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Golden Star Resources2021
Annual Report
Celebrating
Years
Our purpose is to create a brighter future for
people through safe and responsible mining.
About
Newcrest is the largest gold producer listed on the ASX
(ASX, TSX, PNGX: NCM) and is one of the world’s largest
gold mining companies. We operate gold and copper mines
in Australia, Canada and Papua New Guinea and have a
strong pipeline of organic growth and exploration projects.
We have strong technical capabilities across the value chain,
from exploration through to many different forms of mining
and processing. We have a distinctive capability in block
caving and a long reserve life.
Vision
Our edge
To be the Miner of Choice:
Collaboration, innovation and an owner’s mindset
– Valued by our people and communitites
– Respected by our partners, customers, suppliers and peers
– Celebrated by our owners
1
Contents
02 Summary of Financial
Performance
12 Safety and
Sustainability
29 Mineral Resources and
Ore Reserves
04 Chairman’s Report
14 People
44 Director’s Report
06 Managing Director’s Review
16 Operational Review
08 About Newcrest
22 Organic Growth
10 Our Strategy
26 The Board
48 Operating and Financial Review
96 Remuneration Report
123 Consolidated Financial Statements
185 Independent Auditor’s Report
2
Summary of Financial Performance1
Record free cash flow of $1.1bn for FY212
Cumulative free cash flow (FY15–FY21) ($m)2
$4,295m
1,104
4,295
804
601
(621)*
Total dividends for FY213
US55cps
739
814
854
l
a
t
o
T
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Total
Statutory profit ($m)
Underlying profit ($m)2
AISC margin ($/oz)2,4
$1,164m
FY21
FY20
FY19
FY18
FY17
647
561
202
308
$1,164m
$876
FY21
FY20
FY19
FY18
FY17
750
561
459
394
FY21
FY20
FY19
FY18
FY17
668
531
473
476
Earnings per share (cps)
(Net cash) or net debt
ROCE (%)2
142.5cps
($176m)
18.5%
FY21
FY20
FY19
FY18
FY17
83.4
73.0
26.3
40.2
FY21
FY20
FY19
FY18
FY17
624
395
1,040
1,499
FY21
FY20
FY19
FY18
FY17
13.8
11.2
8.8
7.9
*
Free cash flow for FY20 includes investments in M&A activity which includes the payment for the acquisition of Red Chris (70% ownership) of $769 million, the acquisition of Fruta del Norte finance
facilities of $460 million, further investments in Lundin Gold of $79 million, net proceeds from the divestment of Gosowong of $20 million and a payment of $3 million for an interest in Antipa Minerals Ltd.
1 All financial data presented in this Annual Report is quoted in US dollars unless otherwise stated.
2
For this reference and other references to non-IFRS financial measures throughout this Annual Report, refer to the Endnotes in the Operating and Financial Review (within the Directors’ Report) regarding
the inclusion and definitions of non-IFRS financial measures.
3 Represents dividends declared/determined in respect of FY21.
4 Newcrest’s AISC margin for FY21 has been determined by deducting the AISC attributable to Newcrest’s operations of $920/oz from Newcrest’s realised gold price for FY21 of $1,796/oz.
Newcrest Annual Report 2021 FY21 Highlights
3
Creating value for our stakeholders
Communities
Shareholders
We believe that a planned, transparent and constructive approach to
community engagement and development is critical to maintaining
our licence to operate and ensuring that our host communities benefit
from Newcrest’s operations.
New Landholder Agreement at Lihir
Newcrest announced in December 2020 that it had signed new
compensation, relocation and benefits sharing agreements with
the mining lease landholders at Lihir. It is expected that these new
agreements will enhance socio-economic development outcomes
for landholders and the broader Lihirian community, and enable
benefits to be distributed directly to their intended beneficiaries.
The agreements also enable the efficient and transparent distribution
of compensation and benefits.
Newcrest’s Community Support Fund
In April 2020 we announced our
A$20 million Community Support Fund
which was established to help support our host communities with the
challenges associated with the COVID-19 pandemic. Since its inception,
the Fund has supported a variety of initiatives ranging from immediate
health assistance to livelihood restoration and economic recovery across
Papua New Guinea, Australia, Canada (British Columbia) and Ecuador.
We recently extended the Fund through to June 2022 and look forward
to seeing its continued benefits over the next 12 months.
Government
We believe that Newcrest’s activities positively contribute to the
economies of the jurisdictions in which we operate through taxes
and royalties paid to Governments.
Taxes Paid FY17 to FY21 ($m)5
$563m
FY21
FY20
FY19
FY18
FY17
561
420
316
266
Corporate taxes
Mining royalties
Other taxes
To achieve the safe delivery of superior returns to our shareholders,
we strive to:
– safely realise the full potential of our operating assets;
– apply our technical expertise to unlock value in orebodies
that we currently own or can acquire;
– leverage our exploration and technical expertise to discover
new gold/copper orebodies;
– maintain capital discipline when deploying all growth
and exploration opportunities to ensure financial strength
throughout the capital cycle; and
– deliver returns to shareholders through share price
performance and dividends (in line with our dividend policy).
Sixth consecutive year of increased dividends6
US55cps
FY21
FY20
FY19
FY18
FY17
25
22
18.5
15
Environment
Newcrest is progressing multiple near-term greenhouse gas
reduction opportunities and will pursue innovative solutions and
technologies in the longer term, as well as increasing its focus on
improvements in water usage and biodiversity management.
Net Zero Carbon Emissions by 2050
In May 2021, Newcrest announced that it had set a goal of
net zero carbon emissions by 2050
which relates to its operational (Scope 1 and Scope 2 emissions). Newcrest
intends to work across its value chain to reduce its Scope 3 emissions.
Reducing Greenhouse Gas Emissions
Newcrest has committed to a 30% reduction in greenhouse gas
emissions intensity by 20307.
In December 2020, Newcrest entered into a renewable energy PPA for
Cadia which is expected to help deliver a ~20% reduction in Newcrest’s
greenhouse gas emissions from calendar year 2024 and is a significant
step towards achieving its targeted 30% reduction by 20308.
5
Between FY17 and FY21, taxes and royalties paid or borne by the Group totalled $2.1bn worldwide.
Other taxes include employee and other withholding taxes, employer taxes, customs duties, non-recoverable VAT, rates and levies generated in respect of Newcrest’s operations.
6 Dividends declared/determined in respect of each financial year.
7 Kg CO2-e per tonne of ore treated and compared to a baseline of FY18 emissions.
8
PPA = Power Purchase Agreement. The PPA, together with the forecast decarbonisation of electricity in New South Wales is expected to deliver a ~20% reduction in greenhouse gas emissions.
Refer to market release titled “Newcrest signs renewable energy PPA to help deliver ~20% reduction in greenhouse gas emissions” dated 16 December 2020, which is available
to view at www.asx.com.au under the code “NCM” and on Newcrest’s SEDAR profile.
4
Chairman’s Report
Dear Shareholder,
I am pleased to present Newcrest’s Annual
Report for FY21 which outlines our progress
and achievements for the year.
Net Zero Emissions goal
Net zero
carbon emissions
by 2050
New dividend policy
Targeting a free cash flow
payout of at least 30–60%,
with a minimum total annual
dividend of US 15cps
FY21 Result:
41%
payout of FY21’s free cash flow
Total dividends for FY21
US55cps
It has now been six years since Newcrest
established its safety transformation plan
and the benefits are evident throughout our
business. We are now approaching six years
free of fatalities and have reported a pleasing
12% improvement in injury rates compared to
the prior year.
At the 2020 Annual General Meeting I spoke
about the devastating impact the COVID-19
pandemic was having on lives and economies
across the world. Our number one priority during
the pandemic has been the health and safety of
our people and local communities. We continue
to apply a wide range of precautionary measures
throughout the business which include strict
hygiene and social distancing requirements as
well as comprehensive testing, quarantine and
contact tracing procedures to keep people safe
and help minimise disruptions to our operations.
In April 2020 we announced our
A$20 million Community Support Fund
which was established to help support
our host communities with the challenges
associated with the COVID-19 pandemic.
Since its inception the Fund has supported
a variety of initiatives ranging from immediate
health assistance to livelihood restoration and
economic recovery in Papua New Guinea,
Australia, Canada and Ecuador.
Notable initiatives of the Fund during the year
have included a commitment to support vaccine
rollout (and additional in-kind logistical support)
as a Founding Member of the COVID
Vaccination Alliance of UNICEF Australia in
Papua New Guinea as well as contributing to
the establishment of the first Intensive Care Unit
in the Province of Zamora-Chinchipe (Ecuador),
in partnership with other mining companies and
Ecuadorian authorities. We recently extended
the Fund through to June 2022 and look forward
to seeing its continued benefits over the next
12 months.
In the second half of the financial year, we
announced our Purpose of Creating a brighter
future for people through safe and responsible
mining. This is about delivering more than just
safety, profits and growth – it is about leaving
a positive impact for all our stakeholders such
that they are better off by us operating in
proximity to their community and from having
invested in us, partnered with us or worked
with us.
We understand that our employees, younger
generations, investors, governments and the
broader society look to the corporate world
to take the lead on Environmental, Social and
Governance (ESG) matters.
Newcrest recognises that we have a
responsibility to do our part to reduce the
impact of climate change and in May 2021
we announced our goal of net zero carbon
emissions by 20501. We believe that as an
industry we have the ingenuity, technology and
capability to reduce our carbon footprint, and
these capabilities position us well as we target
a zero-carbon emissions future.
At Newcrest we also recognise the benefits of
using strategic partnerships to realise our goal
of net zero carbon emissions. One such example
is the landmark 15-year renewable energy Power
Purchase Agreement (PPA) that we signed
with a wind farm developer for an amount of
energy which represents a significant portion
of Cadia’s future projected energy requirements.
The PPA will act as a partial hedge against
future electricity price increases and will provide
Newcrest with access to large-scale generation
certificates which Newcrest intends to surrender
to achieve a reduction in its greenhouse gas
emissions. The PPA, together with the forecast
decarbonisation of electricity generation in
New South Wales, is expected to help deliver
a ~20% reduction in Newcrest’s greenhouse
gas emissions from calendar year 2024 and is a
significant step towards the achievement of our
previously announced target of a 30% reduction
in greenhouse gas emissions intensity by 20302.
1
2
Relating to Newcrest’s operational (Scope 1 and Scope 2) emissions. Newcrest intends to work across its value chain to reduce its Scope 3 emissions.
Kg CO2-e per tonne of ore treated and compared to a baseline of FY18 emissions.
Newcrest Annual Report 2021 Chairman’s Report
5
On the people front, we acknowledge that a
broad and diverse pool of talent is essential
to deliver on our strategies and make a
positive impact on society. To us this means
a workforce comprised of skilled professionals
from diverse backgrounds.
During the year we continued to focus on
increasing female representation across our
business and made great progress attracting
a broader diversity of talent. We increased our
global hiring of external female talent to 23%
(from 15% in FY20), thereby increasing our
overall global female representation to 15.6%
(from 14.8% in FY20). We remain committed to
retaining, developing and providing leadership
opportunities to our all of our people, especially
our female talent.
Over the last few years we have observed
significant failures in our industry, such as the
destruction of significant cultural heritage sites
and tailings dam failures. Whilst these tragedies
reflect poorly on the mining industry they also
present opportunities to learn and improve our
governance and risk management practices
to prevent such incidents occurring again in
the future.
At Newcrest we recognise the importance
of cultural heritage for current and future
generations. We have robust policies and
standards in place such as Newcrest’s
Indigenous, Human Rights and Communities
Policies which underpin the protection and
preservation of cultural heritage. We conduct
regular cultural heritage assessments at
each of our operating and exploration sites
in partnership with Traditional Owners,
Landowners and First Nations people and
incorporate their views into our decision-making.
In February 2021, we released our revised
Tailings Governance Policy which sets out
Newcrest’s commitment to managing tailings
storage facilities safely and responsibly.
Newcrest is committed to designing, operating,
closing and remediating its tailings storage
and disposal facilities in a safe, socially
and environmentally responsible manner,
in compliance with the Global Industry Standard
on Tailings Management.
During the year, we announced several
changes to the composition of Newcrest’s
Board and Executive Committee. We
welcomed Ms Sally-Anne Layman as
an independent Non-Executive Director
and a member of the Audit and Risk
Committee and Ms Jane McAloon as
an independent Non-Executive Director
and a member of the Human Resources
and Remuneration Committee.
We also announced the resignation of
Ms Xiaoling Liu in September 2020 and the
decision of Mr Gerard Bond, Newcrest’s Finance
Director and Chief Financial Officer, to leave
Newcrest in early 2022. Gerard is the longest
serving member of the Newcrest Board and
Executive Committee and he has made a
significant contribution to Newcrest’s success
during his ten year tenure. We thank Gerard for
his dedication and service to the Company and
wish him every success for the future.
In February 2021, the Board approved a new
dividend policy that retains the minimum total
annual dividend of US 15 cents per share but
increases the target percentage of free cash flow
to be paid in dividends to be at least 30–60%
(up from the previous policy target of at least
10–30% of annual free cash flow generation).
Having regard to Newcrest’s record free cash
flow generation, strong balance sheet and our
future outlook, the Board has determined to
pay a fully franked, final dividend of US 40 cents
per share, which is 129% higher than the final
dividend for FY20. This equates to a total full
year dividend of US 55 cents per share which
represents a 41% payout of FY21’s free cash
flow and marks our sixth consecutive year of
increasing dividend payments to shareholders.
Newcrest recently announced that I plan
to retire as a Director and Chairman of the
Newcrest Board, effective immediately after
the Company’s Annual General Meeting on
10 November 2021. I would like to take this
opportunity to thank all of our shareholders
for your continued support over my eight
year tenure.
We believe that Newcrest is a unique offering
in the gold industry, with a low Group All-In
Sustaining Cost per ounce, an exciting pipeline
of organic growth options, long reserve life,
strong exploration and technical capabilities
and a strong balance sheet.
The Board remains confident about the
Company’s prospects under the leadership of
a strong and committed management team.
Peter Hay
Chairman
6
Managing Director’s Review
Dear Shareholder,
Thank you for your continued support and investment in
Newcrest through what has been another year of strong
operational and financial performance.
Newcrest produced
2.1Moz
of gold for the financial year
All-In Sustaining Cost
$911
per ounce
Statutory and Underlying Profit
$1.2billion
In April 2021, Newcrest celebrated its 30 year
anniversary which was a significant milestone for
the Company. Over our 30 year history we have
established a strong track record of discovering
and commercialising major deposits all over the
world, including our world-class Cadia asset.
Today, Cadia is one of the world’s largest and
lowest cost gold and copper producers, with
an expected multi-decade future.
Earlier this year we announced our Forging an
even stronger Newcrest plan which outlined our
aspirations across five key pillars of Safety and
Sustainability, People, Operating Performance,
Technology and Innovation and Profitable
Growth that we hope to achieve by the end
of calendar year 2025.
A key component of this plan was defining what
we are here to do, which culminated in the creation
of our new Company Purpose: Creating a brighter
future for people through safe and responsible
mining. We found the common motivation that
permeates through our company is that we all
want to create a brighter future for people.
At Newcrest, safety and sustainability is core to
how we run our business. Our unwavering focus
is ensuring that everyone goes home safe and
healthy each day and we strive to ensure that
our local communities trust us because of our
environmental and social performance.
Newcrest’s overarching objective remains
the safety and health of our people. We have
made excellent progress across our safety
objectives during the year and are now nearly
six years free of fatalities. We have also achieved
industry-leading low injury rates of 2.3 injuries
per million hours, which is a 12% improvement
compared to the prior year1.
It has now been more than 18 months since
the start of the COVID-19 pandemic and we
are still witnessing its devastating impacts
across the world. Our operations were able
to continue producing without any material
impacts to production, which is largely due
to the commitment and personal sacrifice
of our people. I extend my personal gratitude to
those who have endured extended periods away
from their families to ensure that our business
was able to continue without material disruption.
My proudest achievement for the year has been
our safety transformation at Red Chris. When
we acquired our 70% interest in August 2019,
Red Chris’ injury rates and their severity were
significantly higher than our other operations.
We immediately implemented our NewSafe
program which, together with our investments
to improve working conditions, has helped to
transform on-site safety behaviours and safety
performance. Our significant investment in
safety has translated to a 48% reduction in
injury rates at Red Chris when compared to
this time last year.
In FY21, we continued our memberships
with the International Council on Mining
and Metals (ICMM), the World Gold Council
(WGC) and the Minerals Council of Australia
(MCA) and have now incorporated the ICMM’s
10 Principles for Sustainable Development
and the WGC’s Responsible Gold Mining
Principles into our Sustainability Framework.
We also made great progress implementing
our flagship sustainability-related policies of
Climate Change, Water Stewardship, Biodiversity
and Communities throughout our business.
A key part of Forging an even stronger Newcrest
is our commitment to developing our people. We
recognise that building capabilities and creating
career opportunities across our business is not
only important for our people but is critical to our
success now and into the future.
Over the past year we have focused on building
an inclusive and psychologically-safe work
environment where our people feel heard,
empowered and able to speak up. We believe that
this is the foundation for increasing collaboration
and innovation in the workplace and is also key
to attracting the best talent in the mining sector,
regardless of their background or experience.
We delivered another strong operational and
financial performance for FY21, producing
2.1 million ounces of gold at an All-In
Sustaining Cost (AISC) of $911 per ounce.
Our strong operating performance, combined
with the benefit of higher gold and copper
prices, underpinned a record free cash flow of
$1.1 billion and a record statutory and underlying
profit of $1.2 billion, 80% and 55% higher than
the prior year respectively.
Newcrest Annual Report 2021 Managing Director’s Review
7
Our Tier 1 Cadia asset had another
outstanding year, delivering record mine and
mill performance which resulted in record
copper production and its lowest reported
AISC of negative $109 per ounce. Cadia also
exceeded the top end of its production guidance
range, delivering gold production of 765koz and
generating a record free cash flow of $1.2 billion.
For the financial year, Lihir produced 737koz
of gold and generated free cash flow of
$321 million. In February 2021 we released the
findings of our Lihir Mine Optimisation Study
which included an optimised mine plan, the
deferral of the construction of the Seepage
Barrier (and its associated capital cost) by a
further ~18 months, and the identification of
an opportunity to unlock additional high grade
mineralisation from Phase 14A. The Phase 14A
opportunity represents further upside from
Lihir’s new optimised mine plan which, subject
to the completion of a Pre-Feasibility Study,
has the potential to bring forward our aspiration
for Lihir to be a 1 million ounce plus producer.
Telfer delivered a solid performance for the
financial year, producing 416koz of gold and
generating free cash flow of $82 million.
In August 2021, we announced that we will
proceed with the West Dome Stage 5 cutback,
which underpins the continuity of operations
at Telfer for at least the next two years2. With the
excellent progress we are making at the nearby
Havieron project, our objective is to continue
utilising the Telfer plant without interruption as
we look to introduce Havieron and other new
potential feed sources in the future.
Our 70% share of Red Chris equated to
gold production of 46koz and an AISC of
$2,248 per ounce. Red Chris’ elevated AISC
outcome reflects the significant investments
we have made to improve the operation and
its safety culture.
As a gold company, our copper production is
often overlooked. For FY21 we reported record
copper production of 142.7 thousand tonnes,
which represented 22% of our total net revenue
for the year.
We expect that the contribution of copper will
continue to increase, with the relative proportion
of copper to Cadia’s revenue expected to
increase over the coming years in line with the
estimated grade profile of gold and copper. We
also have significant copper potential at Red
Chris, Havieron, Wafi-Golpu and Namosi.
I have always seen copper as an excellent
complement to our gold portfolio as it provides
us with good earnings diversification and makes
us more resilient and profitable in the longer
term. Both gold and copper are metals of the
future, with copper in particular being key to a
low carbon world.
It is a very exciting time at Newcrest as we progress
our multitude of organic growth options. At Cadia,
the Molybdenum Plant is in commissioning and the
Expansion Project and PC1-2 Early Works program
are underway. We continue to progress the
construction of exploration declines at the Havieron
and Red Chris Projects following the completion of
box cuts in the second half of this calendar year.
At the Wafi-Golpu Project, the Environment
Permit was granted in December 2020. The
Governor of Morobe Province and the Morobe
Provincial Government have applied to the
National Court of Papua New Guinea for
judicial review of the decision to grant the
Environmental Permit. The judicial review
application is in progress and at this stage
project and permitting activities can continue.
We are currently engaging with the State of
Papua New Guinea, in conjunction with our
joint venture partner Harmony Gold, to progress
permitting of the Wafi-Golpu Project and have
commenced discussions with the State in
relation to the Special Mining Lease.
During the year we invested $115 million on
exploration activities as we look to grow our
company organically through greenfield and
brownfield exploration.
At Red Chris, we discovered East Ridge
which is an exciting new zone of higher grade
mineralisation located outside of Newcrest’s
initial Mineral Resource estimate and at
Havieron we have an extensive growth drilling
program focused on potential resource
expansion across several key targets.
We recently announced that Peter Hay intends
to retire as a Director and Chairman of the
Newcrest Board, effective immediately after our
Annual General Meeting on 10 November 2021.
On behalf of all of us at Newcrest I would like
to thank Peter for his strong leadership and
contribution to Newcrest and wish him every
success for the future.
The past year has provided challenges, significant
progress and many achievements and I thank
everybody at Newcrest for their resilience and
dedicated contribution to making this possible.
I also extend my thanks to our shareholders,
suppliers, customers and local communities
for their continued support.
Newcrest is well positioned for the new
financial year, with a strong balance sheet,
an exciting pipeline of organic growth options
and a well-articulated roadmap to Forging an
even stronger Newcrest.
I look forward to sharing the story that lies
ahead of us and working together to achieve it.
1
Injury rates are lowest quartile when compared to the International Council on Mining & Metals report titled “Safety Performance –
Benchmarking progress of ICMM company members in 2020”.
Sandeep Biswas
Managing Director and
Chief Executive Officer
8
About Newcrest
Newcrest is one of the world’s largest gold mining
companies. Our Purpose is to create a brighter future
for people through safe and responsible mining.
We are known for our strong
technical capabilities across the
value chain, from exploration through
to many different forms of mining
and processing. We also have a
distinctive capability in block caving
and a long reserve life.
We are committed to creating a
work environment where everyone
can go home safe and healthy every
day, and where everyone actively
contributes to this outcome.
Our edge
Collaboration,
innovation and
an owner’s mindset
Our Vision
Investor Proposition
Our Values
To be the Miner of Choice
– Valued by our people
and communities
– Respected by our partners,
customers, suppliers and peers
– Celebrated by our owners
Long
reserve life
Low cost
production
Strong
exploration
and technical
capabilities
Organic
growth
options
Do what
we say
Financially
robust
Caring about
people
Integrity
and honesty
Working
together
Innovation
and problem
solving
High
performance
Newcrest Annual Report 2021 About Newcrest
9
Significant Copper Mineral Resources and Ore Reserves
Record copper production in FY21
Copper Production (tonnes)
∼22%
of total FY21 net revenue
142,724
137,623
142,724
Copper is expected
to become a higher
proportion of Cadia’s
revenue over the next
~30 years
Significant copper resources
drive potential for copper
upside at Golpu, Red Chris,
Havieron and Namosi
1. Resources represent Measured & Indicated Mineral Resources.
The Mineral Resource estimate for Red Chris has been extracted
from Newcrest’s release titled “Newcrest announces its initial
Mineral Resource estimate for Red Chris” dated 31 March 2021,
but is subject to depletions for the period since 1 January 2021.
For Ore Reserve & Mineral Resource estimates for Newcrest’s
other provinces refer to Newcrest’s release titled “Annual Mineral
Resources and Ore Reserves Statement – 31 December 2020”
dated 11 February 2021, but note that such figures are subject to
depletion for the period since 1 January 2021. Figures represent
Newcrest’s interest.
2. Newcrest recently announced an updated Ore Reserve and Mineral
Resource estimate for Cadia East (refer Newcrest release “Cadia
PC1-2 Pre-Feasibility Study delivers attractive returns” dated 19
August 2021, which is available to view at www.asx.com.au under
the code “NCM” and on Newcrest’s SEDAR profile). The reserves
for Cadia East comprise a portion of the reserves for the Cadia
operations. The estimates included in that release are not reflected
in the charts on this slide (as estimates for the remainder of the
Cadia operations have not been updated since their effective date)
and supersede the estimates for Cadia East included in Newcrest’s
release titled “Annual Mineral Resource and Ore Reserves
Statement – 31 December 2020” dated 11 February 2021.
105,867
83,941
77,975
FY17
FY18
FY19
FY20
FY21
Copper Resource & Reserve Base of Newcrest’s Provinces1,2
3,500
3,000
2,500
2,000
1,500
1,000
500
)
n
o
i
l
l
i
m
(
s
e
n
n
o
T
y
r
D
Cadia
Telfer
Namosi
Red Chris
Wafi-Golpu
0
0
0.2
0.4
0.6
0.8
1.0
1.2
Copper grade (%)
Area of bubble represents proportionate size of insitu copper (million tonnes)
Full circles represent Measured and Indicated Resources
Empty circles represent Ore Reserves
10
Newcrest Annual Report 2021
Our Strategy
Forging an even
stronger Newcrest
In February 2021 we announced our
Forging an even stronger Newcrest
plan which outlined our aspirations
across five key pillars of Safety and
Sustainability, People, Operating
Performance, Technology and
Innovation and Profitable Growth
that we hope to achieve by the end
of calendar year 2025.
This plan builds on what we have already
achieved under our Forging a stronger
Newcrest plan and will help drive our
aspirations for the next five years.
Our Aspirations
We are a safe and
sustainable business.
Everyone goes home safe and healthy every day.
Communities trust us because of our environmental
and social performance.
We have the best people.
We have a high-performance, inclusive
culture where everyone can thrive and excel.
We are outstanding
operators.
We safely operate our assets to their full potential.
– Deliver on robust value-focused budgets
We are a leader in
innovation and creativity.
We create lasting value through audacious breakthroughs.
We grow profitably.
We have an industry leading portfolio that delivers
superior returns and growth.
