0%

Gold multiple
Historically, in valuing gold producers, the gold multiple has been widely used as a proxy for, inter alia, higher gold price, reserve and
resource conversion and exploration success. In the 2013 impairment review, largely due to the significant decline in gold company share
prices in the latter part of the financial year and the absence of an observable premium, a gold multiple of 1.0 was applied to all CGUs in the
estimation of Fair Value. In 2012, the following multiples were applied to the CGU net present value of discounted cash flows to determine
Fair Value: Cadia Valley 1.4; Lihir 1.4; Gosowong 1.3; Telfer 1.2; Hidden Valley 1.1; West Africa 1.1.

Operating and capital costs
Life-of-mine operating and capital cost assumptions are based on the Group’s latest budget, five year plan and longer term province
plans. The projections include expected cost improvements reflecting the Group’s objectives to maximise free cash flow, optimise and
reduce activity, apply technology, improve capital and labour productivity, and remove high cost gold ounces from the production profile.
Operating cost assumptions reflect the expectation that costs will, over the long term, have a degree of positive correlation to the
prevailing commodity price and exchange rate assumptions.

Unmined resources and exploration values
Unmined resources may not be included in a CGU’s particular life-of-mine plan for a number of reasons, including the need to constantly
re-assess the economic returns on and timing of specific production options in the current economic environment. The Group has
estimated unmined resources values on a dollar margin per gold equivalent ounce basis individually for each CGU, taking into account
a range of factors including the physical specifications of the ore, probability of conversion, estimated capital and operating costs,
and length of mine life.

Exploration values have been estimated by the Group based on estimates of total mineral endowments by CGU. A per unit valuation
of expected resource growth is applied on a CGU specific basis, determined by the expected realisable value of the estimated
additional inventory.

The value of unmined resources and exploration as a % of the assessed Fair Value in the current period for each CGU subject to
impairment is as follows:

Unmined resource
Exploration

96(cid:14)NEWCREST MINING ANNUAL REPORT 2013

Lihir

1%
6%

Telfer

Hidden Valley

West Africa

18%
9%

8%
8%

6%
25%

16. IMPAIRMENT OF GOODWILL AND NON-CURRENT ASSETS (continued)

iii) Impacts
After reflecting the write-down of certain assets arising from the Group’s revised operating plans, the Group has conducted carrying value
analysis, and recognised goodwill and non-current assets impairments of A$5,583 million after tax, as summarised in the table below:

CGU

Lihir
Telfer
West Africa
Hidden Valley

Total items by CGU

Tax

Total items by CGU (after tax)

Impairment –
Goodwill
A$M

Impairment –
Other Assets
A$M

3,492
–
203
–

3,695

–
1,674
372
406

2,452

Total
A$M

3,492
1,674
575
406

6,147

(564)

5,583

The Fair Value of the Group’s other CGUs – Cadia Valley and Gosowong – were assessed by the Group to significantly exceed their
carrying values.

The Fair Value of the Telfer, West Africa and Hidden Valley CGUs have been most impacted by the sharp decline in short to medium term
commodity price assumptions and changes to mine plans focussed on maximising free cash flow in a lower gold price environment.
The elimination of the use of gold multiples in the determination of Fair Value also had a negative impact on the valuation of these CGUs.

The Lihir CGU was most impacted by the elimination of the use of a gold multiple in the determination of Fair Value, in addition to the
sharp decline in short to medium term commodity price assumptions.

b) Sensitivity Analysis
After effecting the impairments for the Lihir, Telfer, West Africa and Hidden Valley CGUs, the Fair Value of these assets is assessed as being
equal to their carrying amount as at 30 June 2013.

Any variation in the key assumptions used to determine Fair Value would result in a change of the assessed Fair Value. If the variation in
assumption had a negative impact on Fair Value, it could indicate a requirement for additional impairment to non-current assets.

It is estimated that changes in the key assumptions would have the following approximate impact on the Fair Value of each CGU in its
functional currency that has been subject to impairment in the 2013 statutory accounts:

$ million in functional currency

US$100 per ounce change in gold price
0.25% increase/decrease in discount rate
$0.05 increase/decrease in AUD:USD rate
5% increase/decrease in operating costs from that assumed

Lihir
US$

1,285
285
N/A
400

Telfer
A$

Hidden Valley
US$

West Africa
US$

425
25
410
260

115
5
N/A
65

80
5
N/A
30

It must be noted that each of the sensitivities above assumes that the specific assumption moves in isolation, while all other assumptions
are held constant. In reality, a change in one of the aforementioned assumptions is usually accompanied with a change in another
assumption, which may have an offsetting impact (for example, the recent decline in the US$ gold price has been accompanied with a
decline in the A$ compared to the US$). Action is also usually taken to respond to adverse changes in economic assumptions that may
mitigate the impact of any such change.