What we will do
Measures
FY21 Progress1
– Sustain and build on the NewSafe, CCM
– Zero fatalities or life-changing injuries
– Approaching six years free of fatalities
– Enable our people to reach their full
– Top decile Organisational Health
– Progressing our objective of creating
and Process Safety programs
– Accelerate the roll out of our health and
– Top decile TRIFR
– No repeat SPIs
wellbeing programs
– Deliver our Social Performance program
in partnership with host communities
to leave a positive legacy
– Deliver on our public environmental
commitments and policies
– Achieving our Greenhouse Gas
emission intensity reduction and
water efficiency targets
– Top decile performance for Metals
& Mining in the Dow Jones
Sustainability Index
potential through training and focused
career development opportunities
– Top half of industry diversity metrics
– Year on year improvement in Organisation
– Embed performance management and
Health inclusion measures
recognition programs
– At least 50% of our appointments are
– Build an inclusive and diverse workforce
internal candidates
by implementing our D&I plans
– Strengthen Inclusive Leadership at all
levels in the organisation
– Deliver on our full potential targets under
– Top quartile Overall Equipment
cash generation
the Edge program
and business plans
and technical limits
Effectiveness (OEE)
– Lowest quartile AISC per ounce
– No major unplanned operational
– Deliver on MOS, Asset Management and
interruptions
Process Control & Analytics plans
– Actively manage & reduce our material risks
– Industry-leading low injury rates2
– Goal of net zero carbon emissions
by 20503
– Cadia renewable energy PPA is expected
to help deliver ~20% reduction in Group
emissions intensity from 20244
– New compensation, relocation and
benefits sharing agreements with the
mining lease landholders at Lihir
a diverse, inclusive and psychologically
safe work environment
– Senior leaders are actively engaged in
an inclusive leadership program
– Increased global hiring of female talent
to 23% (from 15%)
guidance for FY21
– Cadia achieved record low AISC of
negative $109/oz for FY21
– All our people apply the Edge mindset
– Consistently meet or exceed Budget
– Cadia delivered ore mined & milled
with a focus on maximising sustainable
– Performance v industry benchmarks
records and exceeded its production
– Further improve operational safety and
– No major unexpected geotechnical events
– Studying the application of civil engineering
sustainability through technology
– 15 Moz eq of innovation driven
– Extend our caving leadership position
growth in Ore Reserves5
– Apply digital, big data, automation and
– 20% improvement in operational
efficiency and sustainability measures5
– Assessing whether these techniques
– $1 Bn of incremental NPV added
through breakthroughs5
techniques to Phase 14A which could
enable access to existing Indicated
Mineral Resources
can be applied to other cutbacks at Lihir
which could enable a further deferral of
the construction of the Seepage Barrier
other future of mining technologies to
realise step change improvements in
operating efficiencies
– Make technology breakthroughs to release
the full value of our orebodies
– Rapid experimentation and adoption through
collaboration with others
– Disciplined capital allocation
– Add to our portfolio of Tier 1 and Tier 2
– Cadia Moly plant in commissioning
– Maximise exploration success through
orebodies
technology and Newcrest know how
– 2–3 greenfield discoveries
– Execute Projects in a capital efficient way
– Havieron in production
on budget and on schedule
– Execute value accretive M&A
– Red Chris block cave nearing production
– Wafi-Golpu project approved and
in development
– Cadia Expansion Project and PC1-2 Early
Works Program underway at Cadia
– Progressing construction of exploration
declines at Havieron and Red Chris
– Telfer WDS5 cutback underpins long
term potential
– Recommenced Wafi-Golpu SML discussions
Our Strategy
11
Our Aspirations
What we will do
Measures
FY21 Progress1
We are a safe and
sustainable business.
Everyone goes home safe and healthy every day.
Communities trust us because of our environmental
and social performance.
We have the best people.
We have a high-performance, inclusive
culture where everyone can thrive and excel.
We are outstanding
operators.
We safely operate our assets to their full potential.
We are a leader in
innovation and creativity.
We create lasting value through audacious breakthroughs.
We grow profitably.
We have an industry leading portfolio that delivers
superior returns and growth.
– Sustain and build on the NewSafe, CCM
and Process Safety programs
– Accelerate the roll out of our health and
wellbeing programs
– Deliver our Social Performance program
in partnership with host communities
to leave a positive legacy
– Deliver on our public environmental
commitments and policies
– Zero fatalities or life-changing injuries
– Top decile TRIFR
– No repeat SPIs
– Achieving our Greenhouse Gas
emission intensity reduction and
water efficiency targets
– Top decile performance for Metals
& Mining in the Dow Jones
Sustainability Index
– Enable our people to reach their full
potential through training and focused
career development opportunities
– Embed performance management and
recognition programs
– Top decile Organisational Health
– Top half of industry diversity metrics
– Year on year improvement in Organisation
Health inclusion measures
– At least 50% of our appointments are
– Build an inclusive and diverse workforce
internal candidates
by implementing our D&I plans
– Strengthen Inclusive Leadership at all
levels in the organisation
– All our people apply the Edge mindset
with a focus on maximising sustainable
cash generation
– Consistently meet or exceed Budget
– Performance v industry benchmarks
and technical limits
– Deliver on our full potential targets under
– Top quartile Overall Equipment
the Edge program
– Deliver on robust value-focused budgets
and business plans
Effectiveness (OEE)
– Lowest quartile AISC per ounce
– No major unplanned operational
– Deliver on MOS, Asset Management and
interruptions
– Approaching six years free of fatalities
– Industry-leading low injury rates2
– Goal of net zero carbon emissions
by 20503
– Cadia renewable energy PPA is expected
to help deliver ~20% reduction in Group
emissions intensity from 20244
– New compensation, relocation and
benefits sharing agreements with the
mining lease landholders at Lihir
– Progressing our objective of creating
a diverse, inclusive and psychologically
safe work environment
– Senior leaders are actively engaged in
an inclusive leadership program
– Increased global hiring of female talent
to 23% (from 15%)
– Cadia delivered ore mined & milled
records and exceeded its production
guidance for FY21
– Cadia achieved record low AISC of
negative $109/oz for FY21
Process Control & Analytics plans
– Actively manage & reduce our material risks
– Further improve operational safety and
sustainability through technology
– Extend our caving leadership position
– Apply digital, big data, automation and
other future of mining technologies to
realise step change improvements in
operating efficiencies
– Make technology breakthroughs to release
the full value of our orebodies
– Rapid experimentation and adoption through
collaboration with others
– Disciplined capital allocation
– Maximise exploration success through
technology and Newcrest know how
– Execute Projects in a capital efficient way
on budget and on schedule
– Execute value accretive M&A
– No major unexpected geotechnical events
– 15 Moz eq of innovation driven
growth in Ore Reserves5
– 20% improvement in operational
efficiency and sustainability measures5
– $1 Bn of incremental NPV added
through breakthroughs5
– Studying the application of civil engineering
techniques to Phase 14A which could
enable access to existing Indicated
Mineral Resources
– Assessing whether these techniques
can be applied to other cutbacks at Lihir
which could enable a further deferral of
the construction of the Seepage Barrier
– Add to our portfolio of Tier 1 and Tier 2
orebodies
– 2–3 greenfield discoveries
– Havieron in production
– Red Chris block cave nearing production
– Wafi-Golpu project approved and
in development
– Cadia Moly plant in commissioning
– Cadia Expansion Project and PC1-2 Early
Works Program underway at Cadia
– Progressing construction of exploration
declines at Havieron and Red Chris
– Telfer WDS5 cutback underpins long
term potential
– Recommenced Wafi-Golpu SML discussions
As at 31 August 2021 and reflects progress made since announcing Newcrest’s Forging an even stronger Newcrest plan in February 2021.
1.
2. Injury rates are lowest quartile when compared to the International Council on Mining & Metals report titled “Safety Performance – Benchmarking progress of ICMM company members in 2020”.
3. Relating to Newcrest’s operational (Scope 1 and Scope 2) emissions. Newcrest intends to work across its value chain to reduce its Scope 3 emissions.
4. Refer to market release titled “Newcrest signs renewable energy PPA to help deliver ~20% reduction in greenhouse gas emissions” dated 16 December 2020.
5. Aspirational statements, which are not to be construed as guidance.
12
Safety & Sustainability
At Newcrest, safety and
sustainability is core to
how we run our business.
Our goal is to ensure that
everyone goes home safe
and healthy every day,
and that communities
trust us because of our
environmental and social
performance.
Goal of net zero carbon emissions by
2050
First modern slavery statement
published in December 2020
Safety
We empower our people to be safe, in an
environment in which they have the authority
and responsibility for their own safety and
the safety of others. We strive to create an
environment where everyone can make a
difference and share their concerns, insights
and learnings with others, no matter where
our people are or what they do.
Our Safety Transformation Plan, established
in 2015, continues to direct our efforts and
deliver results. We believe that an ongoing
focus on culture, controls and systems is
required to continue to improve our safety
and health performance.
– Our safety culture
is centred around NewSafe, which drives
our understanding of why people do the
things they do and how we can all influence
the right safety outcomes.
– Our Critical Control
Management system
provides the review, approval and verification
steps for high-risk tasks. This system helps
our workforce identify which tasks could
cause fatalities or life-changing injuries and
verifies that preventative controls are in place
before commencing the task.
– Process Safety
is aimed at managing chemical and energy
hazards through the proper design and
operation of our assets. It strives to reduce
the risk of the types of events that can cause
multiple fatalities.
Our overarching aim remains the elimination
of fatalities and life-changing injuries from our
business. We have made excellent progress
across our safety objectives during the year
and are now nearly six years free of fatalities
and have achieved a low 2.3 injuries per million
hours, which is a 12% improvement on the prior
year. Our lost time injury frequency rate (LTIFR)
was 0.5 injuries per million hours worked,
consistent with our performance in FY20.
Across Newcrest we have worked hard to
respond to the threat of the COVID-19 pandemic
in co-operation with the communities in which
we operate. Newcrest continues to monitor
the unfolding situation around the globe,
seeking health advice and medical expertise
and reviewing and updating our programs in
response to local conditions.
Each decision has been guided by our values
of Caring about people and Working together
to respond to this crisis. We continue to work
closely with government authorities and industry
associations to guide the safe operations of
mining during the pandemic and respond to
travel restrictions.
Early on, Newcrest recognised the potential for
the COVID-19 pandemic to have a severe impact
on the health and wellbeing of our people and
host communities. Through our WellnessMatters
program Newcrest provided tools, education
and support for our people to look after their
mental and physical wellbeing resulting
from the challenges of working remotely,
being separated from family and managing
life outside of work. The risk from COVID-19
still persists and we remain vigilant with our
preventative controls.
Newcrest Annual Report 2021
Safety & Sustainability
13
Our purpose
Creating a brighter future
for people through safe
and responsible mining.
Our new Sustainability Strategy
Newcrest has introduced a new sustainability
strategy that is underpinned by three of the five
pillars of our Forging an even stronger Newcrest
business plan. Over the next five years we will
strive to:
– Be a safe and sustainable business
– Have the best people and
– Be outstanding operators
Our sustainability strategy has three main
strategic imperatives:
1.
Protect and inspire our people and respect
nearby communities and host governments
– capturing the internal and external
social elements
2. Protect the environment – addressing
operational eco-efficiency, climate strategy,
water and waste management
3. Be a trusted and responsible miner –
addressing growth and financial
sustainability, reporting, transparency,
and governance
Under this strategy we will also focus on material
issues that drive the biggest change, enhance
livelihoods and support the United Nations
Sustainable Development Goals (SDGs).
During FY21 we continued our memberships
with the International Council on Mining
and Metals (ICMM), the World Gold Council
(WGC) and the Minerals Council of Australia
(MCA). Newcrest’s Sustainability Framework
incorporates the ICMM’s 10 Principles for
Sustainable Development and the WGC
Responsible Gold Mining Principles (which have
a three-year timeframe for implementation). We
also continued to progress the implementation
of our sustainability-related policies of Climate
Change, Water Stewardship, Biodiversity, and
Communities policies throughout our business.
In May 2021, Newcrest set a goal of net zero
carbon emissions by 2050, which relates to its
operational (Scope 1 and Scope 2) emissions.
Newcrest will also strive to work across its value
chain to reduce its Scope 3 emissions.
The goal of “Net Zero” is in addition to our target
of a 30% reduction in GHG emissions intensity
per tonne of ore treated by 2030 (against a 2018
baseline), which we announced in June 2019. To
inform investment decisions Newcrest has also
adopted a protocol for applying shadow carbon
prices of US$25/tonne and US$50/tonne CO2-e
for jurisdictions where there are no regulated
carbon prices.
In FY21, Newcrest continued its progress to
report in line with the recommendations of
the Taskforce on Climate-related Financial
Disclosures. Newcrest assessed the transition
risks and opportunities, as well as physical risks,
using climate scenario analysis over different
time horizons to address the Strategy element
of the TCFD recommendations. Under the TCFD
framework, Climate Financial Driver Analysis
(CFDA) is used to assess the financial impacts
of the transition risks and opportunities pursuant
to the selected scenarios.
The results of the CFDA indicate a risk of cost
increases in the following areas:
– Carbon pricing
– Increased regulation in response to
climate change
– Diesel price
– Oil price
– Uptake of low carbon technologies
However, there is opportunity for these potential
risks to be offset by strong demand and prices
for copper, together with Newcrest’s expected
increase in copper production.
Newcrest has identified the following physical
risks in relation to its operating sites – water
scarcity, flood, extreme heat, heat stress, wildfire,
wind and cyclones, extreme cold and sea level
rise. Adaptation measures and strategies have
been identified for these main physical risks and
will be assessed by Newcrest’s operating sites.
The Global Industry Standard on Tailings
Management was released on 5 August 2020
following endorsement by all three co-conveners
of the Global Tailings Review, which included the
United Nations Environment Program (UNEP),
the Principles for Responsible Investment
(PRI) and the ICMM. Newcrest, as a member
of the ICMM, will continue to participate in
the implementation program of the Global
Tailings Standard. Newcrest’s revised Tailings
Governance Policy was released in February 2021.
Newcrest released its revised Human Rights
Policy in October 2020, and released its first
Modern Slavery Statement in December 2020.
Our approach to sustainability also includes
community agreements, partnerships and
investments to foster socio-economic
advancement. Newcrest and its employees are
involved in targeted local community programs,
ranging from Indigenous employment and
training, education, health and awareness
programs to agribusiness and social
housing initiatives.
Community support
Newcrest’s A$20 million Community Support
Fund, launched in April 2020, has collaboratively
delivered targeted support to local communities
to assist them with the health impact of
COVID-19 pandemic, as well as supporting
economic recovery and vaccine research and
distribution efforts. Major initiatives during
the year have included a commitment of
US$1.8 million to support vaccine rollout (and
in-kind logistical support) as a Founding Member
of the COVID Vaccination Alliance of UNICEF
Australia in Papua New Guinea with a focus
on New Ireland Province. We also contributed
to the establishment of the first Intensive Care
Unit (ICU) in the province of Zamora Chinchipe
in Ecuador, in partnership with other mining
companies and Ecuadorian authorities. The ICU
will provide much needed care in response to
the COVID-19 pandemic and in the longer term
is expected to support other critical health needs
and emergency response capabilities of the
regional Yantzaza Hospital.
14
People
Newcrest Annual Report 2021
We are building a culture
and work environment that
is inclusive and supports
challenge, so as to create
the conditions for high
performance that leverages
the diversity of talent within
our business.
Recognising that organisational culture is vital
to our continued success, in February 2021
we articulated a roadmap to achieve our
2025 aspirations. This builds on the inclusive
leadership program and involves our senior
leaders setting the tone and expectations for
our organisation.
Our refreshed talent and succession processes
have focused on ensuring we promote, progress
and support our diverse and high potential
talent to access career and development
opportunities. This is enabled by having a
diversified representation in our talent and
succession plans, a focus on promoting
internal talent and targeted development action
plans to support our early career talent and
emerging leaders.
Newcrest achieved Work180 endorsed-employer
status which demonstrates our commitment
to providing career opportunities to females.
We also secured our membership with the
Diversity Council Australia to provide all our
employees and leaders access to resources,
education and tools to support both inclusion
and diversity initiatives.
As we continue our growth trajectory, we are
building and acquiring the diversity of skill sets
and talent we need as well as accelerating our
capability to enable innovation, digitisation and
automation of mining and related technologies.
Best people
Essential to Newcrest’s ability to meet our
objectives is our ability to attract, develop and
retain the best talent. This requires us to have
an inclusive and high performing culture where
everyone can thrive and excel. When we have
a culture and work environment that supports
challenge, we create the conditions for high
performance that leverages the diversity of
talent within our business.
Our focus over the past year has been to build
an inclusive and psychologically-safe work
environment where all our people feel heard,
empowered and able to speak up. This is the
foundation for collaboration and innovation.
It also creates a workplace that is free from
harassment and discrimination and ensures
that everyone feels safe and supported. We also
believe this will attract the best talent in the
mining sector, regardless of their background
or experience, and will grow the pool of talent
available to Newcrest.
To consciously shape Newcrest’s culture our
most senior leaders, including our Executive
Committee, have been actively engaged in
an inclusive leadership program to develop
their skills in self-awareness, empathy,
curiosity, courage and vulnerability, creating
psychologically-safe environments and ensuring
everyone feels they belong and are valued at
Newcrest. This program was designed with
insights from over 1,100 of our people across the
globe. We have also set up a Respect-at-Work
Taskforce to proactively create the conditions
for people to feel safe to speak up and address
broader concerns in the mining industry
regarding the risks of sexual harassment.
People
15
Diversity
During the financial year, we have made
strong inroads attracting a greater diversity
of talent. We have increased our global hiring
of external female talent from 15% to 23%,
thereby increasing our overall global female
representation from 14.8% to 15.6%. We
are focused on reaching our stated goal of
increasing female representation in Australia
having achieved a 37% new hire rate for
female talent within Australia during FY21 and
improving female representation from 16.2% in
FY20 to 17.3% in FY211. In Canada, we achieved
a 25% external female hire rate and exceeded
our target representation of 16.8% females
by finishing FY21 with 19.3% females at our
Red Chris site.
We remain committed
to retaining, developing
and providing leadership
opportunities to all our
people, especially our
female talent.
In line with our aspirations, we have continued
to invest in and develop our early careers
programs. We have been working towards
a gender balance in our early careers talent
pools and have achieved 49% female
representation. This includes our 2020/21
summer vacation program which achieved
56% female representation, and our recent
graduate recruitment campaign for our 2022
Graduate program will achieve 40% female
representation.
Our resilient workforce
The COVID-19 pandemic continues to test
the resilience of our workforce. It has required
relentless adaptability and flexibility to changes
in our ways of work, and in many respects, it
has accelerated positive change to allow for
hybrid and flexible ways of working, increased
use of digitisation and accessible virtual
communication channels for us to continue
to collaborate and enable business continuity.
At the site level, management teams have
worked tirelessly to adapt to these new
circumstances, implementing new health and
hygiene standards to help keep people safe
and healthy. Site teams continue to maintain
dialogue with local communities around health
advice, community health surveillance and
sanitation practices. We are grateful to all of
our workforce for practising our COVID-19
lifesaving behaviours which strive to keep
our communities and each other safe.
Hiring external female talent
23%
Early careers programs
49%
female representation
Global female representation
15.6%
1
Newcrest lodges annual reports with the Workplace Gender Equality Agency (WGEA) in relation to its Australian operations. A copy of these reports may be obtained from the WGEA website.
16
Operational Review
Red Chris1
British Columbia, Canada
70% Newcrest Ownership
JV
Au
46koz
Cu
23kt
North America
Jarbidge/Jack Creek (O)
2
Fortuity 89 (O & FI)
Fruta del Norte (EI)2
Au
129koz
Zamora-Chinchipe Province, Ecuador
32% Newcrest Ownership, through its
32% equity interest in Lundin Gold Inc.
Ecuador
4
Lundin Gold (JV)
SolGold (EI)
Porphyry Targets (100%)
Cana Brava Project (O & FI)
Chile
3
Vicuna (O & FI)
Mioceno (O & FI)
Gorbea (O & FI)
Our commodity performance for FY21
Au
Gold
Cu
Copper
Legend
Asset type
Producing Assets
Exploration Projects
Advanced Projects
77% of Net Revenue
22% of Net Revenue
Mining Method
Open pit
Underground
2.1Moz produced
143kt produced
US$1,796/oz
Realised Price3
US$3.66/lb
Realised Price3
Exploration Projects
FI Farm-In
JV Joint Venture
O Option
FY21 Production
100% 100% Newcrest Tenement
EI Equity Investment
Newcrest Annual Report 2021 Operational Review
17
Namosi
Waisoi Project
JV
Namosi Province, Fiji
72.74% Newcrest Ownership
Lihir
Au
737koz
New Ireland Province, Papua New Guinea
100% Newcrest Ownership
Wafi-Golpu
JV
Morobe Province, Papua New Guinea
50% Newcrest Ownership
Australia
Juri (JV & FI)
5
Antipa (EI)
Second Junction Reefs Project (JV)
Wilki (JV & FI)
Tennant East (100%)
Telfer
Au
416koz
Cu
13kt
Pilbara, Western Australia, Australia
100% Newcrest Ownership
Havieron
JV
FI
Pilbara, Western Australia, Australia
40% Newcrest Ownership4
Cadia
Au
765koz
Cu
106kt
Orange, New South Wales, Australia
100% Newcrest Ownership
Number of Employees/Contractors5
~12,800
Total
~4,900
Employees
~7,900
Contractors
3
4
5
1 Production outcomes represent Newcrest’s 70% share.
2
The production outcome shown represents Newcrest’s 32% attributable share, through its 32%
equity interest in Lundin Gold Inc.
Realised metal prices are the US$ spot prices at the time of sale per unit of metal sold (net of
Telfer gold production hedges), excluding deductions related to treatment and refining charges
and the impact of price related finalisations for metals in concentrate. The realised price has been
calculated from sales ounces generated by Newcrest’s operations only (i.e. excluding Fruta del
Norte).
The Havieron Project is operated by Newcrest under a Joint Venture Agreement with Greatland
Gold. As announced on 30 November 2020, Newcrest has now met the Stage 3 expenditure
requirement (US$45 million) and is entitled to earn an additional 20% joint venture interest,
resulting in an overall joint venture interest of 60% (Greatland Gold 40%).
At 30 June 2021. Employees are Newcrest directly employed FTEs. Contractor FTEs include
labour hire and project contractors, replacement labour and other contractors.
18
Newcrest Annual Report 2021
Cadia
Low cost, long life world class asset
Cadia is located 25km from Orange in New South Wales, Australia.
Cadia is one of the world’s largest gold and copper mining operations
with Ore Reserves of 20Moz and Measured and Indicated Mineral
Resources of 35Moz1.
Newcrest is currently progressing an Expansion Project at Cadia,
which includes the development of the PC2-3 block cave and an
expected increase to the nameplate capacity of the process plant.
Additionally, the Newcrest Board approved the gating of the PC1-2
Pre-Feasibility Study to the Feasibility Stage in August 2021, and
the Molybdenum Plant is in commissioning.
FY21 Performance
Cadia achieved record high annual copper production and a record low
annual AISC per ounce for the financial year. Gold production of 765koz
was 9% lower than the prior period, driven by a 17% reduction in gold
grade milled, partially offset by a 10% increase in tonnes milled (achieving
record mill throughput). The lower head grade was in line with expected
grades for the current period.
AISC of negative $109 per ounce was 168% lower than the prior period and
is Cadia’s lowest reported AISC for a twelve-month period. This outcome
was primarily driven by higher copper by-product credits, reflecting the
42% higher realised copper price and record copper production and
associated sales volumes in the current period, partially offset by higher
operating costs and the negative impact of a stronger Australian dollar
in the current period.
Cadia’s record free cash flow of $1,232 million was 24% higher than the
prior period. This reflects earnings (EBITDA) being 24% higher and a
favourable movement in working capital, partially offset by an increase
in capital expenditure.
1
Mineral Resources and Ore Reserves for Cadia have been extracted from Newcrest’s release
titled “Annual Mineral Resources and Ore Reserves Statement – as at 31 December 2020”
dated 11 February 2021 (which is available to view at www.asx.com.au under the code “NCM”
and on Newcrest’s SEDAR profile), subject to depletions for the period from 1 January 2021.
M&I = Measured and Indicated Mineral Resources. Newcrest recently announced an updated
Ore Reserve and Mineral Resource estimate for Cadia East (refer Newcrest release “Cadia PC1-2
Pre-Feasibility Study delivers attractive returns” dated 19 August 2021, which is available to view
at www.asx.com.au under the code “NCM” and on Newcrest’s SEDAR profile). The reserves for
Cadia East comprise a portion of the reserves for the Cadia operations. The estimates included in
that release are not reflected on this page as estimates for the remainder of the Cadia operations
have not been updated since their effective date.
Reserve life is indicative and calculated as proven and probable gold reserves (contained metal)
as at 31 December 2020 divided by gold production for the 12 months ended 30 June 2021. The
reserve life calculation does not take into account future gold production rates and therefore the
estimated reserve life does not necessarily equate to operating mine life.
3 The achievement of guidance is subject to market and operating conditions.
4 Free cash flow is before interest, tax and intercompany transactions.
2
Orange
Cadia
Sydney
Au
Cu
765koz
106kt
Gold produced (koz)
Copper produced (kt)
FY21
FY20
FY19
843
913
FY21
FY20
FY19
96
91
Site process
Mining
Processing
Panel Cave mining from Cadia East (Panel Cave 1 and 2),
with underground crushing and conveyor to surface
High pressure grinding rolls, SAG mills, ball mills, flotation,
coarse ore flotation and gravity concentration
Output
Principally copper/gold concentrate, gold doré
Key statistics
Reserve Life
Gold Ore Reserves
Gold M&I Mineral Resources
Copper Ore Reserves
Copper M&I Mineral Resources
26 years2
20Moz1
35Moz1
4.1Mt1
7.9Mt1
FY22 Production Guidance
540–610koz Au, 85–95kt Cu3
Free cash flow ($m)4
AISC ($/oz)
$1,232m ($109)
FY21
FY21
FY20
FY19
991
965
FY20
FY19
160
132
Asset Overview
19
Lihir Island
Airport
Londolovit
Lihir
Au
737koz
Gold produced (koz)
FY21
FY20
FY19
776
933
Site process
Mining
Processing
Open pit drill, blast, load and haul mining. Substantial
stockpiles
Crushing, grinding, flotation, pressure oxidation,
NCA circuit
Output
Gold doré
Key statistics
Reserve Life
Gold Ore Reserves
Gold M&I Mineral Resources
FY22 Production Guidance
30 years2
22Moz1
43Moz1
700–800koz Au3
Free cash flow ($m)4
AISC ($/oz)
$321m
FY21
$1,391
FY21
FY20
FY19
233
301
FY20
FY19
1,206
887
Lihir
1Moz per annum aspiration
Lihir is located on Niolam Island, 900km from Port Moresby, Papua
New Guinea. Lihir is one of the world’s largest producing gold mines,
with Ore Reserves of 22Moz and Measured and Indicated Mineral
Resources of 43Moz1.
In February 2021, Newcrest released the findings of its Lihir Mine
Optimisation Study which included an optimised mine plan and
the identification of an opportunity to unlock additional high grade
mineralisation from Phase 14A. The Phase 14A opportunity represents
further upside from Lihir’s new optimised mine plan which, subject to the
completion of a Pre-Feasibility Study, has the potential to bring forward
Newcrest’s aspiration for Lihir to be a 1 million ounce plus producer.
FY21 Performance
Lihir produced 737koz of gold, which was 39koz (or 5%) lower than the
prior period, primarily driven by lower mill throughput, partially offset by
higher recovery and head grade.
AISC of $1,391 per ounce was 15% higher than prior period primarily
reflecting higher operating costs (including COVID-19 related costs) and
higher sustaining capital expenditure. This was partially offset by 2% higher
gold sales volumes.
Free cash flow of $321 million was 38% higher than the prior period.
This reflects earnings (EBITDA) being $125 million (or 27%) higher than
the prior period, partially offset by an increase in total capital expenditure.
1
2
Mineral Resources and Ore Reserves for Lihir have been extracted from Newcrest’s release
titled “Annual Mineral Resources and Ore Reserves Statement – as at 31 December 2020”
dated 11 February 2021 (which is available to view at www.asx.com.au under the code “NCM”
and on Newcrest’s SEDAR profile), subject to depletions for the period from 1 January 2021.
M&I = Measured and Indicated Mineral Resources.
Reserve life is indicative and calculated as proven and probable gold reserves (contained metal)
as at 31 December 2020 divided by gold production for the 12 months ended 30 June 2021. The
reserve life calculation does not take into account future gold production rates and therefore the
estimated reserve life does not necessarily equate to operating mine life.
The achievement of guidance is subject to market and operating conditions.
3
4 Free cash flow is before interest, tax and intercompany transactions.
20
Newcrest Annual Report 2021
Telfer
Strategically positioned in the
Paterson Province
Telfer is located in the Great Sandy Desert of the Pilbara, Western Australia.
In August 2021, Newcrest announced that it will proceed with the West
Dome Stage 5 cutback, which underpins the continuity of operations at
Telfer for at least the next two years1.
Telfer is located 45km west of the Havieron Project which is operated
by Newcrest under a Joint Venture Agreement with Greatland Gold plc.
Telfer’s strategic positioning in the highly prospective Paterson Province,
with its existing infrastructure and 22mpta processing capacity, provides
significant potential opportunities for Newcrest moving forward.
FY21 Performance
Telfer produced 416koz of gold, which was 6% higher than the prior period
due to higher mill throughput, partially offset by lower recovery and lower
head grade.
AISC of $1,473 per ounce was 15% higher than the prior period, driven by a
stronger Australian dollar negatively impacting site costs, additional costs
associated with COVID-19 measures and increased sustaining capital
expenditure. This was partially offset by the benefit of a higher realised
copper price and lower waste mined. The key drivers of the increased
sustaining capital expenditure in the current period relate to tailings dam
lift (TSF7), new tailings dam construction (TSF8) and pit dewatering.
Free cash flow of $82 million was 61% higher than the prior period due to
higher realised gold and copper prices, higher gold sales volume and a
favourable movement in net working capital. This was partially offset by
higher sustaining capital, the adverse impact of a stronger Australian dollar,
additional costs associated with COVID-19 measures and lower copper
sales volumes. Excluding the Telfer gold price hedge losses of $99 million
in FY21, Telfer’s free cash flow would have been $181 million.
1 Subject to market and operating conditions.
2
3
Reserve life is indicative and calculated as proven and probable gold reserves (contained metal)
as at 31 December 2020 divided by gold production for the 12 months ended 30 June 2021. The
reserve life calculation does not take into account future gold production rates and therefore the
estimated reserve life does not necessarily equate to operating mine life.
Mineral Resources and Ore Reserves for Telfer have been extracted from Newcrest’s release
titled “Annual Mineral Resources and Ore Reserves Statement – as at 31 December 2020” dated
11 February 2021 (which is available to view at www.asx.com.au under the code “NCM” and
on Newcrest’s SEDAR profile), subject to depletions for the period from 1 January 2021. M&I =
Measured and Indicated Mineral Resources.
4 The achievement of guidance is subject to market and operating conditions.
5 Free cash flow is before interest, tax and intercompany transactions.
Winu
Nullagine
Havieron
Telfer
Au
Cu
416koz
13kt
Gold produced (koz)
Copper produced (kt)
FY21
FY20
FY19
393
452
FY21
FY20
FY19
16
15
Site process
Mining
Processing
Open pit mining and Underground sub-level cave and
stope mining
Crushing, grinding, gravity concentration, flotation,
leaching circuit, dump leach
Output
Copper/gold concentrate and gold doré
Key statistics
Reserve Life
Gold Ore Reserves
Gold M&I Mineral Resources
Copper Ore Reserves
Copper M&I Mineral Resources
FY22 Production Guidance
3 years2
1.1Moz3
3.4Moz3
0.17Mt3
0.36Mt3
390–440koz Au, ~15kt Cu4
Free cash flow ($m)5
AISC ($/oz)
$82m
FY21
$1,473m
FY21
FY20
FY19
8
51
FY20
FY19
1,281
1,253
Asset Overview
21
GJ
Red Chris
Galore Creek
Eskay Creek
Brucejack
Au
Cu
46koz2
23kt2
Gold produced (koz)
Copper produced (kt)
FY21
FY20
39
FY21
FY20
25
Site process
Mining
Open pit mining, with block cave potential1
Processing
Crushing, grinding, flotation
Output
Gold, copper and silver concentrate
Key statistics
Gold M&I Mineral Resources
Copper M&I Mineral Resources
FY22 Production Guidance
13Moz3
3.7Mt3
40–42koz Au, 23–25kt Cu2,4
Free cash flow ($m)2,5
AISC ($/oz)2
$(37)m
FY21
$2,248
FY21
FY20
(18)
FY20
1,703
Red Chris
Potential Tier 1 orebody1
On 15 August 2019, Newcrest acquired a 70% interest in and
operatorship of the Red Chris mine and surrounding tenements in
British Columbia, Canada.
FY21 Performance
Red Chris produced 46koz of gold, which was approximately 3% higher
than the prior period on a normalised basis, primarily driven by a 2%
increase in gold recovery.
AISC of $2,248 per ounce was 32% higher than the prior period primarily
due to higher levels of sustaining capital activity, additional costs
associated with COVID-19 measures, and higher levels of infill drilling
activity. This was partially offset by a higher realised copper price.
Free cash flow of negative $37 million was lower than the prior period
primarily driven by increased non-sustaining and sustaining capital
activity, increased production stripping activity, increased exploration,
and increased site costs. The increase in exploration primarily relates to
increased drilling activity at Red Chris and the nearby GJ property. This
was partially offset by higher realised gold and copper prices.
1
2
3
Subject to market and operating conditions, further drilling and studies, all necessary permits,
regulatory requirements and Board approvals.
Production and financial outcomes represent Newcrest’s 70% share. Outcomes for FY20 are
for the period 15 August 2019 (the acquisition date) to 30 June 2020.
The information on this page that relates to Red Chris Mineral Resources has been extracted
from the release titled “Newcrest announces its initial Mineral Resource estimate for Red Chris”
dated 31 March 2021 which is available to view at www.asx.com.au under the code “NCM” and on
Newcrest’s SEDAR profile. Gold M&I Mineral Resources and Copper M&I Resources represent
Measured and Indicated Mineral Resources. Mineral Resource estimates are shown at 100%.
Newcrest’s joint venture interest in the Mineral Resource is 70%.
The achievement of guidance is subject to market and operating conditions.
4
5 Free cash flow is before interest, tax and intercompany transactions.
22
Organic Growth
Cadia
Cadia Expansion Project
Cadia is currently undergoing a significant
expansion project which is expected to help it
retain its industry leading position as one of the
largest, lowest cost and longest life gold mines
in the world.
The Expansion Project is in two stages1:
– Stage 1 is the development of the next block
cave, PC2-3, and an increase to the nameplate
capacity of the process plant to 33mtpa
– Stage 2 is focused on increasing the plant
processing capacity from 33mtpa to 35mpta,
delivering life-of-mine gold and copper
recovery improvements and reducing
unit costs
Execution of the works for both stages of the
Project is in progress.
Molybdenum Plant
The Molybdenum Plant is in commissioning
and is expected to provide an additional revenue
stream for Cadia which will be recognised as a
by-product credit in the calculation of Cadia’s
already low All-In Sustaining Cost per ounce.
PC1-2 Pre-Feasibility Findings:
In August 2021, the Newcrest Board approved
the Cadia PC1-2 Pre-Feasibility Study enabling
the commencement of the Feasibility Stage and
Early Works Program.
The Pre-Feasibility Study updates and defines
a significant portion of Cadia’s future mine plan,
with the development of PC1-2 accounting for
~20% of Cadia’s current Ore Reserves. The
approved commencement of the Early Works
Program will allow critical infrastructure to
be established in parallel with the Feasibility
Study before the commencement of the Main
Works program in the second half of CY22.
A$120 million (~US$90 million) of funding has
been approved for this Early Works Program
which is expected to commence in the
December 2021 quarter.
Pre-Feasibility Study key findings for PC1-2:2,3,4
– Estimated total capital expenditure of
~A$1.3 billion (~US$0.9 billion)
– Real, after-tax internal rate of return of 21.5%
– Net Present Value of A$2.0 billion
(US$1.5 billion)
– ~17 year mine life from first production, at
an average of 15mtpa
– Total estimated ore production of 258Mt
containing 3.5Moz of gold and 660kt of copper
– Average AISC of A$54/oz (US$41/oz)
– Enhanced footprint design and
productivity allowing:
– Deferral of ~25% of the previously required
footprint into a future PC1-3 project
– A$150 million (US$112 million) reduction
in the initial capital spend
– Enhanced average gold and copper
grades in the medium term
Early Works Program of critical path activities
for the establishment of PC1-2 is expected
to commence in the December 2021 quarter.
The Feasibility Study has now commenced
with expected completion in the second
half of CY225.
Cadia Expansion Key Project Milestones:
August 2018
October 2020
– Newcrest Board approved Cadia
– Newcrest Board approved Stage 2
Expansion Pre-Feasibility Study to
Feasibility Stage
of the Expansion Project
FY23
– First production expected
from PC2-35
October 2019
Late FY22
– Newcrest Board approved Stage
– Expected completion of Stage 2 of the
1 of the Expansion Project
Cadia Expansion Project5
1
2
3
While the targeted capacity of the process plant under the Expansion Project is 33mtpa in Stage 1 and 35mtpa in Stage 2, the actual milling rate will be subject to regulatory and permitting approvals.
The Pre-Feasibility Study has been prepared with the objective that its findings are subject to an accuracy range of ±25%. The findings in the Study and the implementation of the PC1-2 Project are subject
to all the necessary approvals, permits, internal and regulatory requirements and further works. The estimates are indicative only and are subject to market and operating conditions. They should not be
construed as guidance.
The production targets underpinning the Study estimates is 3.5Moz gold and 660kt copper over PC1-2’s expected 17 year mine life. The production target is based on the utilisation of ~20% of the
Cadia East Ore Reserves, being 18Moz Probable Ore Reserves as at 30 June 2021 which have been prepared by Competent Persons in accordance with Appendix 5A of the ASX Listing Rules (see release
titled “Cadia PC1-2 Pre-Feasibility Study delivers attractive returns” dated 19 August 2021 which is available to view at www.asx.com.au under the code of “NCM” and on Newcrest’s SEDAR profile), but
is subject to depletions for the period since 1 July 2021.
As Cadia’s functional currency is AUD, the Study has been assessed in AUD. The outcomes presented have been converted to USD using an exchange rate of 0.75.
4
5 Subject to market and operating conditions, Board and regulatory approvals and potential delays due to COVID-19 impacts.
Newcrest Annual Report 2021 Organic Growth
23
Newcrest’s initial Mineral Resource estimate
is expected to support the development of
a high-margin, underground block cave and
is a key input into the Red Chris Block Cave
Pre-Feasibility Study3.
To date, Red Chris’ brownfield exploration
program has delivered considerable exploration
success, including East Ridge which is a new
zone of higher grade mineralisation located
outside of Newcrest’s initial Mineral Resource
estimate. In July 2021, Newcrest reported its
highest grade intercept to date from this zone,
supporting the potential for resource growth
over time.
In June 2021, Newcrest commenced
construction of the exploration decline.
The commencement of the exploration
decline underpins Newcrest’s objective of
having a block cave in operation at Red Chris
within the next five to six years4.
Red Chris
Red Chris is a joint venture between Newcrest
(70%) and Imperial Metals Corporation
(30%). Newcrest acquired its interest in, and
operatorship of, Red Chris on 15 August 2019.
Since acquisition, Newcrest has undergone a
significant drilling campaign which was focused
on the delivery of Newcrest’s initial Mineral
Resource estimate for Red Chris together with
a brownfields exploration program which is
concentrated on the discovery of additional
zones of higher grade mineralisation within the
Red Chris porphyry corridor (including targets
outside of the Mineral Resource estimate).
In FY20, Newcrest reported the existence
of multiple discrete ‘pods’ of higher grade
mineralisation in the East Zone. Newcrest is
currently evaluating options to ‘early mine’ these
pods with the aim of generating cash flows prior
to the completion of a block cave at Red Chris.
In March 2021, Newcrest announced its initial
Mineral Resource Estimate for Red Chris
which comprised1,2:
– a Measured and Indicated Mineral Resource
estimate of 980Mt @ 0.41 g/t gold and 0.38%
copper for 13Moz contained gold and 3.7Mt
contained copper
– an Inferred Mineral Resource estimate of
190Mt @ 0.31g/t gold and 0.30% copper
for 1.9Moz contained gold and 0.57Mt
contained copper
Red Chris Key Project Milestones:
August 2019
March 2021
June 2021
– Newcrest acquired a 70%
interest in, and operatorship
of Red Chris
– Newcrest announced its initial
Mineral Resource estimate for
Red Chris
– Exploration decline commenced
following completion of the box cut
and portal
February 2021
April 2021
– Regulatory approval received to commence
construction of the box cut
– Regulatory approval received
to commence construction of
the exploration decline
1
2
3
4
The information on this page that relates to Red Chris Mineral Resources has been extracted from the release titled “Newcrest announces its initial Mineral Resource estimate for Red Chris” dated
31 March 2021 which is available to view at www.asx.com.au under the code “NCM” and on Newcrest’s SEDAR profile.
Newcrest’s initial Mineral Resource estimate for Red Chris is presented at 100%. Newcrest’s joint venture interest in the Mineral Resource estimate is 70%.
The development of a block cave mine at the Red Chris project is subject to the completion of a successful exploration program and further studies, market and operating conditions, regulatory approvals
and Board approvals.
Subject to market and operating conditions, Board and regulatory approval and any potential delays due to COVID-19 impacts.
24
Organic Growth (Continued)
Havieron Project
The Havieron Project is located 45km east
of Telfer in the Paterson Province in Western
Australia. The Project is operated by Newcrest
under a joint venture agreement with Greatland
Gold plc. As announced on 30 November 2020,
Newcrest has now met the Stage 3 expenditure
requirement (US$45 million) and is entitled to
earn an additional 20% joint venture interest,
resulting in an overall joint venture interest of
60% (Greatland Gold 40%).
Newcrest can earn up to a 70% joint
venture interest through total expenditure of
US$65 million and the completion of a series
of exploration and development milestones
(including the delivery of a Pre-Feasibility Study)
in a four-stage farm-in over a six year period
that commenced in May 2019. Newcrest is also
entitled to acquire an additional 5% interest at
the end of the farm-in period at fair market value.
The joint venture agreement also includes
tolling principles reflecting the intention of the
parties that, subject to a successful exploration
program, Feasibility Study and a positive
decision to mine, the resulting joint venture
mineralised material will be processed at Telfer.
Newcrest commenced its exploration drilling
program in June 2019 and has progressively
increased its drilling activities such that eight
drill rigs are currently operational. Results from
Newcrest’s infill drilling program continue to
support the geological and grade continuity
for its ongoing studies and continue to confirm
Newcrest’s previously reported drilling results.
Exploration activities are also focused on an
extensive growth drilling program across several
key targets. In June 2021, Newcrest announced
a number of new high grade extensions to the
South East Crescent zone, located outside of the
initial Inferred Mineral Resource estimate. These
drilling results continue to support the potential
for incremental resource extensions.
In December 2020, Newcrest announced its
initial Inferred Mineral Resource estimate for
Havieron of 52Mt @ 2.0g/t Au and 0.31 Cu
for 3.4Moz Au and 160kt Cu1,2. Mineralisation
remains open in multiple directions outside
of the initial Inferred Mineral Resource, which
indicates the possibility that the resource could
continue to grow over time with additional
planned drilling activity.
In the second half of the FY21 financial year,
Newcrest announced that it had commenced
its Early Works Program. Subsequent to the
completion of the box cut and portal, Newcrest
commenced construction of the exploration
decline in May 2021 which is critical to achieving
first production from the Project in the next two
to three years3.
Works to progress the necessary approvals
and permits that are required to commence the
development of an operating underground mine
and associated infrastructure at the Project
are ongoing4.
Havieron Key Project Milestones:
March 2019
November 2020
January 2021
– Newcrest entered into a
farm-in agreement with
Greatland Gold plc
– Newcrest formalised its relationship
with Greatland Gold and signed
Havieron Joint Venture Agreement
– Regulatory approval to commence construction
of the box cut, exploration decline and associated
surface infrastructure
April 2020
December 2020
– Newcrest earnt 40% interest
in Havieron Project
– Initial Inferred Mineral Resource
estimate announced of 3.4Moz
Au and 160kt Cu1
May 2021
– Exploration decline commenced
following completion of the box
cut and portal
1
2
3
4
The information on this page that relates to Havieron Mineral Resources has been extracted from the release titled “Initial Inferred Mineral Resource estimate for Havieron of 3.4Moz of gold and 160kt of
copper” dated 10 December 2020 which is available to view at www.asx.com.au under the code “NCM” and on Newcrest’s SEDAR profile.
The initial Inferred Mineral Resource estimate is presented on a 100% basis. As announced on 30 November 2020, Newcrest has now met the Stage 3 expenditure requirement (US$45 million) and is
entitled to earn an additional 20% joint venture interest in addition to its existing 40% interest, resulting in an overall joint venture interest of 60% (Greatland Gold 40%).
Subject to market and operating conditions, Board and regulatory approval and any potential delays due to COVID-19 impacts.
The development of any underground mine at the Havieron Project is subject to the completion of a successful exploration program and further studies, market and operating conditions, Board approvals
and a positive decision to mine.
Newcrest Annual Report 2021 Organic Growth
25
Lihir
In February 2021, Newcrest announced the
findings of its Lihir Mine Optimisation Study
which included an optimised mine plan, the
deferral of the construction of the Seepage
Barrier (and its associated capital cost) by a
further ~18 months, and the identification of
an opportunity to unlock additional high grade
mineralisation from Phase 14A. The Phase 14A
opportunity represents further upside from
Lihir’s new optimised mine plan which, subject
to the completion of a Pre-Feasibility Study
(PFS), has the potential to bring forward
Newcrest’s aspiration for Lihir to be a 1 million
ounce plus producer.
The Phase 14A PFS is focused on extending
the Phase 14 cutback and safely steepening
the walls of the pit by utilising civil engineering
techniques to access existing Indicated
Mineral Resources, which would have
otherwise been inaccessible through standard
mining techniques.
Additionally, the cutback would provide a
separate mining front, providing further flexibility
for fresh competent ore feed. The cutback is fully
permitted and is within the existing mine lease.
Site field investigation is underway, including
geotechnical drilling and preparation for
contractor mobilisation for trial works.
Field trials of the wall support technology are
planned for FY22 with long lead materials
ordered and the mobilisation of specialist
contractors in progress.
Newcrest is currently assessing whether
applying steep wall engineering techniques
to its other cutbacks at Lihir could enable
access to additional high grade mill feed and
potentially further defer construction of the
Seepage Barrier, which is currently subject to
a Feasibility Study.
26
The Board
Peter Hay
Sandeep Biswas
Gerard Bond
LLB, FAICD, 71
Independent Non-Executive Chairman
BEng (Chem) (Hons), FAusIMM, 59
Managing Director and
Chief Executive Officer
BComm, Chartered Accountant, Grad Dip
App Fin & Investment, F Fin, 53
Finance Director and
Chief Financial Officer
Mr Biswas was appointed Managing
Director and Chief Executive Officer
effective 4 July 2014. He joined Newcrest
in January 2014, as an Executive Director
and Chief Operating Officer.
Skills, experience and expertise
Mr Biswas was previously Chief Executive
Officer of Pacific Aluminium, a wholly
owned subsidiary within the Rio Tinto group,
which incorporated the bauxite, alumina,
refining and smelting operations in Australia
and New Zealand. He began his career with
Mount Isa Mines, working in both Australia
and Europe. Mr Biswas has also worked for
Western Mining Corporation in Australia
and Rio Tinto in Canada and Australia.
He has experience in research, operations,
business development and projects, across
commodities including aluminium, copper,
lead, zinc and nickel.
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.
On 5 May 2021, it was announced that
Mr Bond had decided to leave Newcrest
in early 2022.
Skills, experience and expertise
Mr Bond has experience in the global
financial and resources industry with
BHP Billiton, Coopers & Lybrand and
Price Waterhouse. Prior to joining Newcrest,
Mr Bond was with BHP Billiton for over
14 years where he held a number of senior
executive roles in Europe and Australia
including in Mergers and Acquisitions,
Treasury, as Deputy CFO of the Aluminium
business, CFO and then Acting President
of the Nickel business, and as BHP Billiton’s
Head of Group Human Resources.
Other Current Directorships/Appointments
Other Current Directorships/Appointments
– Vice Chairman of the Minerals Council
of Australia (Vice Chairman from 2018,
Director from 2014)
– Vice Chairman of the World Gold Council
(Vice Chairman from 2020, Director
from 2017)
– Member of ICMM Council (from 2017)
– Alternate Director of the World Gold
Council (from 2017)
Mr Hay was appointed as a Non-Executive
Chairman of the Board in January 2014,
after being appointed as a Non-Executive
Director in August 2013. Mr Hay is
also the Chairman of the Nominations
Committee. On 5 October 2021, Newcrest
announced that Mr Hay intends to
retire as Non-Executive Chairman and
as a Non-Executive Director, effective
immediately after Newcrest’s Annual
General Meeting on 10 November 2021.
Skills, experience and expertise
Mr Hay has a strong background and
breadth of experience in business,
corporate law, finance and investment
banking advisory work, with a particular
expertise in relation to mergers and
acquisitions. He has also had significant
involvement in advising governments and
government-owned enterprises. Mr Hay
was a partner of the legal firm Freehills until
2005, where he served as Chief Executive
Officer from 2000 and is a former member
of the Australian Takeovers Panel.
Current Directorships/Appointments
– Chairman of Australia Pacific Airports
Corporation Limited (from 2019)
– Chairman of Mutual Trust Pty Ltd
(from 2020)
– Director of Cormack Foundation Pty Ltd
(from 2005)
– Member of AICD Corporate Governance
Committee (from 2012)
Former Listed Directorships (last 3 years)
– Chairman of Vicinity Centres
(2015–2019)
Newcrest Annual Report 2021 The Board
27
Philip Aiken AM
Roger Higgins
Sally-Anne Layman
BEng (Chemical), Advanced Management
Program (HBS), 72
Independent Non-Executive Director
BE (Civil Engineering) (Hons), MSc (Hydraulics),
PhD (Water Resources), Stanford Executive
Program, FIEAust, FAusIMM, 70
Independent Non-Executive Director
BEng (Mining) (Hons), BComm,
CPA Australia, MAICD, 47
Independent Non-Executive Director
Mr Aiken was appointed to the Board as a
Non-Executive Director in April 2013. He is
Chairman of the Human Resources and
Remuneration Committee and a member
of the Safety and Sustainability Committee
and the Nominations Committee.
Skills, experience and expertise
Mr Aiken has extensive Australian and
international business experience,
principally in the engineering and resources
sectors. He was Group President Energy
BHP Billiton, President BHP Petroleum,
Managing Director BOC/CIG, Chief
Executive of BTR Nylex and Senior Advisor
Macquarie Capital (Europe).
Current Listed Directorships
– Chairman of Aveva Group plc (from 2012)
Other Current Directorships/Appointments
– Business Ambassador, Business Events
Sydney Pty Ltd (from 2016)
Former Listed Directorships (last 3 years)
– Chairman of Balfour Beatty plc
(2015–2021)
Dr Higgins was appointed to the Board as a
Non-Executive Director in October 2015. He
is Chairman of the Safety and Sustainability
Committee and a member of the Human
Resources and Remuneration Committee.
Ms Layman was appointed to the
Board as a Non-Executive Director in
October 2020. She is a member of the
Audit and Risk Committee and the Safety
and Sustainability Committee.
Skills, experience and expertise
Skills, experience and expertise
Dr Higgins brings extensive experience leading
mining companies and operations, and has deep
working knowledge of Papua New Guinea as
a current Non-Executive Director and a former
Managing Director of Ok Tedi Mining Limited
in Papua New Guinea. In his most recent
executive position, Dr Higgins served as Senior
Vice President, Copper at Canadian metals and
mining company, Teck Resources Limited. Prior
to this role he was Vice President and Chief
Operating Officer with BHP Billiton Base Metals
Customer Sector Group working in Australia
and also held senior positions with BHP Billiton
in Chile. He also holds the position of Adjunct
Professor with the Sustainable Minerals Institute,
University of Queensland.
Current Listed Directorships
– Director of Worley Limited (from 2019)
– Chairman of Minotaur Exploration Limited
(Director from 2016, Chairman from 2017)
Other Current Directorships/Appointments
Ms Layman has over 26 years of
international experience in resources and
corporate finance. She spent 14 years with
the Macquarie Group in a range of senior
positions, including as Division Director
and Joint Head of the Perth office of the
Metals, Mining & Agriculture Division. Prior
to that, Ms Layman held various positions
with resource companies including Mount
Isa Mines, Great Central Mines and
Normandy Yandal.
Current Listed Directorships
– Director of Beach Energy Limited
(from 2019)
– Director of Pilbara Minerals Limited
(from 2018)
– Director of Imdex Limited (from 2017)
Other Current Directorships/Appointments
– Director of RL Advisory Pty Limited
(from 2017)
– Chair of the Advisory Board, PAX Republic
Former Listed Directorships (last 3 years)
– Director of Perseus Mining Limited
(2017–2020)
– Director of Gascoyne Resources Limited
(Director 2017–2019, Chair 2018–2019)
(from 2019)
– Director of Ok Tedi Mining Limited
(from 2014)
– Member of the Sustainable Minerals Institute
Advisory Board, University of Queensland
(from 2016)
– Member of the Energy and Resources Advisory
Board, University of Adelaide (from 2019)
Former Listed Directorships (last 3 years)
– Director of Metminco Limited (2013–2019)
28
Jane McAloon
Vickki McFadden
Peter Tomsett
BEc (Hons), LLB, GDip CorpGov, FAICD, 57
Independent Non-Executive Director
BComm, LLB, 62
Independent Non-Executive Director
BEng (Mining) (Hons), MSc (Mineral
Production Management), GAICD, 63
Independent Non-Executive Director
Ms McAloon was appointed to the Board as
a Non-Executive Director with effect from
1 July 2021. She is a member of the Human
Resources and Remuneration Committee.
Skills, experience and expertise
Ms McAloon has extensive experience in
the resources, energy, infrastructure and
utilities industries. She spent 9 years as
Group Company Secretary at BHP, including
2 years on the Group Management
Committee as President Governance. Prior
to that, Ms McAloon was Group Manager,
Corporate & External Services & Company
Secretary at AGL, had leadership roles with
the NSW Government and worked in a
private legal practice.
Current Listed Directorships
– Director of United Malt Group Limited
(from 2020)
– Director of Home Consortium
(from 2019)
Other Current Directorships/Appointments
– Director of Energy Australia (from 2012)
– Director of Allianz Australia Limited
(from 2020)
– Independent Member of the Advisory
Board for the legal firm Allens (from 2019)
– Chairman of the Monash University
Foundation (from 2019)
– Senior Adviser Brunswick Group Asia
(from 2018)
Former Listed Directorships (last 3 years)
– Director of Healthscope (2016–2019)
– Director of Cogstate (2017–2019)
– Director of Viva Energy Group Limited
(2018–2021)
Ms McFadden was appointed to the Board
as a Non-Executive Director in October
2016. She is Chairman of the Audit and Risk
Committee and a member of the Human
Resources and Remuneration Committee.
Skills, experience and expertise
Ms McFadden is an experienced company
director and has broad experience in several
roles as member or chairman of audit and
risk committees. Ms McFadden has an
extensive background in finance and law.
She is a former investment banker with
considerable expertise in corporate finance
transactions, having served as Managing
Director of Investment Banking at Merrill
Lynch in Australia and as a Director of
Centaurus Corporate Finance and a former
President of the Australian Takeovers Panel.