In addition to the impairment testing performed at 30 June 2013, the Group also undertook a sensitivity analysis on the Cadia Valley and
Gosowong CGUs. Both of these CGUs have a Fair Value that significantly exceeds their carrying value. None of the sensitivities in the table
above, applied either in isolation or in aggregate (as improbable as this scenario may be) to the Cadia Valley and Gosowong CGUs, would
cause an impairment in either CGU as at 30 June 2013. The gold price assumptions required in order for the estimated Fair Values to equal
the carrying amounts for these two CGUs are:
– Cadia Valley – less than approximately US$625 per ounce; and
– Gosowong – less than approximately US$875 per ounce.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)97

Notes to the Financial Statements
For the year ended 30 June 2013

17. OTHER INTANGIBLE ASSETS

Information Systems Development

At 30 June
Cost
Accumulated amortisation

Year ended 30 June
Carrying amount at 1 July
Expenditure during the year
Amortisation for the year
Transfers and other

Carrying amount at 30 June

18. INVESTMENT IN ASSOCIATE

Investment in Evolution Mining Ltd(1)
Carrying amount at 1 July
Acquisitions (Note 35)
Non-participation in rights issue
Share of comprehensive loss
Share of results of associate:
– Share of associate’s operational profit
– Share of associate’s impairment(2)

Additional impairment loss recognised

Carrying amount at 30 June(3)

2013
$M

2012
$M

193
(79)

114

93
40
(19)
–

114

2013
$M

395
–
–
(2)

12
(122)

(110)
(151)

132

154
(61)

61
45
(19)
6

2012
$M

–
390
(10)
–

15
–

395

(1) The Group holds 231,082,631 shares (2012: 231,082,631) in Evolution Mining Limited (Evolution), representing a 32.63% (2012: 32.68%) interest.

Evolution is an Australian gold mining company listed on the Australian Securities Exchange (ASX).

(2) On 29 July 2013, Evolution announced an expected impairment. The Group’s expected share of this impairment is $122 million and is based on the

mid-point of the range announced by the associate.

(3) As a result of the Group’s impairment review, the investment has been impaired to the market value as at 30 June 2013. The market value of $132 million
is based on the closing market bid price of $0.570 on the ASX on 28 June 2013. The carrying value will be reviewed at each balance date with reference
to the closing share price on the ASX. As at 9 August 2013, the share price was $0.775.

The following table discloses summarised financial information of the Group’s investment in Evolution:

Share of the associate’s statement of financial position:
Total assets
Total liabilities

Net assets

Share of the associate’s revenue:
Revenue

19. TRADE AND OTHER PAYABLES

Trade payables(1)
Other payables and accruals(1)

Total trade and other payables

(1) All payables are unsecured, non-interest-bearing and are normally settled on 30-60 day terms.

2013
$M

219
(87)

132

208

2013
$M

136
484

620

2012
$M

445
(50)

395

126

2012
$M

120
362

482

98(cid:14)NEWCREST MINING ANNUAL REPORT 2013

20. BORROWINGS

Current
Finance lease liabilities – secured
US dollar bilateral bank debt – unsecured

Total current borrowings

Non-Current
Finance lease liabilities – secured
US dollar bilateral bank debt – unsecured
US dollar private placement notes – unsecured
US dollar corporate bonds – unsecured

Total non-current borrowings

(i) Finance lease facility

2013
$M

1
–

–
1,806
248
2,156

4,210

2012
$M

3
1,197

1,200

1
–
226
981

1,208

(i)
(ii)

(i)
(ii)
(iii)
(iv)

The Group’s lease liabilities are secured by the assets leased. In the event of default, the assets revert to the lessor.

(ii) US dollar bilateral bank debt

The Group has bilateral bank debt facilities of US$2,500 million (2012: US$2,000 million) with 10 banks. These are committed
unsecured revolving facilities with maturities of September 2015 and September 2017 (2012: maturities ranging between December
2012 and February 2013), individually negotiated and documented with each bank but with similar terms and conditions. These
facilities are on normal terms and conditions and include certain financial covenants. Interest is based on LIBOR plus a margin
which varies amongst the lenders.