Current Listed Directorships
– Chairman of The GPT Group (from 2018)
Other Current Directorships/Appointments
– Director of Allianz Australia Limited
(from 2020)
Former Listed Directorships (last 3 years)
– Director of Tabcorp Holdings Limited
(2017–2020)
Mr Tomsett was appointed to the
Board as a Non-Executive Director in
September 2018. He is a member of
the Audit and Risk Committee, Safety
and Sustainability Committee and the
Nominations Committee. As announced
on 5 October 2021, Mr Tomsett will be
appointed as Non-Executive Chairman with
effect from the close of Newcrest’s Annual
General Meeting on 10 November 2021,
subject to his re-election as a Director.
Skills, experience and expertise
Mr Tomsett has extensive and deep
gold mining and international business
experience as both an executive and
non-executive director of a broad range of
mining companies listed on the Australian,
Toronto, New York and London stock
exchanges. His last executive role was as
the President and Chief Executive Officer
of global gold and copper company, Placer
Dome Inc, where he worked for 20 years in
project, operational and executive roles.
He has been the Chairman and Managing
Director of Kidston Gold Mines Ltd and
the Non-Executive Chairman of Equinox
Minerals Ltd and Silver Standard Resources
Inc. He has also held numerous other Board
positions in mining, energy and construction
companies and associations including as a
Director of OZ Minerals Ltd, Acacia Mining
plc, Talisman Energy Inc, North American
Energy Partners Inc, Africo Resources
Ltd, World Gold Council, Minerals Council
of Australia, and International Council for
Mining and Metals.
Former Listed Directorships (last 3 years)
– Director of OZ Minerals Ltd (2017–2018)
Newcrest Annual Report 2021 Mineral Resources and Ore Reserves
29
The Group Inferred Mineral Resources as at 31 December 2020 include
changes at numerous deposits following divestures, additions, or updated
notional constraining shells and/or resource models. These include:
– Increase at Telfer of 1.8 million ounces of gold due to the inclusion of
the initial Havieron Inferred Mineral Resource (~1.35 million ounces
of gold reflecting Newcrest’s 40% equity interest) and an increase
at the West Dome open pit and Telfer underground due to updated
metal prices, exchange rates, cost assumptions, resource models
and the re-optimisation of the West Dome open pit and Main Dome
Underground resources
– Minor decrease of 0.1 million ounces of gold and 0.1 million ounces
of silver following divesture of Newcrest’s 75% interest in Gosowong.
As at 31 December 2020, Group Ore Reserves are estimated to contain
49 million ounces of gold, 6.8 million tonnes of copper, 35 million ounces of
silver and 0.12 million tonnes of molybdenum. This represents a decrease of
approximately 2.6 million ounces of gold (~5%), 0.1 million tonnes of copper
(~2%) and 1.3 million ounces of silver (~4%) compared to the estimate as
at 31 December 2019.
The Group Ore Reserves as at 31 December 2020 include the
following changes:
– Estimated mining depletion of approximately 2.5 million ounces of
gold, 0.1 million tonnes of copper, 1 million ounces of silver and minor
molybdenum
– Removal of 0.3 million ounces of gold and 0.4 million ounces of silver
following divesture of Newcrest’s 75% interest in Gosowong
– Minor changes at Telfer and Lihir due to updated input assumptions
for net increase of 0.3 million ounces of gold
Updated mining, metallurgical and long term cost assumptions were
developed with reference to recent performance data. The revised long
term assumptions include changes in performance consistent with
changing activity levels at each site over the life of the operation and the
latest study for each deposit.
Newcrest Mining Limited releases its Annual Statement of Mineral
Resource and Ore Reserve estimates as of 31 December each year.
The Statement for the period ending 31 December 2020 was released
on 11 February 2021, and can be found on Newcrest’s website at
www.newcrest.com. This section of the Annual Report includes relevant
information set out in that Statement. Changes that have occurred in
the six months ending 30 June 2021 due to mining depletion and other
adjustments are noted below.
For the purposes of the Annual Mineral Resources and Ore Reserves
Statement as at 31 December 2020, Newcrest has completed a detailed
review of all production sources. The review has taken into account
long term metal prices, foreign exchange and cost assumptions, and
mining and metallurgy performance to inform cut-off grades and physical
mining parameters.
As at 31 December 2020, Group Measured and Indicated Mineral
Resources are estimated to contain approximately 97 million ounces of
gold, 17 million tonnes of copper, 87 million ounces of silver and 0.19 million
tonnes of molybdenum. This represents a decrease of approximately
4.2 million ounces of gold (~4%), 0.2 million tonnes of copper (~1%)
and 2 million ounces of silver (~2%), compared with the estimate as at
31 December 2019.
The Group Measured and Indicated Mineral Resources as at
31 December 2020 include changes at numerous deposits
following divestures or updated notional constraining shells and/or
resource models. These include:
– Estimated mining depletion of approximately 2.6 million ounces of gold,
0.1 million tonnes of copper and 1 million ounces of silver and minor
molybdenum
– Decrease at Telfer, post mining depletion, of approximately 0.7 million
ounces of gold following removal of 0.3 million ounces of gold
from Main Dome open pit at the end of operation and updated
metal prices, exchange rates, costs assumptions, resource models,
and re-optimisation of the West Dome open pit and Main Dome
Underground resources
– Removal of 0.9 million ounces of gold and 1.2 million ounces of silver
following divesture of Newcrest’s 75% interest in Gosowong
As at 31 December 2020, Group Inferred Mineral Resources are estimated
to contain approximately 11 million ounces of gold, 2.3 million tonnes of
copper and 5.4 million ounces of silver. This represents an increase of
approximately 1.7 million ounces of gold (~20%), 0.1 million tonnes of
copper (~5%) and decrease of 0.1 million ounces of silver (~3%), compared
with the estimate as at 31 December 2019.
Mineral Resources and Ore Reserves 30
Long term metal prices and foreign exchange assumptions for Mineral
Resources and Ore Reserves are set out below.
Competent Person Statement
Long Term Metal Price Assumptions
Newcrest, WGJV & NJV
Mineral Resource Estimates
Gold – US$/oz
Copper – US$/lb
Silver – US$/oz
Molybdenum – US$/lb
Ore Reserve Estimates
Gold – US$/oz
Copper – US$/lb
Silver – US$/oz
Molybdenum – US$/lb
Long Term Exchange Rate AUD:USD
1,400
3.40
21.00
10.00
1,300
3.00
18.00
8.00
0.75
For long mine life assets the gold price has been increased by US$100/oz
for both Mineral Resources and Ore Reserves. Copper and silver metal
price assumptions remain unchanged from those used for December 2019
reporting. The AUD:USD exchange rate assumption for long life assets
remain unchanged at 0.75 and local currency assumptions for the PNG
Kina remain unchanged. In consideration of Telfer’s current comparatively
short mine life the gold price assumption has been increased by
US$200/oz and the copper price assumption has been decreased by
US$0.20/Ib for Ore Reserves compared to that used for December
2019 reporting. The AUD:USD exchange rate for Telfer, considering its
comparatively short mine life, has been lowered to 0.70 for Ore Reserves
and remains at 0.75 for Mineral Resources. Note Havieron Mineral
Resource uses the long term metal price and exchange rate assumptions.
Where appropriate, Mineral Resources are also spatially constrained with
notional mining volumes based on metal prices of US$1,400/oz for gold
and US$4.00/lb for copper. This approach has been adopted to eliminate
mineralisation that does not have reasonable prospects of eventual
economic extraction from Mineral Resource estimates.
Note that the increased long-term gold price assumptions have been applied
to re-optimise the Lihir and Telfer operating Mineral Resource and Ore
Reserve and Havieron project and Namosi JV Mineral Resource estimates
for this reporting period. Remaining assets of Cadia and the undeveloped
projects at Wafi Golpu and Telfer will be progressively re-optimised when
the full supporting studies are updated and as at 31 December 2020 are
optimised on the more conservative 2019 gold price assumption.
1. This Mineral Resources and Ore Reserves section of the Annual Report
has been compiled and approved by Mr R. Stewart. Mr Stewart is
the Acting Head of Resource Development, a full-time employee of
Newcrest Mining Limited and holds options and shares in Newcrest
Mining Limited. Mr Stewart is also entitled to participate in Newcrest’s
executive equity long term incentive plan, of which details are
included in Newcrest’s 2021 Remuneration Report. He is a Fellow of
the Australasian Institute of Mining and Metallurgy. Mr Stewart has
sufficient experience which is relevant to the styles of mineralisation
and types of deposits under consideration and to the activity which he
is undertaking to qualify as a Competent Person as defined in the JORC
Code 2012. Mr Stewart consents to the inclusion of the material in this
report in the form and context in which it appears.
2. The information in this section of the Annual Report that relates to
Mineral Resources or Ore Reserves as at 31 December 2020 are based
on and fairly represent information and supporting documentation
prepared by the Competent Persons named in the Mineral Resources
and Ore Reserves endnotes on Pages 40 & 41. Newcrest confirms that
the form and context in which the Competent Person’s findings are
presented have not been materially modified from the original release.
3. The information in this section of the Annual Report that relates
to changes in the Mineral Resources or Ore Reserves since
31 December 2020:
a. for each of Main Dome Stockpiles Ore Reserve and West Dome
Open Pit Ore Reserves, is based on and fairly represents information
and supporting documentation prepared by the following
Competent Persons: Brett Swanson;
b. for Telfer Underground Ore Reserves is based on and fairly
represents information and supporting documentation prepared by
the following Competent Persons: Stephen Fitch; and
c. for all other Mineral Resources or Ore Reserves, is based on and fairly
represents information and supporting documentation prepared by
the Competent Persons named in the Mineral Resources and Ore
Reserves Tables extracted from the original release.
Each of these Competent Persons, other than Mr G. Job was at the
reporting date a full-time employee of Newcrest Mining Limited or its
relevant subsidiaries, holds options (and in some cases, shares) in Newcrest
Mining Limited and is entitled to participate in Newcrest’s executive equity
long term incentive plan, details of which are included in Newcrest’s 2021
Remuneration Report. Mr Job is a full-time employee of Harmony Gold
Mining Company Limited, Newcrest’s joint venture partner in the WGJV.
All the Competent Persons named are Members/Fellows of the
Australasian Institute of Mining and Metallurgy and/or Members of the
Australian Institute of Geoscientists, and have sufficient experience which
is relevant to the styles of mineralisation and types of deposits under
consideration and to the activity which they are undertaking to qualify as
a Competent Person as defined in the JORC Code 2012. Each Competent
Person consents to the inclusion in this report of the matters based on
their information in the form and context in which it appears.
Mineral Resources and Ore Reserves continuedNewcrest Annual Report 2021 31
Governance
Cadia (NSW)
Mineralisation recognised to date in the Cadia Province is porphyry
related gold and copper, hosted in rocks of Ordovician age. Orebodies 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 underground operations. Changes to Mineral Resources and
Ore Reserves at Cadia since 31 December 2020 have only occurred
at Cadia East as detailed below.
Cadia East Underground
Cadia East is a low-grade, porphyry gold and copper deposit with mining
based on bulk underground extraction by panel caving methods. Commercial
production from Panel Cave 1 (PC1) commenced in January 2013. Commercial
production from Panel Cave 2 (PC2) commenced in October 2014.
Changes to the Mineral Resource and Ore Reserve since
31 December 2020 were due to mining depletion up to 30 June 2021 and
represent decreases of 0.5 million ounces of gold and 0.06 million tonnes
of copper.
On 19 August 2021, Newcrest announced the completion of Cadia PC1-2
Pre-Feasibility Study which comprised the proposed development of the
PC1-2 cave (within the overall Ore Reserve) resulting in a decrease of
0.8 million ounces of gold and 0.1 million tonnes of copper due to changes
in mining assumptions, updated resource estimate, and changes in costs.
Newcrest has a policy for the Public Reporting of Exploration Results,
Mineral Resources and Ore Reserves. This policy provides a clear
framework for how Newcrest manages all public reporting of Exploration
Results, Mineral Resources and Ore Reserves, ensuring compliance with
the JORC Code 2012. This policy applies to all regulatory reporting, public
presentations and other publicly released company information at both
local (site) and corporate levels.
Newcrest has in place a Resource and Reserve Steering Committee
(RRSC). The role of the committee is to ensure the proper functioning of
Newcrest’s Resource and Reserve development activity and reporting.
The Committee’s control and assurance activities respond to a four-level
compliance process:
1. Provision of standards and guidelines, and approvals consequent
to these;
2. Resources and Reserves reporting process, based on well founded
assumptions and compliant with external standards (JORC Code 2012,
ASX Listing Rules);
3. External review of process conformance and compliance; and
4. Internal assessment of processes around all input assumptions.
Updates to the Mineral Resource and Ore Reserve estimates at
31 December 2020 were completed in accordance with the RRSC
governance and review process. This included reporting in compliance
with the JORC Code 2012, training and endorsement of suitably qualified
Competent Persons, independent external review of Mineral Resources
and Ore Reserves every three years (unless agreed by the RRSC)
or where there is a material change and endorsement of the Annual
Mineral Resources and Ore Reserve Statement by the RRSC prior to
release to the market.
Changes Since 31 December 2020 Mineral
Resource and Ore Reserve Statement
Newcrest is not aware of any new information or data that materially
affects the information contained in the “Annual Mineral Resource
and Ore Reserve Statement – 31 December 2020” other than changes
due to normal mining depletion, updates and other adjustments that
occurred during the six months ended 30 June 2021. These changes are
summarised by province below.
Newcrest’s Annual Statement of Mineral Resources and Ore Reserves
is based upon a number of factors, including (without limitation) actual
exploration and production results, economic assumptions (such as future
commodity prices and exchange rates) and operating and other costs.
No material changes were made to those assumptions during the period
to 30 June 2021.
There are also specific ongoing studies to maximise the value of operations
at Cadia, Lihir, Telfer, and Red Chris that may be incorporated into the
Mineral Resource and Ore Reserve assumptions for the period ending
31 December 2021.
Mineral Resources and Ore Reserves 32
Ridgeway
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). 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. Changes to Mineral Resources and
Ore Reserves at Lihir since 31 December 2020 have occurred in both open
pit and stockpiles and have comprised the depletion of 0.4 million ounces
of gold from both Mineral Resource and Ore Reserve.
Red Chris (Canada 70%)
Red Chris is a copper-gold porphyry with an operating open-pit mine.
The Initial Mineral Resource was announced on 31 March 2021, with the
addition of 8.9 million ounces of gold and 2.6 million tonnes of copper in
Measured & Indicated Mineral Resources, and 1.3 million ounces of gold
and 0.40 million tonnes of copper in Inferred Mineral Resources.
WGJV Wafi-Golpu Project (PNG 50%)
No change in Mineral Resource or Ore Reserve has been made since
31 December 2020 for Golpu. There has been no change to the Wafi
or Nambonga Mineral Resource since 31 December 2020.
No change in Ore Reserves or Mineral Resources has been made since
31 December 2020.
Telfer (WA)
Gold and copper mineralisation in the Telfer Province are intrusion
related and occurs as higher-grade stratabound reefs, discordant veins,
and lower-grade bulk tonnage stockwork zones. The Telfer operation is
comprised of open pit mining at both Main Dome and West Dome and
underground mining at Main Dome. Open pit mining is a conventional
truck and hydraulic excavator operation. Underground selective and
bulk long hole open stope mining methods are used for excavation of
the high-grade reefs and Western Flanks respectively, while stockwork
ore and waste are mined using sub level cave bulk mining methods.
Underground sub level cave mining ore and Western Flanks bulk open
stope ore is hoisted to the surface via a shaft. Changes to Mineral
Resources and Ore Reserves at Telfer since 31 December 2020
have only occurred in the two producing mines and the Havieron
project detailed below.
Telfer Main Dome and West Dome Open Pits
Open pit mining continued at West Dome (including stockpile reclaim).
Since 31 December 2020, the Mineral Resource was depleted by
0.2 million ounces of gold and 0.01 million tonnes of copper and Ore
Reserve additions offset depletions.
Telfer Underground
The Telfer Underground comprises the SLC mine, selective high-grade
reef mining, and Western Flanks reef and stockwork mining. Since
31 December 2020, both the Mineral Resource and Ore Reserve
additions have more than offset depletions. Mineral Resource increased
by 0.3 million ounces of gold and 0.01 million tonnes of copper. Ore
Reserve increased by 0.02 million ounces of gold and 0.01 million tonnes
of copper. Further studies are currently evaluating potential for additional
Mineral Resources and Ore Reserves at other underground areas to
extend the underground mine life.
Havieron (40%)
The Havieron project is a proposed gold-copper mine located 45 km east
from the Telfer mine. Development of this project formally commenced in
January 2021.
Mineral Resources and Ore Reserves continuedNewcrest Annual Report 2021 33
Mineral Resources as at 31 December 2020
Dec-20 Mineral Resources
Measured Resource
Indicated Resource
Dec-20 Measured and
Indicated Resource
Dec-19 Measured and
Indicated Resource
Gold Measured and
Indicated Mineral Resources
(inclusive of Gold
Ore Reserves)
Dry
Tonnes
(million)
Gold
Grade
(g/t Au)
Insitu
Gold
(million
ounces)
Dry
Tonnes
(million)
Gold
Grade
(g/t Au)
Insitu
Gold
(million
ounces)
Dry
Tonnes
(million)
Gold
Grade
(g/t Au)
Insitu
Gold
(million
ounces)
Dry
Tonnes
(million)
Gold
Grade
(g/t Au)
Insitu
Gold
(million
ounces)
Operational Provinces
Cadia East Underground 1
Ridgeway Underground 2
Cadia Extended
Underground 3
Cadia Hill Stockpiles 4
Total Cadia Province
Main Dome Open Pit
(incl. stockpiles) 6
West Dome Open Pit 7
Telfer Underground 8
Satellites Deposits 10
Total Telfer Province
Lihir Open Pit 13
Lihir Stockpiles 14
Total Lihir Province
Gosowong 15
–
–
–
32
32
8.8
–
–
–
8.8
–
67
67
–
Total Operational Provinces
110
Non-Operational Provinces
WGJV – Golpu (50%) 16
WGJV – Wafi (50%) 17
Total WGJV Province
Namosi JV Waisoi (72.74%) 19
Total Non-Operational
Provinces
Total Gold Measured
and Indicated Mineral
Resources
–
–
–
–
–
–
–
–
0.30
0.30
0.39
–
–
–
0.39
–
2.0
2.0
–
1.3
–
–
–
–
–
–
–
2,900
110
–
0.31
0.31
80
–
3,100
0.11
–
–
–
0.11
–
4.2
4.2
–
1.9
95
20
0.44
120
520
11
530
–
0.35
0.57
0.35
–
0.36
0.44
0.64
2.1
2.9
0.88
2.3
1.6
2.3
–
32
1.9
2,900
110
0.89
–
80
32
35
3,100
0.027
1.9
1.3
0.040
3.3
38
0.56
39
–
11
95
20
0.44
130
520
78
600
–
0.35
0.57
0.35
0.30
0.36
0.40
0.64
2.1
2.9
0.85
2.3
1.9
2.2
–
32
1.9
2,900
110
0.89
0.31
80
32
35
3,100
0.14
1.9
1.3
0.040
3.4
38
4.8
43
–
21
120
32
0.44
170
530
83
610
2.7
0.36
0.57
0.35
0.30
0.36
0.59
0.66
1.7
2.9
0.86
2.3
1.9
2.2
10
4.7
3,700
0.65
77
3,800
0.67
82
3,900
0.68
–
–
–
–
340
54
400
1,300
0.71
1.7
0.84
0.11
7.9
2.9
11
4.6
340
54
400
1,300
0.71
1.7
0.84
0.11
7.9
2.9
11
4.6
340
54
400
1,300
0.71
1.7
0.84
0.11
33
1.9
0.89
0.31
36
0.41
2.5
1.8
0.040
4.7
39
5.2
44
0.87
86
7.9
2.9
11
4.6
–
1,700
0.28
15
1,700
0.28
15
1,700
0.28
15
110
1.3
4.7
5,400
0.53
93
5,500
0.55
97
5,600
0.56
100
Mineral Resources and Ore Reserves 34
Mineral Resources as at 31 December 2020 continued
Dec-20 Mineral Resources
Measured Resource
Indicated Resource
Dec-20 Measured and
Indicated Resource
Dec-19 Measured and
Indicated Resource
Copper Measured and
Indicated Mineral Resources
(inclusive of Copper
Ore Reserves)
Dry
Tonnes
(million)
Copper
Grade
(% Cu)
Insitu
Copper
(million
tonnes)
Dry
Tonnes
(million)
Copper
Grade
(% Cu)
Insitu
Copper
(million
tonnes)
Dry
Tonnes
(million)
Copper
Grade
(% Cu)
Insitu
Copper
(million
tonnes)
Dry
Tonnes
(million)
Copper
Grade
(% Cu)
Insitu
Copper
(million
tonnes)
Operational Provinces
Cadia East Underground 1
Ridgeway Underground 2
Cadia Extended
Underground 3
Cadia Hill Stockpiles 4
Total Cadia Province
Main Dome Open Pit
(incl. stockpiles) 6
West Dome Open Pit 7
Telfer Underground 8
O’Callaghans 11
–
–
–
32
32
8.8
–
–
–
–
–
–
0.13
0.13
–
–
2,900
110
–
0.041
80
–
0.26
0.30
0.19
–
7.4
0.31
2,900
110
0.26
0.30
7.4
0.31
2,900
110
0.15
–
80
32
0.19
0.13
0.15
0.041
80
32
0.26
0.30
0.19
0.13
0.041
3,100
0.26
7.8
3,100
0.25
7.9
3,100
0.26
0.072
–
–
–
0.0064
–
–
–
1.9
95
20
69
0.082
0.062
0.45
0.29
0.0016
0.059
0.088
0.20
11
95
20
69
0.074
0.062
0.45
0.29
0.0079
0.059
0.088
0.20
21
120
32
69
0.093
0.062
0.40
0.29
7.5
0.31
0.15
0.041
8.0
0.020
0.072
0.13
0.20
Total Telfer Province
8.8
0.072 0.0064
180
0.19
0.35
190
0.18
0.36
240
0.18
0.42
Total Operational
Provinces
Non-Operational Provinces
MMJV – Golpu (50%) 16
Namosi JV Waisoi (72.74%) 19
Total Non-Operational
Provinces
Total Copper Measured
and Indicated Mineral
Resources
41
0.12
0.048
3,300
0.25
8.2
3,300
0.25
8.2
3,400
0.25
8.4
–
–
–
–
–
–
–
–
340
1,300
1.1
0.35
3.7
4.6
340
1,300
1.1
0.35
3.7
4.6
340
1,300
1.1
0.35
3.7
4.6
–
1,700
0.50
8.3
1,700
0.50
8.3
1,700
0.50
8.3
41
0.12
0.048
4,900
0.34
16
4,900
0.33
17
5,000
0.33
17
Dec-20 Mineral Resources
Measured Resource
Indicated Resource
Dec-20 Measured and
Indicated Resource
Dec-19 Measured and
Indicated Resource
Silver Measured and
Indicated Mineral Resources
(inclusive of Silver
Ore Reserves)
Dry
Tonnes
(million)
Silver
Grade
(g/t Ag)
Insitu
Silver
(million
ounces)
Dry
Tonnes
(million)
Silver
Grade
(g/t Ag)
Insitu
Silver
(million
ounces)
Dry
Tonnes
(million)
Silver
Grade
(g/t Ag)
Insitu
Silver
(million
ounces)
Dry
Tonnes
(million)
Silver
Grade
(g/t Ag)
Insitu
Silver
(million
ounces)
Operational Provinces
Cadia East Underground 1
Ridgeway Underground 2
Total Cadia Province
Gosowong 15
Total Operational
Provinces
Non-Operational Provinces
WGJV – Golpu (50%) 16
WGJV – Wafi (50%) 17
Total WGJV Province
Total Non-Operational
Provinces
Total Silver Measured
and Indicated Mineral
Resources
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,900
110
3,000
–
0.67
0.74
0.68
–
62
2.5
65
2,900
110
3,000
–
0.67
0.74
0.68
–
62
2.5
65
–
2,900
110
3,000
2.7
0.68
0.74
0.68
14
63
2.5
66
1.2
3,000
0.68
65
3,000
0.68
65
3,000
0.69
67
340
54
400
1.3
4.4
1.7
14
7.6
22
340
54
400
1.3
4.4
1.7
14
7.6
22
340
54
400
1.3
4.4
1.7
14
7.6
22
400
1.7
22
400
1.7
22
400
1.7
22
–
3,400
0.80
87
3,400
0.80
87
3,400
0.81
89
Mineral Resources and Ore Reserves continuedNewcrest Annual Report 2021 35
Dec-20 Mineral Resources
Measured Resource
Indicated Resource
Dec-20 Measured and
Indicated Resource
Dec-19 Measured and
Indicated Resource
Molybdenum Measured and
Indicated Mineral Resources
(inclusive of Molybdenum
Ore Reserves)
Dry
Tonnes
(million)
Molyb-
denum
Grade
(ppm Mo)
Insitu
Molyb-
denum
(million
tonnes)
Dry
Tonnes
(million)
Molyb-
denum
Grade
(ppm Mo)
Insitu
Molyb-
denum
(million
tonnes)
Dry
Tonnes
(million)
Molyb-
denum
Grade
(ppm Mo)
Insitu
Molyb-
denum
(million
tonnes)
Dry
Tonnes
(million)
Molyb-
denum
Grade
(ppm Mo)
Insitu
Molyb-
denum
(million
tonnes)
Operational Provinces
Cadia East Underground 1
Total Operational Provinces
Total Molybdenum
Measured and Indicated
Mineral Resources
–
–
–
–
–
–
–
–
2,900
2,900
64
64
0.19
2,900
0.19
2,900
64
64
0.19
2,900
0.19
2,900
64
64
0.19
0.19
–
2,900
64
0.19
2,900
64
0.19
2,900
64
0.19
Dec-20 Mineral Resources
Tonnes
Grade
Contained Metal
Polymetallic Measured and
Indicated Mineral Resources
(inclusive of Polymetallic
Ore Reserves)
Dry
Tonnes
(million)
Tungsten
Trioxide
Grade
(% WO3)
O’Callaghans 11
Measured
Indicated
Dec-20 Polymetallic Measured and
Indicated Mineral Resources
Measured
Indicated
Dec-19 Polymetallic Measured and
Indicated Mineral Resources
–
69
69
–
69
69
–
0.34
0.34
–
0.34
0.34
Zinc
Grade
(% Zn)
–
0.53
0.53
–
0.53
0.53
Lead
Grade
(% Pb)
–
0.26
0.26
–
0.26
0.26
Insitu
Tungsten
Trioxide
(million
tonnes)
Insitu
Zinc
(million
tonnes)
Insitu
Lead
(million
tonnes)
–
0.24
0.24
–
0.24
0.24
–
0.36
0.36
–
0.36
0.36
–
0.18
0.18
–
0.18
0.18
Mineral Resources and Ore Reserves 36
Mineral Resources as at 31 December 2020 continued
Dec-20 Mineral Resources
Dec-20 Inferred Resource
Dec-19 Inferred Resource
Gold Inferred Mineral Resources
Operational Provinces
Ridgeway Underground 2
Big Cadia 5
Total Cadia Province
Main Dome Open Pit (incl. stockpiles) 6
West Dome Open Pit 7
Telfer Underground 8
Havieron (40%) 9
Satellites Deposits 10
Total Telfer Province
Lihir Open Pit 13
Gosowong 15
Total Operational Provinces
Non-Operational Provinces
MMJV – Golpu (50%) 16
MMJV – Wafi (50%) 17
MMJV – Nambonga (50%) 18
Total WGJV Province
Namosi JV Waisoi (72.74%) 19
Total Non-Operational Provinces
Total Gold Inferred Mineral Resources
Dry
Tonnes
(million)
Gold
Grade
(g/t Au)
Insitu Gold
(million
ounces)
Dry
Tonnes
(million)
Gold
Grade
(g/t Au)
Insitu Gold
(million
ounces)
41
11
52
–
11
15
21
4.4
52
67
–
170
68
19
24
110
130
240
410
0.38
0.70
0.45
–
0.68
1.4
2.0
1.1
1.5
2.3
–
1.5
0.63
1.4
0.69
0.77
0.08
0.40
0.86
0.50
0.25
0.75
–
0.24
0.70
1.3
0.16
2.5
4.9
–
8.1
1.4
0.82
0.53
2.70
0.33
3.1
11
41
11
52
0.35
0.023
11
–
4.4
16
67
0.41
140
68
19
24
110
130
240
370
0.38
0.70
0.45
0.23
0.66
1.4
–
1.1
1.3
2.3
8.2
1.5
0.63
1.4
0.69
0.77
0.08
0.40
0.80
0.50
0.25
0.75
0.0026
0.00048
0.53
–
0.16
0.69
4.9
0.11
6.5
1.40
0.82
0.53
2.70
0.33
3.1
9.5
Dec-20 Mineral Resources
Dec-20 Inferred Resource
Dec-19 Inferred Resource
Copper Inferred Mineral Resources
Operational Provinces
Ridgeway Underground 2
Big Cadia 5
Total Cadia Province
Main Dome Open Pit (incl. stockpiles) 6
West Dome Open Pit 7
Telfer Underground 8
Havieron (40%) 9
Camp Dome 12
O’Callaghans 11
Total Telfer Province
Total Operational Provinces
Non-Operational Provinces
WGJV – Golpu(50%) 16
WGJV – Nambonga (50%) 18
Total WGJV Province
Namosi JV Waisoi (72.74%) 19
Namosi JV Wainaulo (72.74%) 20
Total Namosi JV Province
Total Non-Operational Provinces
Total Copper Inferred Mineral Resources
Dry
Tonnes
(million)
Copper
Grade
(% Cu)
Insitu Copper
(million
tonnes)
Dry
Tonnes
(million)
Copper
Grade
(% Cu)
Insitu Copper
(million
tonnes)
41
11
52
–
11
15
21
14
9.0
70
120
68
24
92
130
210
330
430
550
0.40
0.52
0.43
–
0.07
0.53
0.31
0.37
0.24
0.32
0.37
0.85
0.20
0.68
0.27
0.43
0.37
0.44
0.42
0.17
0.058
0.22
–
0.0083
0.081
0.064
0.052
0.022
0.23
0.46
0.58
0.047
0.62
0.33
0.89
1.2
1.8
2.3
41
11
52
0.35
0.023
11
–
14
9.0
35
86
68
24
92
120
210
330
420
510
0.40
0.52
0.43
0.012
0.058
0.43
–
0.37
0.24
0.35
0.40
0.85
0.20
0.68
0.27
0.43
0.37
0.44
0.43
0.17
0.058
0.23
0.000041
0.000013
0.049
–
0.052
0.022
0.12
0.35
0.58
0.047
0.62
0.33
0.89
1.2
1.8
2.2
Mineral Resources and Ore Reserves continuedNewcrest Annual Report 2021 37
Dec-20 Mineral Resources
Dec-20 Inferred Resource
Dec-19 Inferred Resource
Silver Inferred Mineral Resources
Operational Provinces
Ridgeway Underground 2
Gosowong 15
Total Operational Provinces
Non-Operational Provinces
MMJV – Golpu (50%) 16
MMJV – Wafi (50%) 17
Total WGJV Province
Total Non-Operational Provinces
Total Silver Inferred Mineral Resources
Dry
Tonnes
(million)
Silver
Grade
(g/t Ag)
Insitu Silver
(million
ounces)
Dry
Tonnes
(million)
Silver
Grade
(g/t Ag)
Insitu Silver
(million
ounces)
41
–
41
68
19
87
87
130
0.43
–
0.43
1.1
4.2
1.7
1.7
1.3
0.56
–
0.56
2.3
2.5
4.8
4.8
5.4
41
0.40
41
68
19
87
87
130
0.43
11
0.53
1.1
4.2
1.7
1.7
1.3
0.56
0.14
0.70
2.3
2.5
4.8
4.8
5.5
Dec-20 Mineral Resources
Tonnes
Grade
Contained Metal
Polymetallic Inferred
Mineral Resources
O’Callaghans 11
Inferred
Dec 20 Polymetallic Inferred
Mineral Resources
Inferred
Dec-19 Polymetallic Inferred
Mineral Resources
Dry
Tonnes
(million)
Tungsten
Trioxide
Grade
(% WO₃)
Zinc
Grade
(% Zn)
Lead
Grade
(% Pb)
Insitu
Tungsten
Trioxide
(million
tonnes)
Insitu
Zinc
(million
tonnes)
Insitu
Lead
(million
tonnes)
9.0
9.0
9.0
9.0
0.25
0.25
0.25
0.25
0.19
0.19
0.19
0.19
0.11
0.11
0.11
0.11
0.023
0.017
0.0097
0.023
0.023
0.017
0.017
0.0097
0.0097
0.023
0.017
0.0097
Note: As per Newcrest’s Annual Statement of Mineral Resources and Ore Reserves as at 31 December 2020. Refer to Page 40 for the Mineral Resource Endnotes. The Mineral
Resource Endnotes include additional information on each Mineral Resource listed. Data is reported to two significant figures to reflect appropriate precision in the estimate
and this may cause some apparent discrepancies in totals.
A Newcrest recently announced an updated Ore Reserve and Mineral Resource estimate for Cadia East (refer to Newcrest release titled “Cadia PC1-2 Pre-Feasibility Study
delivers attractive returns” dated 19 August 2021). The reserves for Cadia East comprise a portion of the reserves for the Cadia operations. The estimates included in that
release are not reflected in the tables in this Annual Report (as estimates for the remainder of the Cadia operations have not been updated since their effective date) and
supersede the estimates shown in the tables in this Annual Report for Cadia East.
B Gosowong (inclusive of Toguraci and Kencana) is owned and operated by PT Nusa Halmahera Minerals, an incorporated joint venture company (Newcrest 75%). The
figures shown represent 100% of the Mineral Resource. On 31 January 2020 Newcrest announced that it had agreed to sell its interest in PT Nusa Halmahera Minerals
to PT Indotan Halmahera Bangkit (refer market release “Newcrest agrees to divest Gosowong for $90m” dated 31 January 2020). Newcrest finalised the divestment of
Gosowong on 4 March 2020.
C WGJV refers to projects owned by the Morobe Mining unincorporated joint ventures between subsidiaries of Newcrest (50%) and Harmony Gold Mining Company Limited
(50%). The figures shown represent 50% of the Mineral Resource.
D Namosi refers to the Namosi unincorporated joint venture, in which Newcrest has a 72.74% interest. The figures shown represent 72.74% of the Mineral Resource at
December 2020 compared to 72.49% of the Mineral Resource at December 2019.
Mineral Resources and Ore Reserves 38
Ore Reserves as at 31 December 2020
Dec-20 Ore Reserves
Proved Reserve
Probable Reserve
Dec-20 Total Reserve
Dec-19 Total Reserve
Gold Ore Reserves
Operational Provinces
Cadia East Underground 21
Ridgeway Underground 22
Total Cadia Province
Main Dome Open Pit
(incl. stockpiles) 23
West Dome Open Pit 24
Telfer Underground 25
Total Telfer Province
Lihir Open Pit 27
Lihir Stockpiles 28
Total Lihir Province
Gosowong 29
Total Operational
Provinces
Dry
Tonnes
(million)
Gold
Grade
(g/t Au)
Insitu
Gold
(million
ounces)
Dry
Tonnes
(million)
Gold
Grade
(g/t Au)
Insitu
Gold
(million
ounces)
Dry
Tonnes
(million)
Gold
Grade
(g/t Au)
Insitu
Gold
(million
ounces)
Dry
Tonnes
(million)
Gold
Grade
(g/t Au)
Insitu
Gold
(million
ounces)
–
–
–
8.8
–
–
8.8
–
67
67
–
–
–
–
0.39
–
–
0.39
–
2.0
2.0
–
–
–
–
1,300
80
1,400
0.11
–
–
0.11
–
4.2
4.2
–
1.9
37
3.9
42
230
11
240
–
0.44
0.54
0.44
0.44
0.69
1.3
0.74
2.4
1.6
2.4
–
19
1.4
20
1,300
80
1,400
0.027
0.81
0.17
1.0
18
0.56
18
11
37
3.9
51
230
78
310
–
0.44
0.54
0.44
0.40
0.69
1.3
0.68
2.4
1.9
2.3
–
19
1.4
20
0.14
0.81
0.17
1.1
18
4.8
22
–
1,400
80
1,500
7.0
47
1.5
55
230
83
320
1.2
0.45
0.54
0.46
0.44
0.77
2.3
0.77
2.4
1.9
2.3
7.5
20
1.4
21
0.099
1.2
0.11
1.4
18
5.2
23
0.30
76
1.8
4.4
1,700
0.72
39
1,800
0.77
44
1,800
0.79
46
Non-Operational Provinces
MMJV – Golpu (50%) 30
Total Non-Operational
Provinces
Total Gold Ore Reserves
–
–
–
76
–
1.8
–
–
200
0.86
5.5
200
0.86
5.5
200
0.86
5.5
200
4.4
1,900
0.86
0.74
5.5
45
200
2,000
0.86
0.78
5.5
200
49
2,000
0.86
0.80
5.5
52
Dec-20 Ore Reserves
Proved Reserve
Probable Reserve
Dec-20 Total Reserve
Dec-19 Total Reserve
Dry
Tonnes
(million)
Copper
Grade
(% Cu)
Insitu
Copper
(million
tonnes)
Dry
Tonnes
(million)
Copper
Grade
(% Cu)
Insitu
Copper
(million
tonnes)
Dry
Tonnes
(million)
Copper
Grade
(% Cu)
Insitu
Copper
(million
tonnes)
Dry
Tonnes
(million)
Copper
Grade
(% Cu)
Insitu
Copper
(million
tonnes)
Copper Ore Reserves
Operational Provinces
Cadia East Underground 21
Ridgeway Underground 22
Total Cadia Province
Main Dome Open Pit
(incl. stockpiles) 23
West Dome Open Pit 24
Telfer Underground 25
O’Callaghans 26
–
–
–
8.8
–
–
–
–
–
–
–
–
–
1,300
80
1,400
0.29
0.28
0.29
3.9
0.23
1,300
80
4.1
1,400
0.29
0.28
0.29
3.9
0.23
1,400
80
4.1
1,500
0.29
0.28
0.29
4.0
0.23
4.3
0.072
–
–
–
0.0064
–
–
–
1.9
37
3.9
44
86
0.082
0.073
0.24
0.29
0.0016
0.027
0.0092
0.13
0.19
0.17
11
37
3.9
44
95
0.074
0.073
0.24
0.29
0.0079
0.027
0.0092
0.13
0.18
0.17
7.0
47
1.5
44
99
0.094
0.080
0.33
0.29
0.0065
0.037
0.0051
0.13
0.18
0.18
Total Telfer Province
8.8
0.072
0.0064
Total Operational
Provinces
Non-Operational Provinces
MMJV – Golpu (50%) 30
Total Non-Operational
Provinces
Total Copper Ore
Reserves
8.8
0.072
0.0064
1,500
0.29
4.3
1,500
0.28
4.3
1,500
0.29
4.4
–
–
–
–
–
–
200
1.2
2.5
200
1.2
2.5
200
1.2
2.5
200
1.2
2.5
200
1.2
2.5
200
1.2
2.5
8.8
0.072 0.0064
1,700
0.40
6.7
1,700
0.39
6.8
1,700
0.39
6.9
Mineral Resources and Ore Reserves continuedNewcrest Annual Report 2021 39
Dec-20 Ore Reserves
Proved Reserve
Probable Reserve
Dec-20 Total Reserve
Dec-19 Total Reserve
Silver Ore Reserves
Operational Provinces
Cadia East Underground 21
Ridgeway Underground 22
Total Cadia Province
Gosowong 29
Total Operational Provinces
Total Silver Ore Reserves
Dry
Tonnes
(million)
Silver
Grade
(g/t Ag)
Insitu
Silver
(million
ounces)
Dry
Tonnes
(million)
Silver
Grade
(g/t Ag)
Insitu
Silver
(million
ounces)
Dry
Tonnes
(million)
Silver
Grade
(g/t Ag)
Insitu
Silver
(million
ounces)
Dry
Tonnes
(million)
Silver
Grade
(g/t Ag)
Insitu
Silver
(million
ounces)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,300
80
1,400
–
1,400
1,400
0.77
0.66
0.77
–
0.77
0.77
33
1.7
35
–
35
35
1,300
80
1,400
–
1,400
1,400
0.77
0.66
0.77
–
0.77
0.77
33
1.7
35
–
35
35
1,400
80
1,500
1.2
1,500
1,500
0.78
0.66
0.77
34
1.7
36
11
0.43
0.78
0.78
36
36
Dec-20 Ore Reserves
Proved Reserve
Probable Reserve
Dec-20 Total Reserve
Dec-19 Total Reserve
Dry
Tonnes
(million)
Molyb-
denum
Grade
(ppm Mo)
Insitu
Molyb-
denum
(million
tonnes)
Dry
Tonnes
(million)
Molyb-
denum
Grade
(ppm Mo)
Insitu
Molyb-
denum
(million
tonnes)
Dry
Tonnes
(million)
Molyb-
denum
Grade
(ppm Mo)
Insitu
Molyb-
denum
(million
tonnes)
Dry
Tonnes
(million)
Molyb-
denum
Grade
(ppm Mo)
Insitu
Molyb-
denum
(million
tonnes)
–
–
–
–
–
–
–
1,300
88
0.12
1,300
88
0.12
1,300
88
0.12
–
1,300
88
0.12
1,300
88
0.12
1,300
88
0.12
–
1,300
88
0.12
1,300
88
0.12
1,300
88
0.12
Molybdenum Ore Reserves
Operational Provinces
Cadia East Underground 21
Total Operational
Provinces
Total Molybdenum
Ore Reserves
Dec-20 Ore Reserves
Tonnes
Grade
Contained Metal
Polymetallic Ore Reserves
O’Callaghans 26
Proved
Probable
Total Polymetallic Ore Reserves
Proved
Probable
Dec-19 Total Polymetallic
Ore Reserves
Dry
Tonnes
(million)
Tungsten
Trioxide
Grade
(% WO₃)
–
0.36
0.36
–
0.36
–
44
44
–
44
44
Zinc
Grade
(% Zn)
–
0.65
0.65
–
0.65
Lead
Grade
(% Pb)
–
0.32
0.32
–
0.32
Insitu
Tungsten
Trioxide
(million
tonnes)
Insitu
Zinc
(million
tonnes)
Insitu
Lead
(million
tonnes)
–
0.16
0.16
–
0.16
0.16
–
0.29
0.29
–
0.29
0.29
–
0.14
0.14
–
0.14
0.14
0.36
0.65
0.32
NOTE: As per Newcrest’s Annual Statement of Mineral Resources and Ore Reserves as at 31 December 2020. Refer to Page 41 for the Ore Reserve Endnotes. The Ore Reserve
Endnotes include additional information on each Ore Reserve listed. Data is reported to two significant figures to reflect appropriate precision in the estimate and this may
cause some apparent discrepancies in totals.
A Newcrest recently announced an updated Ore Reserve and Mineral Resource estimate for Cadia East (refer to Newcrest release titled “Cadia PC1-2 Pre-Feasibility Study
delivers attractive returns” dated 19 August 2021). The reserves for Cadia East comprise a portion of the reserves for the Cadia operations. The estimates included in that
release are not reflected in the tables in this Annual Report (as estimates for the remainder of the Cadia operations have not been updated since their effective date) and
supersede the estimates shown in the tables in this Annual Report for Cadia East.
B Gosowong (inclusive of Toguraci and Kencana) is owned and operated by PT Nusa Halmahera Minerals, an incorporated joint venture company (Newcrest 75%).
The figures shown represent 100% of the Ore Reserve. On 31 January 2020 Newcrest announced that it had agreed to sell its interest in PT Nusa Halmahera Minerals
to PT Indotan Halmahera Bangkit (refer market release “Newcrest agrees to divest Gosowong for $90m” dated 31 January 2020). Newcrest finalised the divestment
of Gosowong on 4 March 2020.
C WGJV refers to projects owned by the Morobe Mining unincorporated joint ventures between subsidiaries of Newcrest (50%) and Harmony Gold Mining Company Limited
(50%). The figures shown represent 50% of the Ore Reserve.
Mineral Resources and Ore Reserves 40
Mineral Resource Endnotes
1. Cadia East Underground Mineral Resource-JORC Competent Person: Luke Barbetti. Underground block cave operation, Cadia, NSW, Australia. For key assumptions,
parameters and methods used to estimate the Mineral Resource refer to Cadia Operations, New South Wales, Australia, NI 43-101 Technical Report, Report effective date
30 June 2020.
2. Ridgeway Underground Mineral Resource-JORC Competent Person: Luke Barbetti. Underground block cave on Care and Maintenance, Cadia, NSW, Australia. For key
assumptions, parameters and methods used to estimate the Mineral Resource refer to Cadia Operations, New South Wales, Australia, NI 43-101 Technical Report, Report
effective date 30 June 2020.
3. Cadia Extended Underground Mineral Resource-JORC Competent Person: Luke Barbetti. Underground undeveloped project, Cadia, NSW, Australia. For key assumptions,
parameters and methods used to estimate the Mineral Resource refer to Cadia Operations, New South Wales, Australia, NI 43-101 Technical Report, Report effective date
30 June 2020.
4. Cadia Hill Stockpiles Ridgeway Underground Mineral Resource-JORC Competent Person: Luke Barbetti. Open pit stockpiles from completed Cadia Hill Open pit operation,
Cadia, NSW, Australia. For key assumptions, parameters and methods used to estimate the Mineral Resource refer to Cadia Operations, New South Wales, Australia,
NI 43-101 Technical Report, Report effective date 30 June 2020.
5. Big Cadia Open Pit Mineral Resource-JORC Competent Person: Luke Barbetti. Open pit undeveloped project, Cadia, NSW, Australia. For key assumptions, parameters and
methods used to estimate the Mineral Resource refer to Cadia Operations, New South Wales, Australia, NI 43-101 Technical Report, Report effective date 30 June 2020.
6. Main Dome Stockpiles Mineral Resource-JORC Competent Person: Ashok Doorgapershad. Open pit stockpiles from completed Main Dome open pit operation, Telfer, WA,
Australia. Mineral Resource is reported at a Net Smelter Return cut-off of A$17.8/t milled based on variable gold and copper contributions.
7. West Dome Open Pit Mineral Resource-JORC Competent Person: Ashok Doorgapershad. Open pit operation, Telfer, WA, Australia. Mineral Resource is reported at a Net
Smelter Return cut-off of A$20.1/t milled based on variable gold and copper contributions.
8. Telfer Underground Mineral Resources-JORC Competent Person: Ashok Doorgapershad. Underground comprising sub-level cave and Western Flanks, South West and
M Reef stoping operations and Vertical Stockwork Corridor sub-level cave undeveloped project, Telfer, WA, Australia. Mineral Resource is reported at a Net Smelter Return
cut-off of AUD53.0/t milled for sub-level caves, A$60.0/t milled for Western Flanks and A$115.0/t milled for M Reefs based on variable gold and copper contributions.
9. Havieron Underground Mineral Resource-JORC Competent Person: Cameron Switzer. Underground undeveloped joint venture project (Newcrest equity 40%, Greatland
Gold Plc equity 60%), Telfer, WA, Australia. Mineral Resource is reported at a Net Smelter Return cut-off of A$50.0/t milled based on variable gold and copper contributions.
10. Satellites Open Pit Mineral Resources-JORC Competent Person: Ashok Doorgapershad. Open pit undeveloped project, Telfer, WA, Australia. The Mineral Resource
comprised of three deposits (Ironclad, Big Tree and Dolphy) is reported above marginal cut-off grades of 0.20g/t Au in Oxide material and 0.56g/t Au for transitional or
fresh material based on dump leach processing.
11. O’Callaghans Underground Mineral Resource-JORC Competent Person: Ashok Doorgapershad. Underground polymetallic underdeveloped project, Telfer, WA, Australia.
Mineral Resource is reported at a Net Smelter Return cut-off of A$$54.9/t milled based on variable copper, tungsten, lead and zinc contributions.
12. Camp Dome Mineral Resource-JORC Competent Person: Ashok Doorgapershad. Open pit undeveloped project, Telfer, WA, Australia. Mineral Resource has been reported
above a 0.13% copper cut-off based on dump leach processing.
13. Lihir Open Pit Mineral Resource-JORC Competent Person: Ben Likia. Open pit operation, Aniolam Island, PNG. For key assumptions, parameters and methods used
to estimate the Mineral Resource refer to Lihir Operations, Aniolam Island, Papua New Guinea, NI 43-101 Technical Report, Report effective date 30 June 2020.
14. Lihir Open Pit Stockpiles-JORC Competent Person: Ben Likia. Open pit stockpiles from current operation, Aniolam Island, PNG. For key assumptions, parameters
and methods used to estimate the Mineral Resources refer to Lihir Operations, Aniolam Island, Papua New Guinea, NI 43-101 Technical Report, Report effective date
30 June 2020.
15. Gosowong Mineral Resource. Gosowong is owned and operated by PT Nusa Halmahera Minerals, an incorporated joint venture company (Newcrest 75%). The figures
shown represent 100% of the Mineral Resource at 31 December 2019. On 5 March 2020 Newcrest announced that it had completed the divestment of Gosowong (refer
to Market release “Finalisation of Gosowong Sale” dated 5 March 2020) and therefore the resource has been removed.
16. Golpu Underground Mineral Resource-JORC Competent Person David Finn. Underground block cave undeveloped project, Morobe, PNG. For key assumptions,
parameters and methods used to estimate the Mineral Resource refer to Wafi-Golpu Project, Morobe Province, Papua New Guinea, NI 43-101 Technical Report, Report
effective date 30 June 2020.
17. Wafi Open Pit Mineral Resource-JORC Competent Person Greg Job. Open pit undeveloped project, Morobe, PNG. For key assumptions, parameters and methods used
to estimate the Mineral Resource refer to Wafi-Golpu Project, Morobe Province, Papua New Guinea, NI 43-101 Technical Report, Report effective date 30 June 2020.
18. Nambonga Underground Mineral Resource-JORC Competent Person Greg Job. Underground block cave undeveloped project, Morobe, PNG. For key assumptions,
parameters and methods used to estimate the Mineral Resource refer to Wafi-Golpu Project, Morobe Province, Papua New Guinea, NI 43-101 Technical Report, Report
effective date 30 June 2020.
19. Waisoi Open Pit Mineral Resource-JORC Competent Person Vik Singh. Open pit undeveloped project, Namosi, Fiji. Mineral Resource is reported at a Net Smelter Return
cut-off of US$11.0/t based on variable gold and copper contributions.
20. Wainaulo Underground Mineral Resource-JORC Competent Person Vik Singh. Underground block cave undeveloped project, Namosi, Fiji. Mineral Resource is reported
at a Net Smelter Return cut-off of US$23.2/t.
Mineral Resources and Ore Reserves continuedNewcrest Annual Report 2021 41
Ore Reserve Endnotes
21. Cadia East Underground Ore Reserve-JORC Competent Person: Ian Austen. Underground block cave operation, Cadia, NSW, Australia. For key assumptions, parameters
and methods used to estimate the Ore Reserves refer to Cadia Operations, New South Wales, Australia, NI 43-101 Technical Report, Report effective date 30 June 2020.
22. Ridgeway Underground Ore Reserve-JORC Competent Person: Geoffrey Newcombe. Underground block cave on Care and Maintenance, Cadia, NSW, Australia. For key
assumptions, parameters and methods used to estimate the Ore Reserves refer to Cadia Operations, New South Wales, Australia, NI 43-101 Technical Report, Report
effective date 30 June 2020.
23. Main Dome Stockpiles Ore Reserve-JORC Competent Person: Glenn Paterson-Kane. Open pit stockpiles from completed Main Dome open pit operation, Telfer, WA,
Australia. Ore Reserve is reported at a Net Smelter Return cut-off of A$17.8/t milled based on variable gold and copper contributions.
24. West Dome Open Pit Ore Reserve-JORC Competent Person: Glenn Paterson-Kane. Open pit operation, Telfer, WA, Australia. Ore Reserve is reported at a Net Smelter
Return cut-off of A$20.1/t milled based on variable gold and copper contributions.
25. Telfer Underground Ore Reserve-JORC Competent Person: Gito Patani. Underground comprising sub-level cave and Western Flanks, South West and M Reef stoping
operations, Telfer, WA, Australia. Ore Reserve is reported at a Net Smelter Return cut-off of A$53.0/t milled for sub-level cave, A$60.0/t milled for Western Flanks and
A$115.0/t milled for M Reefs based on variable gold and copper contributions.
26. O’Callaghans Underground Ore Reserve-JORC Competent Person: Michael Sykes. Underground polymetallic underdeveloped project, Telfer, WA, Australia. Ore Reserve
is reported at a Net Smelter Return cut-off of A$54.9/t milled based on variable copper, tungsten, lead and zinc contributions.
27. Lihir Open Pit Ore Reserve-JORC Competent Person: David Grigg. Open pit operation, Lihir, PNG. For key assumptions, parameters and methods used to estimate the
Ore Reserve refer to Lihir Operations, Aniolam Island, Papua New Guinea, NI 43-101 Technical Report, Report effective date 30 June 2020.
28. Lihir Open Pit Stockpiles Ore Reserve-JORC Competent Person: David Grigg. Open pit stockpiles from current operation, Lihir, PNG. For key assumptions, parameters and
methods used to estimate the Ore Reserve refer to Lihir Operations, Aniolam Island, Papua New Guinea, NI 43-101 Technical Report, Report effective date 30 June 2020.
29. Gosowong Ore Reserve. Gosowong is owned and operated by PT Nusa Halmahera Minerals, an incorporated joint venture company (Newcrest 75%). The figures shown
represent 100% of the Ore Reserve at 31 December 2019. On 5 March 2020 Newcrest announced that it had completed the divestment of Gosowong (refer to Market
release “Finalisation of Gosowong Sale” dated 5 March 2020) and therefore the reserve has been removed.
30. Golpu Underground Ore Reserve-JORC Competent Person: Pasqualino Manca. Underground block cave undeveloped project, Morobe, PNG. For key assumptions,
parameters and methods used to estimate the Ore Reserve refer to Wafi-Golpu Project, Morobe Province, Papua New Guinea, NI 43-101 Technical Report, Report effective
date 30 June 2020.
Mineral Resources and Ore Reserves 42
The Board believes that adherence by Newcrest and its people to the
highest standards of corporate governance is critical in order to achieve
its vision. Accordingly, Newcrest has a detailed governance framework,
which is regularly reviewed and adapted to developments in market
practice and regulation.