(iii) US dollar private placement notes

During the year ended 30 June 2005, the Group issued US$350 million of long term senior unsecured notes into the North American
private placement market. The proceeds of the placement were received on 11 May 2005. The tranches remaining are shown in the
table below:

Fixed 10 years
Fixed 12 years
Fixed 15 years

Maturity

11 May 2015
11 May 2017
11 May 2020

2013
US$M

105
100
25

230

2012
US$M

105
100
25

230

2013
A$M

113
108
27

248

2012
A$M

103
98
25

226

These notes are on normal terms and conditions and include certain financial covenants. Interest on the notes is payable semi-annually
at an average of 5.7% (2012: 5.7%). These notes were fully drawn as at 30 June 2013, and have been restated to Australian dollars using
the spot exchange rate at the reporting date.

(iv) US dollar corporate bonds

In each of November 2011 and October 2012, Newcrest issued US$1,000 million in US dollar corporate bonds (notes).
The notes were sold in accordance with Rule 144A and Regulation S of the Securities Act of the United States. The notes consist of:
– US$750 million senior unsecured notes due 15 November 2021 with a coupon of 4.45%;
– US$750 million senior unsecured notes due 1 October 2022 with a coupon of 4.20%; and
– US$500 million senior unsecured notes due 15 November 2041 with a coupon of 5.75%.

(v) Hedging: US dollar denominated debt

Where considered appropriate, the foreign currency component of US dollar denominated debt is designated either as a cash flow
hedge of future US dollar denominated commodity sales or a net investment in foreign operations with a US dollar functional
currency. Refer Note 28(d) for further details.

(vi) Financial arrangements

The Group has access to the following unsecured financing arrangements.

Facilities utilised at reporting date
US dollar bilateral bank debt facilities
US dollar private placement notes
US dollar corporate bonds

Facilities unutilised
US dollar bilateral bank debt facilities

Total facilities
US dollar bilateral bank debt facilities
US dollar private placement notes
US dollar corporate bonds

2013
US$M

1,675
230
2,000

3,905

825

2,500
230
2,000

4,730

2012
US$M

1,220
230
1,000

2,450

780

2,000
230
1,000

3,230

2013
A$M

1,806
248
2,156

4,210

889

2,695
248
2,156

5,099

2012
A$M

1,197
226
981

2,404

765

1,962
226
981

3,169

NEWCREST MINING ANNUAL REPORT 2013(cid:14)99

Notes to the Financial Statements
For the year ended 30 June 2013

21. PROVISIONS

Current
Employee benefits
Mine rehabilitation and restoration
Restructure
Other

Total current provisions

Non-Current
Employee benefits
Mine rehabilitation and restoration
Restructure

Total non-current provisions

(i) Employee benefits

2013
$M

119
15
46
61

241

43
302
8

353

2012
$M

134
6
–
60

200

29
279
–

308

(i)
(ii)
(iii)
(iv)

(i)
(ii)
(iii)

Represents annual leave, long service leave, salary at risk and other incentive payments (refer Note 2 (u)).

(ii) Mine rehabilitation and restoration

The Group recognises that it has an obligation to restore its mine sites to their original condition at the end of the life of mine.
Mine rehabilitation costs are provided for at the present value of future expected expenditure when the liability is incurred.
Although the ultimate cost to be incurred is uncertain, the Group has estimated its costs based on feasibility and engineering studies
using current restoration standards and techniques. When this liability is recognised, a corresponding asset is also recognised as part
of the development costs of the mine and is amortised across the same useful life.

(iii) Restructure

Represents the costs associated with the restructuring activities within the Group. Refer to Note 5.

(iv) Other provisions

Comprises of onerous contracts, community obligations and other miscellaneous items.

Movements in Provisions
Movements in provisions (excluding employee benefits) during the year were as follows:

Mine Rehabilitation
& Restoration
$M

Restructure
$M

Other
Provisions
$M

At 1 July 2012
Recognised during the year
Movements in discount rates
Paid/utilised during the year
Unwinding of discount
Foreign currency translation

At 30 June 2013

Split between:
Current
Non-current

22. OTHER FINANCIAL LIABILITIES

Current
Quotational period derivatives(1)
Other financial derivatives

Total current financial derivative liabilities

285
14
–
(5)
10
13

317

15
302

317

–
64
–
(10)
–
–

46
8

2013
$M

68
3

60
26
–
(30)
–
5

61
–

2012
$M

18
–

(1) Represents the embedded derivatives relating to quotational period movements on commodity sales. Refer note 2(z).

100(cid:14)NEWCREST MINING ANNUAL REPORT 2013

23. ISSUED CAPITAL

(a) Movements in Issued Capital
Opening balance
Shares issued during the year:
– Dividend reinvestment plan
– Share buy-back
– Shares repurchased and held in treasury

Total issued capital

(b) Number of Issued Ordinary Shares
Comprises:
– Shares held by the public
– Treasury shares

Total issued capital

Movement in issued ordinary shares for the year
Opening number of shares
Shares issued under:
– Share plans
– Executive service agreements
– Dividend reinvestment plan
– Employee share acquisition plan
– Share buy-back
– Purchases by the Newcrest Employee Share Trust

Closing number of shares

Movement in treasury shares for the year
Opening number of shares
Purchases
Issued pursuant to share plans

Closing number of shares

2013
$M

2012
$M

13,561

13,569

38
–
(7)

36
(35)
(9)

13,592

13,561

2013
No.

2012
No.

(ii)
(iv)
(v)

765,607,049
903,922

764,561,477
438,523

766,510,971

765,000,000

764,561,477

764,412,847

(i)
(i)
(ii)
(iii)
(iv)
(v)

118,130
28,488
1,510,971
64,038
–
(676,055)

379,568
–
1,062,040
39,062
(1,062,040)
(270,000)

765,607,049

764,561,477

438,523
676,055
(210,656)

587,153
270,000
(418,630)

903,922

438,523

(i) Represents rights exercised under the Company’s share-based payments plans and Executive service agreements. Refer Note 27

for share-based payments.

(ii) The Dividend reinvestment plan provides shareholders with an opportunity to reinvest all or part of their dividend entitlements

at the market price at the time of issue.

(iii) The Employee Share Acquisition Plan is a broad based employee share plan. During the year, the Plan offered eligible employees

fully paid shares for $nil consideration.

(iv) In order to minimise dilution of its share capital through the issue of shares under the Company’s share-based payments plans

and the Dividend Reinvestment Plan (DRP), the Company intends to buy-back the corresponding number of shares on market as
and when required. It is anticipated that on-market buy-backs will be undertaken periodically in response to exercise of rights, or
operation of the DRP. The share buy-back plan will only be used to purchase shares that are issued under the above mentioned plans.

(v) During the year, shares were purchased by the Newcrest Employee Share Trust on behalf of Newcrest Mining Limited to satisfy

future share rights and awards as they vest.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)101

Notes to the Financial Statements
For the year ended 30 June 2013

24. RETAINED EARNINGS/(ACCUMULATED LOSSES)

Opening balance
Profit/(loss) after tax (attributable to owners of the parent)
Dividends paid
Changes in equity interests held by the parent

Closing balance

25. RESERVES

Equity settlements reserve
Foreign currency translation reserve
Hedge reserve
Fair value reserve

Total reserves

(a) Equity Settlements Reserve

2013
$M

2,890
(5,778)
(268)
92

(3,064)

2013
$M

62
(655)
13
(3)

(583)

2012
$M

2,171
1,117
(398)
–

2,890

2012
$M

54
(1,543)
15
(2)

(1,476)

Note

(a)
(b)
(c)
(d)

The equity settlements reserve is used to recognise the fair value of rights and options issued to employees, including Key
Management Personnel in relation to equity-settled share based payments.

(b) Foreign Currency Translation Reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries. The reserve is also used to record gains and losses on hedges of the net investment in foreign
operations (refer Note 2(w)).
During the year, the Group issued US$1,000 million in US denominated corporate bonds. This debt has been designated as a hedge
of the net investment in a foreign operation (Lihir Gold Limited). The exchange gains or losses upon subsequent revaluation of this
US dollar denominated debt, in an effective hedge relationship, from the historical drawdown rate to the period-end spot exchange
rate are deferred in equity in the foreign currency translation reserve. These cumulative gains or losses will remain deferred in equity
and will only be transferred to the Income Statement in the event of the disposal of the foreign operation.