As at the date of lodgement of this Report, Newcrest’s governance
framework complies with the Corporate Governance Principles and
Recommendations (4th edition) published by the ASX Corporate
Governance Council. Further information in relation to Newcrest’s
governance framework is provided in the Corporate Governance
Statement, which was lodged with ASX on the date of lodgement of this
Annual Report and is available in the corporate governance section of
the Newcrest website at www.newcrest.com. The corporate governance
section of the Newcrest website also provides further information in
relation to Newcrest’s governance framework, including Board and
Board Committee Charters and key policies.
Corporate Governance StatementNewcrest Annual Report 2021 Directors’ Report
Directors’ Report
43
Directors’ Report
Operating and Financial Review
Remuneration Report
Consolidated Financial Statements
Independent Auditor’s Report
44
48
96
123
185
44
Directors’ Report
The Directors present their report together with the consolidated financial statements of the Newcrest Mining Limited Group, comprising Newcrest Mining
Limited (‘the Company’) and its controlled entities (‘Newcrest’ or ‘the Group’), for the year ended 30 June 2021.
Directors
The Directors of the Company during the year ended 30 June 2021, and up to the date of this report are set out below. All Directors held their position
as a Director throughout the entire year and up to the date of this report unless otherwise stated.
Peter Hay
Non-Executive Director and Non-Executive Chairman
Sandeep Biswas
Managing Director and Chief Executive Officer
Gerard Bond
Finance Director and Chief Financial Officer
Philip Aiken AM
Non-Executive Director
Roger Higgins
Non-Executive Director
Sally-Anne Layman
Non-Executive Director (appointed on 1 October 2020)
Xiaoling Liu
Non-Executive Director (resigned on 11 November 2020)
Jane McAloon
Non-Executive Director (appointed on 1 July 2021)
Vickki McFadden
Non-Executive Director
Peter Tomsett
Non-Executive Director
On 5 May 2021, it was announced that Gerard Bond would leave Newcrest shortly after his tenth year in the role in early 2022.
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.
Significant Changes in the State of Affairs
and Future Developments
Refer to the Operating and Financial Review for information on the
significant changes in the state of affairs of the Group and for likely
developments and future prospects of the Group.
Consolidated Result
Subsequent Events
The profit after tax attributable to Newcrest shareholders (‘Statutory
Profit’) for the year ended 30 June 2021 was US$1,164 million (2020:
US$647 million).
Refer to the Operating and Financial Review for further details. The
Operating and Financial Review forms part of this Directors’ Report.
The financial information in the Operating and Financial Review includes
non-IFRS financial information. Explanations and reconciliations of
non-IFRS financial information to the financial statements are included
in Section 6 of the Operating and Financial Review.
Subsequent to year end, the Directors have determined to pay a final
dividend for the year ended 30 June 2021 of US 40 cents per share, which
will be fully franked. The dividend will be paid on 30 September 2021. The
total amount of the dividend is US$327 million. This dividend has not been
provided for in the 30 June 2021 financial statements.
There have been no other matters or events that have occurred
subsequent to 30 June 2021 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.
Dividends
Options
The following dividends of the Company were paid during the year:
– Final dividend for the year ended 30 June 2020 of US 17.5 cents per
share, amounting to US$143 million, was paid on 25 September 2020.
This dividend was fully franked.
– Interim dividend for the year ended 30 June 2021 of US 15.0 cents per
share, amounting to US$123 million, was paid on 25 March 2021. This
dividend was fully franked.
The Directors have determined to pay a final dividend for the year ended
30 June 2021 of US 40 cents per share, which will be fully franked. The
dividend will be paid on 30 September 2021.
The Company does not have any unissued shares or unissued interests
under option as at the date of this report, nor has it granted, or issued
shares or interests under any options during or since the end of the year.
Refer to Note 36 for the number of Performance Rights at year end.
Rounding of Amounts
Newcrest Mining Limited is a company of the kind referred to in ASIC
Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
and in accordance with that Instrument, amounts in the Directors’ Report
and the Financial Report are rounded to the nearest million dollars except
where otherwise indicated.
Newcrest Annual Report 2021 45
Non-Audit Services
During the year, Ernst & Young (external auditor to the Company), has
provided other services in addition to the statutory audit, as disclosed in
Note 38 to the financial statements. These services included:
– Assurance and agreed-upon-procedure services relating to transaction
accounting services, sustainability assurance services and audited
related assurance services.
– Non-audit services relating to sustainability, tax and other due
diligence services.
The Directors are satisfied that the provision of non-audit services
provided by the auditor is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The
Directors are satisfied that these non-audit services do not compromise
the auditor’s independence, based on advice received from the Audit and
Risk Committee, for the following reasons:
– all non-audit services have been approved by the Audit and Risk
Committee Chair prior to engagement to ensure they did not impact
on the impartiality and objectivity of the auditor;
– none of the services undermine the general principles relating to
auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants, as they did not involve reviewing or auditing
the auditor’s own work, acting in a management or decision-making
capacity for the Company, acting as an advocate for the Company or
jointly sharing economic risks and rewards; and
– Ernst & Young has individually confirmed, prior to each service
commencing, that the service does not create any independence issues
with respect to the Corporations Act 2001. They have also provided a
copy of their Auditor’s Independence Declaration, as required by the
Corporations Act 2001, for inclusion in the Annual Report.
Auditor Independence
The operations of the Group are subject to environmental regulation
under the jurisdiction of the countries in which those operations are
conducted, including Australia, Papua New Guinea (‘PNG’), Canada,
USA, Chile, Ecuador and Fiji. Each mining operation is subject to
particular environmental regulation specific to their activities as part of
their operating licence or environmental approvals. Each of our sites are
required to also manage their environmental obligations in accordance
with our corporate environmental policies and standards.
The environmental laws and regulations that cover each of our sites,
combined with our policies and standards, address the potential impact
of the Group’s activities in relation to water and air quality, noise, land
disturbance, waste and tailings management, and the potential impact
upon flora and fauna. The Group releases an annual Sustainability Report
in accordance with the Global Reporting Initiative that details our activities
in relation to management of key environmental aspects.
The Group has an internal reporting system covering all sites.
Environmental incidents are reported and assessed according to their
environmental consequence and environmental authorities are notified
where required and remedial action is undertaken.
Levels of environmental incidents are categorised based on factors such
as spill volume, incident location (onsite or offsite) and environmental
consequence. Incident numbers are based on four levels of actual
environmental consequence including: 1 (Minor), 2 (Major), 3 (Critical), and
4 (Catastrophic). Level 1 Minor incidents are tracked and managed at a
site level and are not reported in aggregate for the Group. The number of
incidents reported by level based on actual environmental consequence
for the 2021 financial year and 2020 comparative year is shown in the
following table.
Category
Level 2
Level 3
Level 4
2021 – Number of incidents
2020 – Number of incidents
6
6
0
0
0
0
A copy of the Auditor’s Independence Declaration, as required by the
Corporations Act 2001, is included after this report.
Indemnification and Insurance of Directors
and Officers
Currency
All references to dollars in the Directors’ Report and the Financial Report
are references to US dollars ($ or US$) unless otherwise specified.
Environmental Regulation and Performance
The Managing Director reports to the Board on all significant safety,
health and environmental incidents. The Board also has a Safety and
Sustainability Committee which has oversight of the safety, health
and environmental performance of the Group and meets at least four
times per year.
Newcrest indemnifies each Director, Secretary and Executive Officer of
Newcrest and its subsidiaries against any liability related to, or arising
out of, the conduct of the business of Newcrest or its subsidiaries or the
discharge of the Director’s, Secretary’s or Executive Officer’s duties. These
indemnities are given to the extent that Newcrest is permitted by law
and its Constitution to do so. No payment has been made to indemnify
any Director, Secretary and Executive Officer of the Company and its
subsidiaries during or since the end of the financial year.
Newcrest maintains a Directors’ and Officers’ insurance policy which,
subject to some exceptions, provides insurance cover to past, present or
future Directors, Secretaries and Executive Officers of Newcrest and its
subsidiaries. The Company has paid an insurance premium for the policy.
Indemnification of Auditors
To the extent permitted by law, the Company has agreed to indemnify
its auditors, Ernst & Young, as part of the terms of its audit engagement
agreement against claims by third parties arising from the audit (for an
unspecified amount). No payment has been made to indemnify Ernst &
Young during or since the end of the financial year.
Directors’ Report 46
Information on Directors
Details of the Directors’ qualifications, experience and special responsibilities are set out on pages 26 to 28. These details have been updated since
19 August 2021.
Information on Former Directors*
Xiaoling Liu
Independent Non-Executive Director
PhD (Extractive Metallurgy), BEng (Extractive Metallurgy), GAICD,
FAusIMM, FTSE
Dr Liu was appointed to the Board as a Non-Executive Director in
September 2015 and resigned effective 11 November 2020. She was
a member of the Human Resources and Remuneration Committee and
the Audit and Risk Committee.
Skills, experience and expertise
Dr Liu has extensive executive experience in leading global mining and
processing businesses. Her last executive role was as President and Chief
Executive Officer of Rio Tinto Minerals based in Denver, where she ran
integrated mining, processing and supply chain operations in the United
States, Europe and Asia. Prior to her last executive role, Dr Liu held senior
management and operational roles at Rio Tinto throughout her career
including President – Primary Metal Pacific, Managing Director – Global
Technical Services and General Manager Bell Bay Smelter.
Current Listed Directorships
– Director of Incitec Pivot Limited (from 2019)
– Director of South 32 Limited (from 2017)
Other Current Directorships/Appointments
– Chancellor of Queensland University of Technology (from 2020)
– Member of the Australian Academy of Technological Sciences
and Engineering (from 2017)
Former Listed Directorships (last 3 years)
– Director of Iluka Resources Limited (2016–2019)
Directors’ Interests
Information on Company Secretary and
Deputy Company Secretary
Maria (Ria) Sanz Perez
Chief Legal, Risk & Compliance Officer and Company Secretary
BComm, LLB, HDipTax, AMP (Harvard)
Ms Sanz Perez joined Newcrest in July 2020 as Chief Legal, Risk &
Compliance Officer and Company Secretary. Prior to joining Newcrest,
Ms Sanz Perez was the Executive Vice President, General Counsel,
Compliance and Company Secretary at AngloGold Ashanti Ltd
from 2011 to 2020. Prior to joining AngloGold Ashanti Ltd, she held
several senior roles with leading companies such as Sappi Ltd and
African Oxygen Limited.
Ms Sanz Perez is a seasoned executive who has advised public boards,
CEOs and executive committees on governance, risk, sustainability,
compliance, mergers and acquisitions, litigation, regulatory and
commercial legal matters. She has had experience leading
multijurisdictional teams and has regulatory expertise across Africa,
the United States, Australia and the UK.
Claire Hannon
Deputy Company Secretary
BSc, LLB (Hons), Grad. Dip. App Fin, GAICD
Ms Hannon joined Newcrest in January 2013 as Corporate Counsel
in the legal team. She was appointed as an additional Company
Secretary in August 2015. Prior to joining Newcrest, Ms Hannon
worked as a lawyer in the Melbourne office of Ashurst and the
London office of Clifford Chance, specialising in mergers and
acquisitions and corporate law.
As at the date of this report, the interest of each Director in the shares and rights of Newcrest Mining Limited were:
Director
Peter Hay
Sandeep Biswas
Gerard Bond
Philip Aiken AM
Roger Higgins
Sally-Anne Layman
Jane McAloon
Vickki McFadden
Peter Tomsett
Former Director
Xiaoling Liu (2)
Number of
Ordinary Shares
Nature of Interest
Over Ordinary Shares (1)
Number of Rights
Nature of
Interest
57,191
581,054
135,566
18,696
13,675
4,150
3,891
11,446
21,500
14,172
Direct and Indirect
Direct and Indirect
Direct and Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
–
498,738
128,779
–
–
–
–
–
–
–
–
Direct
Direct
–
–
–
–
–
–
–
(1) Represents Sandeep Biswas’ and Gerard Bond’s unvested performance rights granted pursuant to the Company’s Long Term Incentive plans in the 2019, 2020 and 2021
financial years respectively.
(2) Number as at her resignation date of 11 November 2020.
* Information provided is as at the date of cessation as a Director of the Company.
Directors’ Report continuedNewcrest Annual Report 2021 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 were:
Directors’ Meetings
Audit & Risk
Committees of the Board
Human Resources
& Remuneration
Safety &
Sustainability
Nominations
Special Board
Committees (1)
Director
Peter Hay
Sandeep Biswas
Gerard Bond
Philip Aiken AM
Roger Higgins
Sally-Anne Layman (3)
Xiaoling Liu (4)
Vickki McFadden
Peter Tomsett
A
11
11
11
11
11
8
5
11
11
B
11
11
11
11
11
8
5
11
11
A
–
–
–
–
–
5
2
7
7
B
–
–
–
–
–
5
2
7
7
A
–
–
–
7
7
–
3
7
–
B
–
–
–
7
7
–
3
7
–
A
–
–
–
3 (2)
4
1
–
–
4
B
–
–
–
4
4
1
–
–
4
A
5
–
–
5
–
–
1
–
4
B
5
–
–
5
–
–
1
–
4
A
4
4
4
–
–
–
–
4
–
47
B
4
4
4
–
–
–
–
4
–
Column A – Indicates the number of meetings attended whilst a Director/Committee member.
Column B – Indicates the number of meetings held whilst a Director/Committee member.
(1) These are out of session Committee meetings and include meetings of the Board Executive Committee and other Committees established from time to time to deal with
ad-hoc matters delegated to the relevant Committee by the Board. The membership of such special Committees may vary.
(2) Meeting missed due to personal circumstances.
(3) Sally-Anne Layman was appointed as a Director on 1 October 2020.
(4) Xiaoling Liu resigned as a Director effective 11 November 2020.
Details of the functions and memberships of the Committees of the Board are presented in Newcrest’s Corporate Governance Statement.
Remuneration Report
The Remuneration Report is set out on pages 96 to 121 and forms part of this Directors’ Report.
This report is signed in accordance with a resolution of the Directors.
Peter Hay
Chairman
19 August 2021
Melbourne
Sandeep Biswas
Managing Director and Chief Executive Officer
Directors’ Report
48
OPERATING AND FINANCIAL REVIEW
To assist readers to better understand the financial performance of the underlying operating assets of Newcrest, the financial information in this Operating
and Financial Review includes non-IFRS financial information. Explanations and reconciliations of non-IFRS information to the financial statements are set
out in Section 6.
Unless otherwise stated, all financial data presented in this Operating and Financial Review is quoted in US$ and the prior period represents the 12 months
ended 30 June 2020.
Section 1 Endnotes are located at the end of the section.
1. Summary of Results For the 12 Months ended 30 June 2021 1,2,3
Key points
Strong operating and financial performance
– Gold production of 2.1 million ounces 4
– Record copper production of 142.7 thousand tonnes
– Record Statutory profit 5 of $1.2 billion, 80% higher than the prior period
– Record Underlying profit 6 of $1.2 billion, 55% higher than the prior period
– AISC 4,6,7 of $911 per ounce, 6% higher than the prior period
– Record AISC margin 6,7,8 of $876 per ounce, 31% higher than the prior period
– Record Cash flow from operating activities of $2.3 billion, 56% higher than the prior period
– Record free cash flow 6 of $1.1 billion
– Record mine and mill performance at Cadia, underpinning record copper production and its lowest reported annual All-In Sustaining Cost (AISC) of
negative $109 per ounce
Advancing multiple organic growth options
– Havieron and Red Chris early works projects progressing well, with declines commencing
– Havieron initial Inferred Mineral Resource estimate of 3.4 million ounces of contained gold and 160 thousand tonnes of contained copper 9,10,11
– Red Chris Measured and Indicated Mineral Resource estimate of 13 million ounces of contained gold and 3.7 million tonnes of contained copper 11,12,13
– Lihir Mine Optimisation Study identifies potential to unlock additional high grade mineralisation 14
– Progression of the Expansion Project and commissioning of the Molybdenum Plant at Cadia
Balance sheet positioned to support growth
– Strong balance sheet, with a net cash position of $176 million as at 30 June 2021
– Significant liquidity with $3.9 billion in cash and committed undrawn bank facilities
– Early repayment of 2022 Corporate Bonds and renegotiation of Bilateral Bank debt facilities
– Next corporate bond debt repayment not due until May 2030
Increased dividends to shareholders
– Earnings per share of 142.5 cents, 71% higher than the prior period
– Total dividends per share for 2021 financial year of 55 cents per share, 120% higher than the prior period
– Sixth consecutive year of increased annual dividends to shareholders
Directors’ Report continuedNewcrest Annual Report 2021 49
Group production – gold
– copper
Revenue
EBITDA
EBIT
Statutory profit
Underlying profit
Cash flow from operating activities
Free cash flow*
EBITDA margin
EBIT margin
All-In Sustaining Cost
All-In Sustaining margin
Realised gold price
Realised copper price
Average exchange rate
Average exchange rate
Average exchange rate
Closing exchange rate
Earnings per share (basic)
Earnings per share (diluted)
Dividends paid per share
Cash and cash equivalents
(Net cash) or net debt
Leverage ratio
Gearing
ROCE
Interest coverage ratio
Total equity
Endnote
UoM
2021
2020
Change
Change %
For the 12 months ended 30 June
4
6
6
5
6
6
6
6
4,6,7
6,7,8
16
16
6
6
6
oz
t
US$m
US$m
US$m
US$m
US$m
US$m
US$m
%
%
US$/oz
US$/oz
US$/oz
US$/lb
AUD:USD
PGK:USD
CAD:USD
AUD:USD
US$ cents
US$ cents
US$ cents
US$m
US$m
times
%
%
times
US$m
2,093,322
142,724
4,576
2,443
1,770
1,164
1,164
2,302
1,104
53.4
38.7
911
876
1,796
3.66
0.7467
0.2854
0.7789
0.7518
142.5
142.1
32.5
1,873
(176)
(0.1)
(1.8)
18.5
40.7
10,124
2,171,118
137,623
3,922
1,835
1,191
647
750
1,471
(621)
46.8
30.4
862
668
1,530
2.57
0.6715
0.2927
0.7452
0.6863
83.4
83.1
22.0
1,451
624
0.3
6.8
13.8
22.7
8,613
(77,796)
5,101
654
608
579
517
414
831
1,725
6.6
8.3
49
208
266
1.09
0.0752
(0.0073)
0.0337
0.0655
59.1
59.0
10.5
422
(800)
(0.4)
(8.6)
4.7
18.0
1,511
(4%)
4%
17%
33%
49%
80%
55%
56%
278%
14%
27%
6%
31%
17%
42%
11%
(2%)
5%
10%
71%
71%
48%
29%
(128%)
(133%)
(126%)
34%
79%
18%
* Free cash flow in the prior period includes the payment for the acquisition of Red Chris (70% ownership) of $769 million 17, the acquisition of Fruta del Norte finance facilities
of $460 million 18 , further investments in Lundin Gold of $79 million, net proceeds from the divestment of Gosowong of $20 million 19 and a payment of $3 million for an
interest in Antipa Minerals Ltd.
Full year results
In line with Newcrest’s Purpose of “Creating a brighter future for people
through safe and responsible mining”, Newcrest delivered another
twelve-month period free of fatalities or life-changing injuries and reported
an industry-leading low 20 Total Recordable Injury Frequency Rate (TRIFR)
of 2.26 per million hours worked.
Over the current period significant progress has been made to integrate
greenhouse gas (GHG) reduction targets across the business. GHG
Scope 1 and 2 emissions are now measured across Newcrest’s full value
chain 21 , with GHG management plans and detailed actions defined for
each operating site. A Power Purchase Agreement has been entered into
with a wind farm developer for an amount of energy from 2024 onwards
equal to a significant part of Cadia’s future projected energy requirements,
greatly assisting Newcrest’s goal of a 30% reduction in emissions intensity
by 2030 (relative to a 2018 baseline) 22. Additionally, in the current period,
Newcrest announced its goal of net zero carbon emissions by 2050.
To date, Newcrest has not experienced any material disruption to
its operations as a result of COVID-19. Some project activities have
experienced a level of disruption but to date these have been managed to
mitigate their impact on overall cost and schedule. The operating cost of
managing COVID-19 risks for the 2021 financial year was approximately
$70 million, of which $53 million related to Lihir, driven by more extensive
testing, longer quarantining periods, additional accommodation, rostering
and other labour costs to minimise risk to our people and communities and
to ensure business continuity. Newcrest continues to closely monitor and
respond to the developments around COVID-19.
Newcrest’s gold production of 2.1 million ounces was 4% lower than
the prior period, reflecting the divestment of Gosowong in the prior
period (March 2020), the expected decline in grade at Cadia, lower mill
throughput at Lihir, and lower recoveries at Telfer. This decrease in gold
production was partially offset by record annual ore tonnes mined and
record mill throughput at Cadia, the inclusion of 129,285 ounces 4 of gold
production attributable to Newcrest’s 32% equity interest in Lundin Gold
Inc. (the owner of the Fruta del Norte mine), twelve months of Red Chris
production compared to ten-and-a-half months in the prior period and
higher mill throughput at Telfer.
Directors’ Report 50
1. Summary of Results For the 12 Months ended 30 June 2021 1,2,3 continued
Full year results continued
Record copper production of 142.7 thousand tonnes was 4% higher than
the prior period, primarily driven by record annual mill throughput at Cadia,
partially offset by lower grades and recovery at Telfer and Red Chris.
Statutory profit and Underlying profit was a record $1,164 million in the
current period.
Underlying profit of $1,164 million was $414 million (or 55%) higher than
the prior period primarily driven by higher realised gold and copper
prices, favourable fair value adjustments recognised on copper derivatives
and Newcrest’s investment in the Fruta del Norte finance facilities, and
record copper production at Cadia. These benefits were partially offset by
lower gold sales volumes driven by lower production, increased income
tax expense as a result of the Company’s improved profitability in the
current period, the unfavourable impact on operating costs (including
depreciation) from the strengthening of the Australian dollar against the
US dollar, additional costs associated with COVID-19 measures, higher
treatment, refining and transportation costs and higher price-linked costs
such as royalties.
Newcrest’s AISC of $911 per ounce 4,7 was 6% higher than the prior period.
The increase in AISC per ounce reflects marginally lower gold production
and resulting sales, the unfavourable impact of the strengthening of the
Australian dollar on costs, higher sustaining capital expenditure, additional
costs associated with COVID-19 measures, a full twelve months of costs
at Red Chris, higher treatment, refining and transportation costs and
higher royalties in the current period. These higher costs were partially
offset by a higher realised copper price, record copper sales volumes at
Cadia, the divestment of Gosowong (and its higher cost of production),
and a favourable contribution from Newcrest’s 32% equity interest in
Lundin Gold Inc. (the owner of the Fruta del Norte mine). Cadia achieved a
record low annual AISC of negative $109 per ounce in the current period,
positively impacting Newcrest’s AISC despite a lower contribution of
ounces compared to the prior period.
Notwithstanding a higher AISC per ounce, Newcrest’s AISC margin per
ounce in the current period was 31% higher than the prior period as a
result of a higher realised gold price.
Cash inflow from operating activities of $2,302 million was $831 million
(or 56%) higher than the prior period. The increase reflects the benefit of
higher gold and copper prices, increased copper sales volumes at Cadia,
timing of working capital movements, lower net interest paid and lower
income tax payments. This was partially offset by lower gold sales volumes
and the unfavourable impact on costs from a stronger Australian dollar in
the current period.
Newcrest’s record free cash flow of $1,104 million was $1,725 million higher
than the prior period, with the prior period also characterised by a net cash
outflow of $1,291 million in relation to M&A growth investments compared
to $21 million in the current period.
‘Free cash flow before M&A activity’ was $455 million (or 68%) higher than
the prior period, with higher operating cash flows only partially offset by
an increased investment in major capital projects at Cadia, Lihir, Red Chris
and Havieron, higher sustaining capital at all continuing operations and
increased production stripping activity at Lihir and Red Chris.
From this free cash flow of $1,104 million, Newcrest’s cash holdings of
$1,873 million increased by $422 million in the current period following the
redemption of $380 million in corporate bonds and associated costs of
$20 million, deducting dividend payments to shareholders ($240 million),
lease repayments ($32 million), and the purchase of Treasury shares to
satisfy employee share obligations ($10 million).
Newcrest had a net cash position of $176 million and gearing ratio of
negative 1.8% as at 30 June 2021.
During the current period Newcrest continued to advance its multiple
organic growth options, with the Board approving the commencement of
Stage 2 of the Cadia Expansion Project and the Lihir Front End Recovery
Project. The Newcrest Board also approved early works funding for the
construction of the box cut and associated surface infrastructure for both
the Havieron Project (A$146 million, on a 100% basis) and Red Chris
(C$135 million in addition to C$12 million already approved, on a 100%
basis). Construction of exploration declines at both Red Chris and Havieron
commenced in the current period.
During the current period, Newcrest released an initial Inferred Mineral
Resource estimate for the Havieron Project, which is a high-grade deposit
located approximately 45km east of Newcrest’s Telfer mine with the
potential to extend the operational life of Telfer. Newcrest also released
its initial Measured and Indicated Mineral Resource estimate for Red
Chris, which is expected to support the development of a high margin
underground block cave 23.
On 13 October 2020, Newcrest listed on the Toronto Stock Exchange to
support its growth strategy in the Americas and to increase its exposure
to the large North American investment community.
Capital structure
Newcrest’s financial objectives are to meet all financial obligations,
maintain a strong balance sheet to withstand cash flow volatility, be able
to invest capital in value-creating opportunities, and to provide returns to
shareholders. Newcrest looks to maintain a conservative level of balance
sheet leverage.
On 2 March 2021, Newcrest renewed its unsecured bilateral bank lending
facilities with its existing 13 bank lenders, extending the maturity dates.
Each bank has committed approximately US$154 million in facilities for an
overall unchanged quantum of US$2 billion on similar commercial terms
for Newcrest.
These facilities have tenors of three or five years, the aggregate of which
is as follows:
– US$1,077 million of facilities maturing in FY24
– US$923 million of facilities maturing in FY26
On 28 April 2021, Newcrest completed the mandatory redemption and
cancellation of the outstanding US$380 million owing of its 4.200% Senior
Guaranteed Notes, otherwise maturing 1 October 2022.
These refinancing and bond buyback transactions underpin Newcrest’s
objective of having a strong balance sheet, considerable liquidity and
financial flexibility at low cost.
Directors’ Report continuedNewcrest Annual Report 2021 51
Newcrest’s net cash as at 30 June 2021 was $176 million. This comprises of $1,873 million of cash holdings, less $1,635 million of capital market debt and
lease liabilities of $62 million.
At 30 June 2021, Newcrest had liquidity coverage of $3,873 million, comprising $1,873 million of cash and $2,000 million in committed undrawn bilateral
bank debt facilities with tenors ranging from 2024 to 2026.
Newcrest’s financial policy metrics and its performance against them are as follows:
Metric
Credit rating (S&P/Moody’s)
Leverage ratio (Net debt to EBITDA)
Gearing ratio
Cash and committed undrawn
bank facilities
Telfer gold hedging
Policy ‘looks to’
Investment grade
Less than 2.0 times
Below 25%
At least $1.5bn, of which
~1/3 is in the form of cash
No new hedging in relation to Telfer was undertaken in the current period.