The hedge reserve is used to record the effective portion of changes in the fair value of cash flow hedges (refer note 2(w)).
The components of the hedge reserve at year end were as follows:

Component

FX gains on US dollar denominated borrowings(i)
Other cash flow hedges

Tax effect

Total Hedge Reserve

(i) FX gains on US dollar private placement notes

2013
$M

20
(1)

19
(6)

2012
$M

20
1

21
(6)

The foreign currency component of this US dollar denominated debt was designated as a cash flow hedge of future US dollar denominated
commodity sales. During the 2010 year, this hedge was de-designated. As a result of this de-designation, foreign exchange differences on the
retranslation of this debt, from the date of de-designation are recorded in the Income Statement.
At the date of de-designation, the balance of this cash flow hedge deferred in equity was $21 million (net of tax). This balance will continue to
remain deferred in equity and will be released to the Income Statement, in the same period as the anticipated hedged US dollar denominated
commodity sales.
During the year, $nil was transferred to the Income Statement (2012: $10 million pre-tax).

(d) Fair Value Reserve

The Fair Value Reserve records movements in the fair value of available-for-sale financial assets. Where a revalued financial asset
is sold or is determined to be impaired, the cumulative gain or loss included in the reserve is recognised in profit or loss.

102(cid:14)NEWCREST MINING ANNUAL REPORT 2013

26. EARNINGS PER SHARE (EPS)

EPS (cents per share)
Basic EPS
Diluted EPS(2)

Earnings used in calculating EPS
Earnings used in the calculation of basic and diluted EPS:
Profit/(loss) after income tax attributable to owners of the parent

Weighted average number of shares
Share data used in the calculation of basic and diluted EPS:
Weighted average number of ordinary shares used in calculating basic EPS
Effect of dilutive securities: share rights(1)(2)

Adjusted weighted average number of ordinary shares used in calculating diluted EPS

2013
¢

(754.5)
(754.5)

2013
$M

2012
¢

146.0
145.8

2012
$M

(5,778)

1,117

2013
No. of shares

2012
No. of shares

765,828,885
1,596,241

765,048,302
1,108,181

767,425,126

766,156,483

(1) Rights granted to employees (including Key Management Personnel), as described in Note 27, are considered to be potential ordinary shares, and have

been included in the determination of diluted earnings per share to the extent they are dilutive. These rights have not been included in the determination
of basic earnings per share.

(2) In accordance with AASB 133 Earnings per Share, the effects of anti-dilutive potential have not been included when calculating diluted loss per share

for the year ended 30 June 2013.

27. SHARE-BASED PAYMENTS

(a) Newcrest Employee Share Acquisition Plan and Share Match Plan
Under the Newcrest Employee Share Acquisition Plan (ESAP or the plan), eligible employees are granted shares in Newcrest Mining Limited
(‘the Company’) for no cash consideration. All Australian resident permanent employees who have been continuously employed by the
Group for a period of at least one year are eligible to participate in the plan. Employees may elect not to participate in the plan.

Under the plan, eligible employees may be granted up to $1,000 worth of fully paid ordinary shares in the Company for no consideration.
The market value of shares issued under the plan is measured at the weighted average market price of the shares on the ASX over a period
of a week prior to the grant date. The fair value of shares issued under the plan during the year was $1.6 million (2012: $1.4 million).

Members of the plan receive all the rights of ordinary shareholders. Unrestricted possession of these shares occurs at the earliest
of, three years from the date of issue or the date employment ceases. During 2013, 1,642 employees participated in the plan
(2012: 1,396 employees).

The Share Match Plan commenced during the 2013 financial year. Employees may contribute up to $4,950 to acquire shares in the
plan year. On the the third anniversary of the start of the plan year, the Company will match the number of acquired shares held by
the employee at that time with matched shares.

(b) Executive Performance Share Plan (LTI Plan)
The Executive Performance Share Plan (also referred to as the Long Term Incentive (LTI) plan) entitles participants to receive rights to
ordinary fully paid shares in the Company (Performance Rights). The Executive Directors, Executive General Managers and Managers
participate in this plan.

The performance measures for the Performance Rights granted in the 2012 and 2013 financial years comprised of three equally weighted
measures, being:
– Reserves Growth;
– Comparative Cost Position; and
– Return on Capital Employed (ROCE).

Each LTI measure was chosen by the Board, as it is a key driver of group performance:
– Reserves Growth and Comparative Cost Position being key drivers of shareholder return in a gold mining company, and;
– ROCE being a direct measure of returns per unit of capital.

Performance against each of these measures over the three-year vesting period accounts for one-third of any grant made to participants.
There is no ability to re-test performance under the plan after the performance period.

The assessed fair value at grant date of the share rights granted under the plan during the 2013 year was $27.85 (2012: $31.83) per right.