The total outstanding volume and prices of gold hedged for future years at Telfer and in total for Newcrest are:
Financial Year Ending
30 June 2022
30 June 2023
Total
As at
30 June
2021
As at
30 June
2020
BBB/Baa2
BBB/Baa2
(0.1)
(1.8%)
0.3
6.8%
$3.87bn
($1.87bn cash)
$3.45bn
($1.45bn cash)
Gold Ounces
Hedged
Average Price
A$/oz
204,615
137,919
342,534
1,902
1,942
1,918
Telfer is a large scale, low grade mine and its profitability and cash flow are sensitive to the realised Australian dollar gold price. Hedging instruments in the
form of Australian dollar gold forward contracts were put in place in 2016 to 2018 to secure margins on a portion of future planned production to June 2023,
to support investment in cutbacks and mine development.
The current period included 216,639 ounces of Telfer gold sales hedged at an average price of A$1,864 per ounce, representing a net revenue loss of
$99 million for the current period. At 30 June 2021, based on gold forward curves, the unrealised mark-to-market loss of the remaining hedges was
$110 million.
Approximately 90% of Newcrest’s gold sales in the period were unhedged and therefore benefitted from the strong gold prices in the period.
Newcrest’s decision in the prior period to cease its program of hedging the impacts of copper and gold price movements during the quotational period
resulted in a net fair value gain in other income in the current period of $124 million, driven by the increase in gold and copper prices in the current period.
Refer to Section 2.4.
Dividend Policy
Newcrest looks to pay ordinary dividends that are sustainable over time having regard to its cash flow generation, its reinvestment options in the business
and external growth opportunities, its financial policy metrics and its balance sheet strength. Newcrest targets a total annual dividend payout of 30–60%
of free cash flow generated for the financial year, with the annual total dividends being at least US15 cents per share on a full year basis.
Having regard to the abovementioned considerations, the Newcrest Board has determined that a final fully franked dividend of US40 cents per share
will be paid on Thursday, 30 September 2021. The record date for entitlement is Friday, 27 August 2021. The financial impact of the FY21 final dividend
amounting to $327 million has not been recognised in the Consolidated Financial Statements for the year. The Company’s Dividend Reinvestment Plan
remains in place.
Including the interim dividend of US15 cents per share, total dividends in respect of the 2021 financial year amount to US55 cents per share, which is equal
to a 41% payout of the free cash flow for FY21.
The declaration of any future dividend remains at the discretion of the Newcrest Board, having regard to circumstances prevailing at that time.
Directors’ Report 52
1. Summary of Results For the 12 Months ended 30 June 2021 1,2,3 continued
Guidance 3,24,25
Subject to market and operating conditions, Newcrest provides the following guidance for FY22.
The production guidance numbers for FY22 assume no COVID-19 related interruptions. However, the AISC expenditure guidance for FY22 includes an
estimate of additional costs associated with managing the business in a COVID-19 context (including on matters such as flights, transport, rosters, leave,
screening and testing, and disbursements from the Community Support Fund) in the order of $35–45 million.
Guidance for the 12 months ending 30 June 2022
Cadia
Lihir
Telfer
Red Chris
Norte (a)
Havieron
Other
Group
Fruta del
Production
Gold – koz
Copper – kt
540 – 610
85 – 95
700 – 800
390 – 440
~15
40 – 42
23 – 25
120 – 135
1,800 – 2,000
125 – 130
All-In-Sustaining Costs (AISC) – Includes production stripping (sustaining) and sustaining capital
AISC – $m
(100) – 30 950 – 1,040
600 – 680
(25) – 15
100 – 104
Capital Expenditure ($m)
– Production stripping (sustaining)
– Production stripping (non-sustaining)
– Sustaining capital
– Major projects (non-sustaining)
105 – 115
25 – 35
160 – 180
580 – 650
100 – 120
105 – 135
50 – 60
50 – 70
65 – 70
110 – 130
Total Capital expenditure
740 – 830
310 – 370
75 – 95
225 – 270
Exploration and Depreciation ($m)
Exploration expenditure
Depreciation and amortisation (including depreciation of production stripping)
135 – 145
1,720 – 1,920
130 – 140
50 – 70
390 – 440
890 – 990
15 – 20
6 – 8 (b)
21 – 28
1,460 – 1,640
65 – 85
65 – 85
150 – 160
700 – 750
(a) The Fruta del Norte guidance represents Newcrest’s 32% interest in the annualised production and AISC for Fruta del Norte based on Lundin Gold’s market release on
8 December 2020. This release estimated gold production for the 2021 calendar year to be in the range of 380koz to 420koz at an AISC of $770/oz to $830/oz.
(b) Other major project expenditure (non-sustaining) includes non-sustaining capital in relation to Wafi-Golpu.
Directors’ Report continuedNewcrest Annual Report 2021 53
Review of Operations 25
Operating
Production
Gold
Copper
Silver
Sales
Gold
Copper
Silver
Financial
Revenue
EBITDA
EBIT
Net assets
Operating cash flow
Investing cash flow
Free cash flow*
AISC7
AISC Margin 7,8
UoM
Cadia
Lihir
Telfer
Goso-
wong 19 Red Chris 17
Fruta del
Norte 4,7
Other
Group
For the 12 months ended 30 June 2021
koz
kt
koz
koz
kt
koz
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$/oz
US$/oz
765
106
643
766
105
638
2,180
1,615
1,416
3,169
1,796
(564)
1,232
(83)
(109)
1,905
737
–
38
773
–
38
1,425
590
313
4,125
621
(300)
321
1,076
1,391
405
416
13
149
411
13
149
725
137
33
(59)
151
(69)
82
606
1,473
323
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
46
23
114
46
23
111
246
79
9
1,003
114
(151)
(37)
103
2,248
(452)
129
–
–
120
–
–
–
–
–
–
–
–
–
91
753
–
–
–
–
–
–
–
–
22
(1)
1,886
(380)
(114)
(494)
135
–
–
2,093
143
945
2,116
141
936
4,576
2,443
1,770
10,124
2,302
(1,198)
1,104
1,928
911
876
* Free cash flow for ‘Other’ includes a net inflow of $20 million relating to other investing activities (comprising net receipts from Fruta del Norte finance facilities of
$38 million18, proceeds from the sale of property, plant and equipment of $3 million, offset by $21 million relating to payments to maintain Newcrest’s existing interests in
associates), income tax paid of $233 million, exploration expenditure of $79 million, corporate costs of $105 million, other capital expenditure of $57 million, net interest paid
of $46 million, and net working capital inflows of $6 million.
UoM
Cadia
Lihir
Telfer
Goso-
wong 19 Red Chris 17
Fruta del
Norte 4
Other
Group
For the 12 months ended 30 June 2020
Operating
Production
Gold
Copper
Silver
Sales
Gold
Copper
Silver
Financial
Revenue
EBITDA
EBIT
Net assets
Operating cash flow
Investing cash flow
Free cash flow*
AISC
AISC Margin
koz
kt
koz
koz
kt
koz
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$/oz
US$/oz
843
96
575
849
96
578
1,802
1,301
1,138
2,638
1,286
(295)
991
136
160
1,370
776
–
30
761
–
30
1,196
465
170
4,242
468
(235)
233
918
1,206
324
393
16
164
391
16
164
579
103
19
(24)
116
(65)
51
501
1,281
249
103
–
106
104
–
112
160
44
11
–
30
(19)
11
132
1,264
225
39
25
110
37
24
76
185
63
16
836
57
(75)
(18)
63
1,703
(173)
16
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(141)
(163)
921
(486)
(1,403)
(1,889)
98
–
–
2,171
138
983
2,143
137
958
3,922
1,835
1,191
8,613
1,471
(2,092)
(621)
1,848
862
668
* Free cash flow for ‘Other’ includes other investing activities of $1,291 million (comprising the acquisition of a 70% interest in Red Chris of $769 million 17, the acquisition of
Fruta del Norte finance facilities of $460 million 18, further investments in Lundin Gold of $79 million, net proceeds from the divestment of Gosowong of $20 million 19 and
$3 million investment in Antipa Minerals Ltd), income tax paid of $282 million, net interest paid of $96 million, exploration expenditure of $84 million, corporate costs of
$83 million, other capital expenditure of $30 million, and working capital movements of $24 million.
Directors’ Report 54
1. Summary of Results For the 12 Months ended 30 June 2021 1,2,3 continued
Endnotes
1 All figures in this document relate to businesses of the Newcrest Mining Limited Group (Newcrest or the Group) for the 12 months ended 30 June 2021 (current period)
compared with the 12 months ended 30 June 2020 (prior period), except where otherwise stated. All references to ‘the Company’ are to Newcrest Mining Limited.
2 Technical and scientific information: The technical and scientific information contained in this document relating to Wafi-Golpu and Lihir was reviewed and approved by
Craig Jones, Newcrest’s Chief Operating Officer PNG, FAusIMM and a Qualified Person as defined in National Instrument 43-101 – Standards of Disclosure for Mineral
Projects (NI 43-101). The technical and scientific information contained in this document relating to Cadia was reviewed and approved by Philip Stephenson, Newcrest’s
Chief Operating Officer Australia and Americas, FAusIMM and a Qualified Person as defined in NI 43-101.
3 Disclaimer: This document includes forward looking statements and forward looking information within the meaning of securities laws of applicable jurisdictions. Forward
looking statements can generally be identified by the use of words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “continue”, “outlook” and
“guidance”, or other similar words and may include, without limitation, statements regarding estimated reserves and resources, certain plans, strategies, aspirations and
objectives of Management, anticipated production, study or construction dates, expected costs, cash flow or production outputs and anticipated productive lives of projects
and mines. The Company continues to distinguish between outlook and guidance. Guidance statements relate to the current financial year. Outlook statements relate to
years subsequent to the current financial year.
These forward looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance, and
achievements to differ materially from any future results, performance or achievements, or industry results, expressed or implied by these forward looking statements.
Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs
and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licences and permits and
diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which the Company operates or may in the future
operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation. For further
information as to the risks which may impact on the Company’s results and performance, please refer to section 7 for further details and the risk factors included in the
Annual Information Form dated 13 October 2020 lodged with ASX and SEDAR.
Forward looking statements are based on the Company’s good faith assumptions as to the financial, market, regulatory and other relevant environments that will exist and
affect the Company’s business and operations in the future. The Company does not give any assurance that the assumptions will prove to be correct. There may be other
factors that could cause actual results or events not to be as anticipated, and many events are beyond the reasonable control of the Company. Readers are cautioned not
to place undue reliance on forward looking statements, particularly in the current economic climate with the significant volatility, uncertainty and disruption caused by
the COVID-19 pandemic. Forward looking statements in this document speak only at the date of issue. Except as required by applicable laws or regulations, the Company
does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in assumptions on which any such
statement is based.
4 Group gold production, gold sales and AISC includes Newcrest’s 32% attributable share of Fruta del Norte (commercial production commenced in the March 2020 quarter)
through its 32% equity interest in Lundin Gold Inc. The gold production, gold sales and AISC outcomes for Fruta del Norte are sourced from Lundin Gold’s news releases
and have been aggregated to reflect the twelve month period 30 June 2021. Refer to Section 6.7 for further details.
5 Statutory profit is profit after tax attributable to owners of the Company.
6 Newcrest’s results are reported under International Financial Reporting Standards (IFRS). This document includes certain non-IFRS financial information within the
meaning of ASIC Regulatory Guide 230: ‘Disclosing non-IFRS financial information’ published by ASIC and within the meaning of Canadian Securities Administrators Staff
Notice 52-306 – Non-GAAP Financial Measures. Such information includes:
•
•
•
•
•
•
•
‘Underlying profit’ (profit or loss after tax before significant items attributable to owners of the Company);
‘EBITDA’ (earnings before interest, tax, depreciation and amortisation, and significant items);
‘EBIT’ (earnings before interest, tax and significant items);
‘EBITDA Margin’ (EBITDA expressed as a percentage of revenue);
‘EBIT Margin’ (EBIT expressed as a percentage of revenue);
‘ROCE’ is ‘Return on capital employed’ and is calculated as EBIT expressed as a percentage of average total capital employed (net debt and total equity);
‘Interest coverage ratio’ is calculated as EBITDA adjusted for facility fees and discount unwind on provisions, divided by net interest payable (interest expense adjusted
for facility fees, discount unwind on provisions and interest capitalised);
‘Leverage ratio (net debt to EBITDA)’ (calculated as net debt divided by EBITDA for the preceding 12 months);
‘Free cash flow’ (calculated as cash flow from operating activities less cash flow related to investing activities. Free cash flow for each operating site is calculated as
Free cash flow before interest, tax and intercompany transactions);
‘Free Cash Flow before M&A activity’ (being ‘Free Cash Flow’ excluding acquisitions, investments in associates and divestments);
‘AISC’ (All-In Sustaining Cost) and ‘AIC’ (All-In Cost) as per the updated World Gold Council Guidance Note on Non-GAAP Metrics released November 2018. AISC will
vary from period to period as a result of various factors including production performance, timing of sales and the level of sustaining capital and the relative contribution
of each asset; and
•
•
•
•
• AISC Margin reflects the average realised gold price less the AISC per ounce sold.
These measures are used internally by Management to assess the performance of the business and make decisions on the allocation of resources and are included in this
document to provide greater understanding of the underlying financial performance of Newcrest’s operations. The non-IFRS information has not been subject to audit
or review by Newcrest’s external auditor and should be used in addition to IFRS information. Such non-IFRS financial information/non-GAAP financial measures do not
have a standardised meaning prescribed by IFRS and may be calculated differently by other companies. Although Newcrest believes these non-IFRS/non-GAAP financial
measures provide useful information to investors in measuring the financial performance and condition of its business, investors are cautioned not to place undue reliance
on any non-IFRS financial information/non-GAAP financial measures included in this document. When reviewing business performance, this non-IFRS information should
be used in addition to, and not as a replacement of, measures prepared in accordance with IFRS, available on Newcrest’s website and the ASX and SEDAR platforms.
Refer to Section 6 for a reconciliation of non-IFRS measures to the most appropriate IFRS measure.
Directors’ Report continuedNewcrest Annual Report 2021
55
7 Subsequent to the release of the June 2021 quarterly report, the FY21 AISC outcome for the Group and Lihir has been restated due to a change in the classification of
Phase 16 production stripping costs at Lihir. In addition, Group gold sales and the Group AISC outcome for FY21 have been restated to include Newcrest’s 32% share
of Fruta del Norte’s June 2021 quarterly results which Lundin Gold Inc released on 11 August 2021.
8 Newcrest’s AISC margin has been determined by deducting the All-In Sustaining Cost attributable to Newcrest’s operations from Newcrest’s realised gold price. For
further details refer to Section 6.7.
9 The Inferred Mineral Resource estimate is presented on a 100% basis. As announced on 30 November 2020, Newcrest has now met the Stage 3 expenditure requirement
(US$45 million) and is entitled to earn an additional 20% joint venture interest in addition to its existing 40% interest, resulting in an overall joint venture interest of 60%
(Greatland Gold 40%).
10 The information in this document that relates to Havieron Mineral Resources has been extracted from the release titled “Initial Inferred Mineral Resource estimate for
Havieron of 3.4Moz of gold and 160kt of copper” dated 10 December 2020 which is available to view at www.asx.com.au under the code “NCM” (the original Havieron
release) and on Newcrest’s SEDAR profile and has been prepared in accordance with the requirements of Appendix 5A of the ASX Listing Rules by Competent Persons.
Newcrest confirms that it is not aware of any new information or data that materially affects the information included in the original Havieron release and that all material
assumptions and technical parameters underpinning the estimates in the original Havieron release continue to apply and have not materially changed. Newcrest confirms
that the form and context in which the competent person’s findings are presented have not been materially modified from the original Havieron release.
11 As an Australian Company with securities listed on the Australian Securities Exchange (ASX), Newcrest is subject to Australian disclosure requirements and standards,
including the requirements of the Corporations Act 2001 and the ASX. Investors should note that it is a requirement of the ASX listing rules that the reporting of Ore
Reserves and Mineral Resources in Australia is in accordance with the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves (the JORC Code) and that Newcrest’s Ore Reserve and Mineral Resource estimates comply with the JORC Code. Newcrest is also subject to certain
Canadian disclosure requirements and standards, as a result of its secondary listing on the Toronto Stock Exchange (TSX), including the requirements of National
Instrument 43-101 (NI 43-101). Investors should note that it is a requirement of Canadian securities law that the reporting of Mineral Reserves and Mineral Resources in
Canada and the disclosure of scientific and technical information concerning a mineral project on a property material to Newcrest comply with NI 43-101. Newcrest’s
material properties are currently Cadia, Lihir and Wafi-Golpu.
12 The Measured and Indicated Mineral Resource estimate is presented on a 100% basis. Newcrest’s equity interest in the Mineral Resource is 70%.
13 The information in this document that relates to Mineral Resources for Red Chris has been extracted from the release titled “Newcrest announces its initial Mineral
Resources estimate for Red Chris” dated 31 March 2021 which is available to view at www.asx.com.au under the code “NCM” (the original Red Chris release) and on
Newcrest’s SEDAR profile and has been prepared in accordance with the requirements of Appendix 5A of the ASX Listing Rules by Competent Persons. Newcrest confirms
that it is not aware of any new information or data that materially affects the information included in the original Red Chris release and that all material assumptions and
technical parameters underpinning the estimates in the original Red Chris release continue to apply and have not materially changed. Newcrest confirms that the form
and context in which the competent persons’ findings are presented have not been materially modified from the original Red Chris release.
14 The Pre-Feasibility Study has been prepared with the objective that its findings are subject to an accuracy range of +25%. The findings in the study and the implementation
of the Lihir Mine Optimisation Study are subject to all the necessary approvals, permits, internal and regulatory requirements and further works. The estimates are
indicative only and are subject to market and operating conditions. They should not be construed as guidance.
15 The estimate of ~20Mt of Indicated Mineral Resource has been prepared in accordance with the requirements in Appendix 5A of the ASX Listing Rules by a Competent
Person. For further information as to the total Indicated Mineral Resources for Lihir of which the 20Mt of Indicated Mineral Resources is part, see the release titled “Annual
Mineral Resources and Ore Reserves Statement – 31 December 2020” (the original MR&OR release) which is available to view at www.asx.com.au under the code “NCM”
and on Newcrest’s SEDAR profile. Newcrest confirms that it is not aware of any new information or data that materially affects the information included in the original
MR&OR release and that all material assumptions and technical parameters underpinning the estimates in the original MR&OR release continue to apply and have not
materially changed. Newcrest confirms that the form and context in which the competent persons’ findings are presented have not been materially modified from the
original MR&OR release. Newcrest makes no assurances that these Indicated Mineral Resources can be converted to Ore Reserves.
16 Realised metal prices are the US dollar spot prices at the time of sale per unit of metal sold (net of Telfer gold production hedges), excluding deductions related to
treatment and refining costs and the impact of price related finalisations for metals in concentrate. The realised price has been calculated using sales ounces generated
by Newcrest’s operations only (i.e. excluding Fruta del Norte).
17 Newcrest acquired its 70% interest in the Red Chris mine and became the operator on 15 August 2019, the ‘acquisition date’. Production and financial outcomes for the
prior period represent Newcrest’s period of ownership from the acquisition date. The payment of $769 million in the prior period represents the cash consideration paid
and is shown net of debt and working capital adjustments acquired on completion. Refer to Note 33(a) of the consolidated financial statements for further details.
18 As announced on 30 April 2020, Newcrest acquired the gold prepay and stream facilities and an offtake agreement in respect of Lundin Gold Inc’s Fruta del Norte mine
for $460 million. In the current period, Newcrest received net pre-tax cash flows of approximately $92 million from these finance facilities (refer to Note 25(b) of the
consolidated financial statements). This is reflected within the cash flow statement as $54 million in operating cash flow (interest payments received) and $38 million
in investing cash flow (primarily principal repayments received).
19 Newcrest finalised the sale of its 75% interest in Gosowong on 4 March 2020 (the divestment date). Production and financial outcomes for the prior period represent
Newcrest’s period of ownership to the divestment date. In the prior period, net proceeds of $20 million were received with a further $30 million deferred and subject to
extension (becomes payable in September 2021).
20 Injury rates are lowest quartile when compared to the International Council on Mining & Metals report titled “Safety Performance – Benchmarking progress of ICMM
company members in 2020”.
21 Relating to Newcrest’s operational (Scope 1 and 2) emissions. Newcrest will work across its value chain to reduce its Scope 3 emissions.
22 Kg CO2-e per tonne of ore treated and compared to a baseline of FY18 emissions. Refer to market release titled “Newcrest signs renewable energy PPA to help deliver ~20%
reduction in greenhouse gas emissions” dated 16 December 2020, which is available to view at www.asx.com.au under the code “NCM” and on Newcrest’s SEDAR profile.
23 The development of a block cave mine at the Red Chris project is subject to the completion of a successful exploration program and further studies, market and operating
conditions, regulatory approvals and Board approvals.
24 The guidance stated assumes weighted average copper price of $4.20 per pound, AUD:USD exchange rate of 0.75 and CAD:USD exchange rate of 0.80 for FY22.
25 All data relating to operations is shown at 100%, with the exception of Red Chris which is shown at 70% and Fruta del Norte which is shown at 32%.
Directors’ Report 56
2. Discussion and Analysis of Operations and the Income Statement
2.1. Profit overview
Statutory profit and Underlying profit was a record $1,164 million in the current period.
Underlying profit of $1,164 million was $414 million (or 55%) higher than the prior period primarily driven by higher realised gold and copper prices,
favourable fair value adjustments recognised on copper derivatives and Newcrest’s investment in the Fruta del Norte finance facilities, and record copper
production from Cadia. These benefits were partially offset by lower gold sales volumes driven by lower production, increased income tax expense
as a result of the Company’s improved profitability in the current period, the unfavourable impact on operating costs (including depreciation) from
the strengthening of the Australian dollar against the US dollar, additional costs associated with COVID-19 measures, higher treatment, refining and
transportation costs and higher price-linked costs such as royalties.
US$m
Gold revenue
Copper revenue
Silver revenue
Less: treatment and refining deductions
Total revenue
Operating costs
Depreciation and amortisation
Total cost of sales
Corporate administration expenses
Exploration expenses
Share of profit/(losses) of associates
Other income
Net finance costs
Income tax expense
Non-controlling interest
Underlying profit
Movement in Underlying Profit ($m)
For the 12 months ended 30 June
2021
3,584
1,137
26
(171)
4,576
(2,155)
(650)
(2,805)
(143)
(69)
26
185
(102)
(504)
–
1,164
2020
3,278
778
16
(150)
3,922
(1,946)
(622)
(2,568)
(117)
(64)
(37)
55
(102)
(338)
(1)
750
Change
Change%
306
359
10
(21)
654
(209)
(28)
(237)
(26)
(5)
63
130
–
(166)
1
414
9%
46%
63%
(14%)
17%
(11%)
(5%)
(9%)
(22%)
(8%)
170%
236%
0%
(49%)
100%
55%
Revenue
$654m
337 (224)
Operating Costs
($209)m
Depreciation &
Amortisation
($28)m
530
22
10
(21)
(85)
(124)
6
(34)
(26)
(5)
63
1
1,164
130
(166)
750
FY20
GOLD
PRICE
COPPER
PRICE
GOLD
SALES
VOLUME
COPPER
SALES
VOLUME
SILVER
REVENUE
REVENUE
DED-
UCTIONS
OPERATING
COSTS
FX ON
OPERATING
COSTS
DEPREC-
IATION
FX ON
DEPREC-
IATION
CORPORATE
ADMINIS-
TRATION
EXPLOR-
ATION
SHARE OF
PROFIT/
(LOSSES)
OF ASS-
OCIATES
OTHER
INCOME
INCOME
TAX
EXPENSE
NON-
CONTROL-
LING
INTERESTS
FY21
Directors’ Report continuedNewcrest Annual Report 2021 57
2.2. Revenue
Total sales revenue for the current period of $4,576 million included deductions for treatment and refining costs of $171 million. Newcrest’s sales revenue
continues to be predominantly attributable to gold, being 77% of total net sales revenue in the current period (83% in the prior period).
US$m
Total gross revenue for 12 months ended 30 June 2020
Changes in revenues from volume:
Gold
Copper
Silver
Total volume impact
Change in revenue from price:
Gold
Copper
Silver
Total price impact
Total gross revenue for 12 months ended 30 June 2021
Less: treatment and refining deductions
Total net revenue for 12 months ended 30 June 2021
(224)
22
–
530
337
10
4,072
(202)
877
4,747
(171)
4,576
Gold revenue in the current period of $3,584 million was $306 million (or 9%) higher than the prior period driven by a 17% increase in the realised gold
price ($1,796 per ounce in the current period compared to $1,530 per ounce in the prior period), higher sales volumes from Telfer and Lihir, and twelve
months of gold production from Red Chris (prior period represents production from acquisition date of 15 August 2019). This was partially offset by lower
gold sales volumes from Cadia and the divestment of Gosowong in March 2020.
Copper revenue in the current period of $1,137 million was $359 million (or 46%) higher than the prior period driven by the 42% increase in the realised
copper price ($3.66 per pound in the current period compared to $2.57 in the prior period) and higher levels of copper production and sales at Cadia.
This was partially offset by lower production and sales volumes at Telfer and Red Chris.
2.3. Cost of sales
US$m
Site production costs
Royalties
Treatment and realisation
Inventory movements
Operating costs
Depreciation and amortisation
Cost of sales
For the 12 months ended 30 June
2021
1,889
143
54
69
2,155
650
2,805
2020
1,779
119
48
–
1,946
622
2,568
Change
Change %
110
24
6
69
209
28
237
6%
20%
13%
–
11%
5%
9%
Cost of sales of $2,805 million was $237 million (or 9%) higher than the prior period.
Site production costs of $1,889 million were $110 million higher than the prior period primarily due to the unfavourable impact on operating costs from the
stronger Australian dollar against the US dollar, additional costs associated with COVID-19 measures, twelve months of operating costs in the current
period from Red Chris (compared to ten-and-a-half months in the prior period), increased mining and milling activity with record mined and milled tonnes
at Cadia, and higher mill throughput at Telfer. These drivers of higher site production costs were partially offset by the reduction in costs associated with
the divestment of Gosowong in March 2020 and an increase in the waste-to-ore-mined ratio at Lihir, with the costs associated with increased stripping
activity capitalised to the balance sheet.
The increase in royalties primarily reflects the increase in gold and copper revenues driven by higher realised gold and copper prices.
Inventory movements in the current period reflects a drawdown of stockpile inventory at Lihir, with mill throughput volumes exceeding mined ore, together
with a reduction in finished goods inventory at Lihir with gold sales volumes exceeding production.
Directors’ Report 58
2. Discussion and Analysis of Operations and the Income Statement continued
2.3. Cost of sales continued
Depreciation expense was higher than the prior period, reflecting an increase in gold equivalent ounces produced and the unfavourable impact of a
stronger Australian dollar against the US dollar at Cadia and Telfer, and increased production stripping amortisation at Red Chris. This was partially offset
by lower depreciation associated with lower production and sales at Lihir.
As the Company is a US dollar reporting entity, cost of sales will vary in accordance with the movements in the operating currencies where those costs
are not denominated in US dollars.
The table below shows indicative currency exposures on operating costs by site for the current period:
Cadia
Telfer
Lihir
Red Chris
Group*
USD
15%
15%
30%
20%
20%
AUD
85%
85%
35%
–
60%
PGK
–
–
35%
–
15%
CAD
–
–
–
80%
5%
* The Group number also includes the impact of currency exposures on corporate administration expenses and exploration expenditure.