NEWCREST MINING ANNUAL REPORT 2013(cid:14)103

Notes to the Financial Statements
For the year ended 30 June 2013

27. SHARE-BASED PAYMENTS (continued)

(b) Executive Performance Share Plan (LTI Plan) (continued)
The fair value is independently determined using a Black-Scholes option pricing model. The model inputs for share rights granted included:

– Exercise price:

Nil

(2012: Nil)

– Risk-free interest rate:

2.81%

(2012: 3.16%)

– Expected life of right (years): 3 years (2012: 3 years)

– Share price at grant date: $29.12

(2012: $33.18)

– Expected dividend yield:

1.5%

(2012: 1.5%)

(c) Restricted Share Plan (MTI Plan)
The Restricted Share Plan (also referred to as the Medium Term Incentive (MTI) plan) was an annual incentive plan, under which eligible
employees were granted rights to receive ordinary fully paid shares in the Company (Restricted Rights).

The MTI plan was last awarded to eligible employees in 2009.

Outstanding Restricted Rights at the end of 2013 have an expiry date of 11 November 2013.

(d) Movements in the Number of Rights
Detailed information of share rights over unissued ordinary shares is set out below:

Grant
date

Exercise Date
on or after

Expiry Date

2013
9 Nov 07
11 Nov 08
11 Nov 08
10 Nov 09
10 Nov 10
23 Sep 11
17 Sep 12

Total

2012
3 Nov 06
9 Nov 07
11 Nov 08
11 Nov 08
10 Nov 09
10 Nov 10
23 Sep 11

Total

9 Nov 10
11 Nov 10
11 Nov 11
10 Nov 12
10 Nov 13
23 Sep 14
17 Sep 15

3 Nov 09
9 Nov 10
11 Nov 10
11 Nov 11
10 Nov 12
10 Nov 13
23 Sep 14

9 Nov 12
11 Nov 12
11 Nov 13
10 Nov 14
10 Nov 15
23 Sep 14
17 Sep 15

3 Nov 11
9 Nov 12
11 Nov 12
11 Nov 13
10 Nov 14
10 Nov 15
23 Sep 14

All share rights have a nil exercise price.

Movement in Number of Rights During the Year

Granted

Exercised

Forfeited

Number at
End of Year

Number
Exerciseable
at End of Year

–
–
–
–
–
–
743,360

(53,280)
(11,067)
(22,602)
(31,181)
–
–
–

–
–
–
(49,088)
(14,508)
(34,855)
(38,719)

–
31,175
110,967
90,284
178,590
480,584
704,641

–
31,175
110,967
90,284
–
–
–

Number at
Beginning
of Year

53,280
42,242
133,569
170,553
193,098
515,439
–

1,108,181

743,360

(118,130)

(137,170)

1,596,241

232,426

103,429
124,902
81,339
352,129
253,809
261,355
–

–
–
–
–
–
–
517,564

(102,787)
(70,989)
(34,240)
(171,552)
–
–
–

(642)
(633)
(4,857)
(47,008)
(83,256)
(68,257)
(2,125)

–
53,280
42,242
133,569
170,553
193,098
515,439

–
53,280
42,242
133,569
–
–
–

1,176,963

517,564

(379,568)

(206,778)

1,108,181

229,091

104(cid:14)NEWCREST MINING ANNUAL REPORT 2013

28. FINANCIAL AND CAPITAL RISK MANAGEMENT

(a) Financial Risk Management Objectives and Policies
The Group’s management of financial risk is aimed at ensuring net cash flows are sufficient to:
– Withstand significant changes in cash flow at risk scenarios and still meet all financial commitments as and when they fall due;
– Maintain the capacity to fund its forecasted project developments and exploration; and
– Maintain the equivalent of an investment grade credit rating.

The Group continually monitors and tests its forecast financial position against these criteria. The Group has a detailed planning process
that forms the basis of all cash flow forecasting, and updates these plans through a monthly estimation process. The cash flow forecast
is then used to stress test financial risk, and forms the basis for the Capital Management Plan.

Credit, liquidity and market risk (including foreign exchange risk, commodity price risk and interest rate risk) arise in the normal course
of the Group’s business. These are managed under Board approved directives which underpin Group Treasury policies and processes.
The Group’s principal financial instruments, other than derivatives and available-for-sale assets, comprise interest-bearing debt, finance
leases, cash and short-term deposits. Other financial instruments include trade receivables and trade payables, which arise directly
from operations.

The Group’s forecast financial risk position with respect to key financial objectives and compliance with Treasury policy are regularly
reported to the Board.

The following table discloses the carrying amounts of each class of financial assets and financial liabilities at year end.