2.4. Corporate, Exploration and Other items
US$m
Corporate administration expenses
Exploration expenses
Share of profit/(losses) of associates
Other income
Corporate, Exploration and Other items
For the 12 months ended 30 June
2021
2020
Change
Change %
(143)
(69)
26
185
(1)
(117)
(64)
(37)
55
(163)
(26)
(5)
63
130
162
(22%)
(8%)
170%
236%
99%
Corporate administration expenses of $143 million in the current period comprised corporate costs of $105 million, depreciation of $23 million and
equity-settled share-based payments of $15 million. Corporate administration expenses were $26 million (or 22%) higher than the prior period with the
largest driver being the impact of a stronger Australian dollar increasing AUD denominated costs.
Exploration expenditure of $69 million was expensed in the current period, which was $5 million (or 8%) higher than the prior period, primarily due to
increased brownfield drilling at Red Chris.
The share of profit of associates of $26 million represents Newcrest’s share of profits or losses incurred by its equity accounted associates, comprising
Lundin Gold, SolGold, Azucar Minerals and Antipa Minerals.
Other income of $185 million comprised:
US$m
Net fair value gain/(loss) on gold and copper derivatives and fair value movements on
concentrate receivables
Net foreign exchange loss
Net fair value movement on Fruta del Norte finance facilities
Other
Other income
For the 12 months ended 30 June
2021
2020
Change
Change %
124
(57)
118
–
185
64
(6)
1
(4)
55
60
(51)
117
4
130
94%
(850%)
11,700%
100%
236%
Directors’ Report continuedNewcrest Annual Report 2021 59
In the prior period, Newcrest ceased its program of hedging the copper and gold price movement impacts during the quotational period. Newcrest is
exposed to changes in commodity prices during the quotational period for the sale of concentrate. The measurement of fair value for Newcrest’s outstanding
concentrate debtors is recognised as a net fair value gain in other income driven by the increase in gold and copper prices in the current period.
The net foreign exchange loss in the current period primarily relates to the restatement of US dollar denominated cash and foreign denominated financial
assets (including concentrate debtors) and liabilities held by the Group’s Australian and Canadian subsidiaries.
The current period also includes a favourable movement of $118 million in the net fair value of Newcrest’s investment in the Fruta del Norte finance
facilities, primarily due to the increase in the gold price assumptions used in the fair value calculations.
2.5. Net finance costs
US$m
Interest on cash holdings
Interest on Fruta del Norte facilities
Finance income
Interest on loans
Interest on leases
Facility fees and other costs
Discount unwind on provisions
Debt extinguishment and related costs
Finance costs
Net finance costs
For the 12 months ended 30 June
2021
2020
Change
Change %
5
22
27
(84)
(2)
(17)
(6)
(20)
(129)
(102)
15
4
19
(97)
(2)
(15)
(7)
–
(121)
(102)
(10)
18
8
13
0
(2)
1
(20)
(8)
0
(67%)
450%
42%
13%
0%
(13%)
14%
–
(7%)
0%
Net finance costs of $102 million was in-line with the prior period with higher interest income from the Fruta del Norte finance facilities and lower debt
servicing costs, offset by lower interest rates received on cash holdings and debt extinguishment fees relating to the mandatory redemption of the
$380 million outstanding of its 4.200% Senior Guaranteed Notes, otherwise maturing 1 October 2022.
2.6. Income tax
Income tax on Statutory and Underlying profit was $504 million, resulting in an effective tax rate of 30% which is consistent with the Australian company
tax rate of 30%.
2.7. Significant items
There were no significant items reported in the current period.
In the prior period, significant items totalling a net expense of $103 million (after non-controlling interests) were recognised, comprising:
– the write-down of tax assets and property, plant and equipment totalling $44 million (after non-controlling interests) in relation to the divestment
of Gosowong;
– one-off finance costs of $48 million arising from the early repayment of Newcrest’s corporate bonds ($750 million which were due in November 2020
and a part repayment of $370 million which were due in October 2022); and
– transaction and integration costs of $11 million in relation to major M&A activity (acquisition of Fruta del Norte finance facilities, divestment of
Gosowong and certain integration costs associated with Red Chris).
Directors’ Report
60
3. Discussion and Analysis of Cash Flow
Newcrest’s record free cash flow of $1,104 million was $1,725 million higher than the prior period, with the prior period also characterised by a net cash
outflow of $1,291 million in relation to M&A growth investments compared to $21 million in the current period.
‘Free cash flow before M&A activity’ was $455 million (or 68%) higher than the prior period, with higher operating cash flows only partially offset by an
increased investment in major capital projects at Cadia, Lihir, Red Chris and Havieron, higher sustaining capital at all continuing operations and increased
production stripping activity at Lihir and Red Chris.
In the current period, Newcrest received net pre-tax cash flows of $92 million from finance facilities acquired from Lundin Gold Inc, relating to the Fruta
del Norte mine 18. This is reflected within the cash flow statement as $54 million in operating cash flow (interest payments received) and $38 million in
investing cash flow (primarily principal repayments received).
US$m
Cash flow from operating activities
Production stripping and sustaining capital expenditure
Major capital expenditure (non-sustaining)
Total capital expenditure
Reclassification of capital leases
Exploration and evaluation expenditure
Net receipts from Fruta del Norte finance facilities 18
Proceeds from sale of property, plant and equipment
Free cash flow (before M&A activity)
Acquisition payment for a 70% interest of Red Chris 17
Acquisition of Fruta del Norte finance facilities 18
Payment for investment in Lundin Gold
Payment for investment in SolGold
Payment for investment in Antipa Minerals
Proceeds from sale of Gosowong, net of cash divested 19
Free cash flow
For the 12 months ended 30 June
2020
Change
Change %
1,471
(422)
(273)
(695)
4
(113)
1
2
670
(769)
(460)
(79)
–
(3)
20
(621)
831
(102)
(322)
(424)
7
(2)
37
6
455
769
460
71
(10)
–
(20)
1,725
56%
(24%)
(118%)
(61%)
175%
(2%)
3,700%
300%
68%
100%
100%
90%
–
0%
(100%)
278%
2021
2,302
(524)
(595)
(1,119)
11
(115)
38
8
1,125
–
–
(8)
(10)
(3)
–
1,104
Directors’ Report continuedNewcrest Annual Report 2021
61
For the 12 months ended 30 June
2020
Change
Change %
1,471
(2,092)
(621)
463
(158)
1,600
9
1,451
831
894
1,725
(1,148)
577
(149)
(6)
422
56%
43%
278%
(248%)
365%
(9%)
(67%)
29%
For the 12 months ended 30 June
2020
Change
Change %
1,835
64
(4)
1,895
(96)
(11)
63
(2)
(46)
(96)
(282)
1,471
608
5
(17)
596
38
68
24
6
136
50
49
831
33%
8%
(425%)
31%
40%
618%
38%
300%
296%
52%
17%
56%
2021
2,302
(1,198)
1,104
(685)
419
1,451
3
1,873
2021
2,443
69
(21)
2,491
(58)
57
87
4
90
(46)
(233)
2,302
3.1. Cash at the end of the period
US$m
Cash flow from operating activities
Cash flow related to investing activities
Free cash flow
Cash flow related to financing activities
Net movement in cash
Cash at the beginning of the period
Effects of exchange rate changes on cash held
Cash at the end of the period
3.2. Cash flow from operating activities
US$m
EBITDA
Add: Exploration expenditure written-off
Add: Other non-cash items or non-operating items
Sub-total
Working capital movements*
Receivables
Inventories
Payables and provisions
Other assets and liabilities
Net working capital movements
Net interest paid
Income taxes paid
Net cash inflow from operating activities
*
Includes adjustments for non-cash items.
Cash inflow from operating activities of $2,302 million was $831 million (or 56%) higher than the prior period. The increase reflects the benefit of higher gold
and copper prices, increased copper sales volumes at Cadia, timing of working capital movements, lower net interest paid and lower income tax payments.
This was partially offset by lower gold sales volumes, and the unfavourable impact on costs from a stronger Australian dollar in the current period.
Directors’ Report
62
3. Discussion and Analysis of Cash Flow continued
3.3. Cash flow from investing activities
US$m
Production stripping
Telfer
Lihir
Red Chris
Total production stripping
Sustaining capital expenditure
Cadia
Telfer
Lihir
Gosowong
Red Chris
Corporate
Total sustaining capital
Major projects (non-sustaining)
Cadia
Lihir
Red Chris
Wafi-Golpu
Havieron
Total major projects (non-sustaining) capital
Total capital expenditure
Reclassification of capital leases
M&A activity
Acquisition payment for a 70% interest in the Red Chris mine 17
Acquisition of Fruta del Norte finance facilities 18
Payment for investment in Lundin Gold
Payment for investment in SolGold
Payment for investment in Antipa Minerals
Proceeds from sale of Gosowong, net of cash divested 19
Total M&A activity
Net receipts from Fruta del Norte finance facilities 18
Exploration and evaluation expenditure
Proceeds from sale of property, plant and equipment
Net cash outflow from investing activities
For the 12 months ended 30 June
2021
2020
Change
Change %
–
120
28
148
106
65
109
–
70
26
376
465
70
29
6
25
595
1,119
(11)
–
–
8
10
3
–
21
(38)
115
(8)
32
94
21
147
94
24
85
13
42
17
275
203
56
1
10
3
273
695
(4)
769
460
79
–
3
(20)
(32)
26
7
1
12
41
24
(13)
28
9
101
262
14
28
(4)
22
322
424
(7)
(769)
(460)
(71)
10
–
20
1,291
(1,270)
(1)
113
(2)
(37)
2
(6)
(894)
(100%)
28%
33%
1%
13%
171%
28%
(100%)
67%
53%
37%
129%
25%
2,800%
(40%)
733%
118%
61%
(175%)
(100%)
(100%)
(90%)
–
0%
100%
(98%)
(3,700%)
2%
(300%)
(43%)
Cash outflow from investing activities of $1,198 million was $894 million (or 43%) lower than the prior period.
Excluding M&A related activity, cash outflow from investing activities in the current period of $1,177 million was $376 million (or 47%) higher than the prior
period due to an increased capital investment in organic growth projects which include Cadia Expansion, Lihir Front End Recovery and Red Chris and
Havieron projects together with increased sustaining capital expenditure across all continuing operations and increased production stripping activity at
Lihir and Red Chris. The cash outflows associated with investing activities were partially offset by net receipts from the Fruta del Norte finance facilities.
1,198
2,092
Directors’ Report continuedNewcrest Annual Report 2021
63
Capital expenditure of $1,119 million in the current period comprised:
– Production stripping of $148 million, which was $1 million higher than the prior period primarily due to an increase in production stripping activity at
Lihir (Phase 15 and commencement of Phase 16) and increased stripping activity at Red Chris (completion of Phase 5 and commencement of Phase 7),
offset by a decrease in stripping activities at Telfer following the completion of West Dome capital stripping activities in the current period.
– Sustaining capital expenditure of $376 million, which was $101 million higher than the prior period due to:
– Telfer – tailings and pit dewatering projects;
– Lihir – execution of fixed plant maintenance activities and procurement of mining and fleet equipment;
– Red Chris – elevated levels of spend reflecting a full twelve months of activity and continued works to improve the site’s future operational
performance; and
– The impact of a stronger Australian dollar on Australian operations and corporate.
This was partially offset by the divestment of Gosowong in March 2020.
– Major project, or non-sustaining, capital expenditure of $595 million was $322 million higher than the prior period. This investment underpins the
expected future growth of Newcrest, with the main items being:
– Cadia – increased spend associated with the Expansion Project (Stage 1) including ramp up of PC2-3 development, the commencement of works
in relation to Stage 2 of the Expansion Project, and the continuation of the Molybdenum Project;
– Lihir – major projects in the period included the Seepage Barrier field trials which support the Feasibility Study, the High Voltage Switchroom
upgrade, Front-End Recovery uplift projects, and the Phase 14A Pre-Feasibility Study;
– Red Chris – spend associated with the Block Cave Pre-Feasibility Study and the commencement of the exploration decline;
– Havieron – spend associated with Pre-Feasibility Study costs, Early Works Program and the commencement of the exploration decline; and
– Wafi-Golpu – lower capital expenditure in the current period reflects a reduced work program which includes general maintenance of the site,
community programs and environmental monitoring.
Exploration activity of $115 million was $2 million (or 2%) higher than the prior period, comprising the following:
US$m
Expenditure by nature
Greenfield
Brownfield
Resource Definition
Total
Expenditure by region
Australia
Indonesia
Papua New Guinea
North America
South America
Total
For the 12 months ended 30 June
2021
2020
Change
Change %
81
16
18
115
66
–
1
36
12
115
84
6
23
113
59
4
1
31
17
113
(3)
10
(5)
2
7
(4)
–
5
(5)
2
(4%)
167%
(22%)
2%
12%
(100%)
0%
16%
(29%)
2%
In the current period, Newcrest continued its search for new discoveries with greenfield exploration activity undertaken in Australia, Canada and USA.
Activity has been focused in and around fertile gold/copper districts including the Paterson Province (Western Australia), the Golden Triangle of British
Columbia (Canada), Tanami (Northern Territory/Western Australia) and Jarbidge (Nevada).
Exploration expenditure was higher in the North American region compared to the prior period with additional Brownfield exploration drilling at Red Chris
partially offset by reduced Resource Definition drilling. Resource Definition was also lower due to the divestment of Gosowong in March 2020. Lower
expenditure in South America was primarily the result of COVID-19 restricting activity.
Directors’ Report
64
3. Discussion and Analysis of Cash Flow continued
3.4. Cash flow from financing activities
US$m
Net proceeds from equity raising
Net proceeds/(repayments) from corporate bonds
Repayment of lease principal
Repayment of other loans
Dividends paid to members of the parent entity
Dividend paid to non-controlling interests
Payment for treasury shares
Other financing activities
Net cash inflow/(outflow) from financing activities
For the 12 months ended 30 June
2021
2020
Change
Change %
–
(380)
(32)
(3)
(240)
–
(10)
(20)
(685)
771
14
(27)
(29)
(154)
(23)
(25)
(64)
463
(771)
(394)
(5)
26
(86)
23
15
44
(1,148)
(100%)
(2,814%)
(19%)
90%
(56%)
100%
60%
69%
(248%)
Cash outflow from financing activities of $685 million, was $1,148 million lower than the prior period which included $771 million in net proceeds from the
A$1.0 billion placement to institutional investors in May 2020, and the A$200m share purchase plan (SPP) completed in June 2020, less costs.
Financing activities of $685 million for the current period comprised:
– The mandatory redemption of the $380 million outstanding on Newcrest’s 4.200% Senior Guaranteed Notes, otherwise maturing 1 October 2022,
completed on 28 April 2021;
– Repayment of $32 million of lease principal;
– Repayment of $3 million of other loans assumed as part of the acquisition of Red Chris;
– Dividends paid of $240 million to Newcrest shareholders, being $86 million (or 56%) higher than the payment in the prior period;
– Payment for treasury shares of $10 million which represents shares purchased on market to satisfy obligations under employee share-based payment
plans; and
– Other financing activities of $20 million reflects the costs associated with redemption of the Notes.
Directors’ Report continuedNewcrest Annual Report 2021 65
For the 12 months ended 30 June
UoM
2021
2020
Change
Change %
tonnes ‘000
tonnes ‘000
tonnes ‘000
grams/tonne
%
ounces
tonnes
ounces
ounces
tonnes
ounces
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$/oz
32,506
33,283
32,371
0.95
77.4
764,895
106,402
643,007
766,118
105,444
637,974
2,180
764
199
1,615
1,416
1,796
106
465
571
1,232
(83)
(109)
30,178
30,178
29,347
1.14
78.6
843,338
96,042
574,594
848,959
96,437
577,650
1,802
664
163
1,301
1,138
1,286
94
203
297
991
136
160
2,328
3,105
3,024
(0.19)
(1.2)
(78,443)
10,360
68,413
(82,841)
9,007
60,324
378
100
36
314
278
510
12
262
274
241
(219)
(269)
8%
10%
10%
(17%)
(2%)
(9%)
11%
12%
(10%)
9%
10%
21%
15%
22%
24%
24%
40%
13%
129%
92%
24%
(161%)
(168%)
4. Review of Operations
4.1. Cadia
Measure
Operating
Total ore mined
Total material mined
Total material milled
Gold head grade
Gold recovery
Gold produced
Copper produced
Silver produced
Gold sales
Copper sales
Silver sales
Financial
Revenue
Cost of Sales (including depreciation)
Depreciation
EBITDA
EBIT
Operating cash flow
Sustaining capital
Non-sustaining capital
Total capital expenditure
Free cash flow
All-In Sustaining Cost
All-In Sustaining Cost
Cadia achieved record high annual copper production and a record low
annual AISC per ounce in the current period.
Gold production of 764,895 ounces was 78,443 ounces (or 9%) lower
than the prior period, driven by a 17% reduction in gold grade milled,
partially offset by a 10% increase in tonnes milled (achieving record mill
throughput). The lower gold head grade was in line with expected grades
for the current period.
The mine produced 32.5 million tonnes of ore in the current period,
achieving record annual ore mined from Cadia East and an 8% increase
on the prior period. In the final three months of the current period, the
mine achieved record ore mined from Cadia East at a volume equivalent
to 38.1 million tonnes per annum.
The mill processed a record 32.4 million tonnes of ore during the current
period and in the final three months of the current period achieved record
ore mill throughput at a volume equivalent to 34.3 million tonnes per
annum. The increase in throughput rates reflects the successful realisation
of a number of throughput improvement initiatives in Concentrator 1. The
prior period was also characterised by the previously reported extended
downtime of the Concentrator 1 SAG mill following the identification
(through routine inspections) of a preventative maintenance opportunity.
EBIT of $1,416 million was 24% higher than the prior period. This reflects
the benefit of a 21% increase in revenue partially offset by a 15% increase
in cost of sales (including depreciation). The increase in revenue was driven
by a 17% higher realised gold price, 42% higher realised copper price and
record copper tonnes produced (11% higher than the prior period), which
together more than offset the 10% reduction in gold sales volumes.
Cost of sales (including depreciation) was 15% higher than the prior period
primarily due to a 11% stronger Australian dollar unfavourably impacting
costs, higher royalties due to higher prices, and increased mining and
milling activity.
AISC of negative $109 per ounce was 168% lower than the prior period and
is Cadia’s lowest reported AISC for a twelve-month period. This outcome
was primarily driven by higher copper by-product credits reflecting the
42% higher realised copper price and record copper production and
associated sales volumes in the current period, partially offset by higher
operating costs and the negative impact of a stronger Australian dollar
in the current period.
Directors’ Report 66
4. Review of Operations continued
4.1. Cadia continued
Record Free cash flow of $1,232 million was 24% higher than the prior
period. This reflects earnings (EBITDA) being 24% higher and a favourable
movement in working capital, partially offset by a 92% increase in capital
expenditure. The key drivers of the higher capital expenditure in the current
period were increased spend associated with the Expansion Project (Stage
1) including ramp up of PC2-3 development, the commencement of works
in relation to Stage 2 of the Expansion Project, and the continuation of the
Molybdenum Project.
As announced in December 2020, Newcrest has entered into a 15 year
renewable Power Purchase Agreement (PPA) with a wind farm developer
for an amount of energy which represents a significant part of Cadia’s
future projected energy requirements. The PPA, together with the forecast
decarbonisation of electricity generation in New South Wales, is expected
to help deliver a ~20% reduction in Newcrest’s greenhouse gas emissions
and is a significant step towards the achievement of Newcrest’s targeted
30% reduction by 2030 22. The PPA will act as a partial hedge against
future electricity price increases and will provide Newcrest with access
to large scale generation certificates which Newcrest intends to surrender
to achieve a reduction in its greenhouse gas emissions.
4.2. Lihir
Measure
Operating
Total ore mined
Total material mined
Total material milled
Gold head grade
Gold recovery
Gold produced
Silver produced
Gold sales
Silver sales
Financial
Revenue
Cost of Sales (including depreciation)
Depreciation
EBITDA
EBIT
Operating cash flow
Production stripping
Sustaining capital
Non-sustaining capital
Total capital expenditure
Free cash flow
All-In Sustaining Cost 7
All-In Sustaining Cost 7
For the 12 months ended 30 June
UoM
2021
2020
Change
Change %
tonnes ‘000
tonnes ‘000
tonnes ‘000
grams/tonne
%
ounces
ounces
ounces
ounces
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$/oz
8,662
33,467
12,792
2.40
74.7
737,082
38,377
773,146
37,741
1,425
1,112
277
590
313
621
120
109
70
299
321
1,076
1,391
12,030
30,085
13,798
2.38
73.6
775,978
29,520
760,724
29,520
1,196
1,026
295
465
170
468
94
85
56
235
233
918
1,206
(3,368)
3,382
(1,006)
0.02
1.1
(38,896)
8,857
12,422
8,221
229
86
(18)
125
143
153
26
24
14
64
88
158
185
(28%)
11%
(7%)
1%
1%
(5%)
30%
2%
28%
19%
8%
(6%)
27%
84%
33%
28%
28%
25%
27%
38%
17%
15%
Directors’ Report continuedNewcrest Annual Report 2021 67
Gold production of 737,082 ounces was 38,896 ounces (or 5%) lower than
the prior period, primarily driven by lower mill throughput, partially offset
by higher recovery and head grade.
Total material mined was 11% higher than the prior period, driven by a
change in the mix of ore mined (28% lower) and waste mined (37% higher)
with the focus being on waste stripping in Phase 15 and Phase 16 to enable
access to the ore. Ore mined from Phase 14 is expected to be completed in
the 2022 financial year.
Over the past 12 months Newcrest has successfully processed the argillic
ores through the application of improvements in ore blending, process
controls and minor plant modifications. Mill throughput was 7% lower
than the prior period reflecting the adverse effects of unplanned downtime
events and shutdown overruns, together with an increase in planned major
downtime events throughout the year.
Gold head grade was 1% higher than the prior period primarily due to
higher grade ore from Phase 14. The higher head grade, coupled with
a higher proportion of direct feed to the autoclaves, led to a 1% higher
recovery than the prior period.
EBIT of $313 million was 84% higher than the prior period resulting from
increased revenue, partially offset by higher cost of sales. Higher revenue
was driven by a 17% higher realised gold price. Cost of sales (including
depreciation) was 8% higher than the prior period reflecting additional
costs associated with COVID-19 measures, unplanned maintenance,
shutdown overruns and timing of major mining and mobile fleet
maintenance. Cost of sales was partially offset by an increase in costs
capitalised to the balance sheet with higher production stripping activity
and lower depreciation.
AISC of $1,391 per ounce was 15% higher than prior period primarily
reflecting higher operating costs (including COVID-19 related costs) and
higher sustaining capital expenditure. This was partially offset by 2% higher
gold sales volumes.
Free cash flow of $321 million was 38% higher than the prior period. This
reflects earnings (EBITDA) being $125 million (or 27%) higher than the
prior period, partially offset by a 27% increase in total capital expenditure.
The key drivers of the higher capital expenditure in the current period
were increased production stripping activity and higher sustaining capital
expenditure in mining and mobile fleet maintenance, together with a
number of studies.
At the date of this report the number of COVID-19 cases at Lihir remains
at levels that are within the capability of the care and treatment and
isolation facilities, with the majority of these cases continuing to be
asymptomatic. Newcrest continues to strengthen its COVID-19 controls
at Lihir, focusing on containment through extensive contact tracing and
isolation procedures. Charter flights with restricted capacity are operating
between Papua New Guinea and Australia, as are limited commercial
flights between Port Moresby and Brisbane.
There were no material COVID-19 related events impacting gold
production at Lihir during the current period. However, as advised in the
March 2021 quarterly report, the ability to attract labour, travel restrictions,
contact tracing and associated isolation requirements has impacted total
material mined. Delays have also been experienced on development
projects (including Phase 14A ground support trials) and shutdown
performance due to difficulty in mobilising and accommodating labour.
There remains a risk of COVID-19 impacting production at Lihir and this
continues to be closely managed. Elevated costs related to the pandemic,
which amounted to $53 million in the current period, are expected to
continue through the 2022 financial year.
In October 2020 Newcrest approved the Front End Recovery project to
execution. The project is expected to increase gold recovery in flotation
with upgrades to hydro-cyclones and water addition systems to improve
grind size classification. Additional flotation capacity will also be added
with the introduction of flash flotation to the grinding circuit. The project
has recently completed detailed engineering design and is expected to
be commissioned in the second half of the 2022 financial year.
In February 2021, Newcrest announced the findings of its Lihir Mine
Optimisation Study (LMOS)14 which included the identification of a
new opportunity called Phase 14A. This opportunity is currently being
progressed in a separate Pre-Feasibility Study (‘Phase 14A PFS’) that
Newcrest expects to release by the end of September 2021.
The Phase 14A PFS is focused on extending the Phase 14 cutback
and safely steepening the walls of the pit by utilising civil engineering
techniques to access existing Indicated Mineral Resources which would
have otherwise been inaccessible through standard mining techniques.
The Phase 14A PFS work to date has identified approximately 20Mt at
2.4g/t Au (including 13Mt at 3g/t Au) of Indicated Mineral Resource15 that
could be accessed.
Additionally, the cutback would open a separate mining front, providing
further flexibility for fresh competent ore feed. The cutback is fully
permitted and is within the existing mine lease.
Site field investigation is underway, including geotechnical drilling and
contractor mobilisation for trial works. Field trials of the wall support
technology are planned for FY22 with long lead materials ordered and the
mobilisation of specialist contractors in progress.
Newcrest is currently assessing whether applying steep wall engineering
techniques to its other cutbacks at Lihir could enable access to additional
high grade mill feed and potentially further defer construction of the full
Seepage Barrier, which is currently subject to a Feasibility Study.
Directors’ Report 68
4. Review of Operations continued
4.3. Telfer
Measure
Operating
Total ore mined
Total material mined
Total material milled
Gold head grade
Gold recovery
Gold produced
Copper produced
Silver produced
Gold sales
Copper sales
Silver sales
Financial
Revenue
Cost of Sales (including depreciation)
Depreciation
EBITDA
EBIT
Operating cash flow
Production stripping
Sustaining capital
Non-sustaining capital
Total capital expenditure
Free cash flow
All-In Sustaining Cost
All-In Sustaining Cost
For the 12 months ended 30 June
UoM
2021
2020
Change
Change %
tonnes ‘000
tonnes ‘000
tonnes ‘000
grams/tonne
%
Ounces
Tonnes
Ounces
Ounces
Tonnes
Ounces
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$/oz
25,260
47,335
17,933
0.89
78.7
416,138
13,177
149,006
411,336
12,560
149,006
725
692
104
137
33
151
–
65
–
65
82
606
1,473
17,481
55,107
16,209
0.90
81.3
393,164
16,278
163,500
391,339
16,283
163,500
579
560
84
103
19
116
32
24
–
56
51
501
1,281
7,779
(7,772)
1,724
(0.01)
(2.6)
22,974
(3,101)
(14,494)
19,997
(3,723)
(14,494)
146
132
20
34
14
35
(32)
41
–
9
31
105
192
44%
(14%)
11%
(1%)
(3%)
6%
(19%)
(9%)
5%
(23%)
(9%)
25%
24%
24%
33%
74%
30%
(100%)
171%
–
16%
61%
21%
15%
Gold production of 416,138 ounces was 22,974 ounces (or 6%) higher than
the prior period, due to higher mill throughput, partially offset by lower
recovery and lower head grade.
copper price in the current period, together with increased gold sales
volumes, partially offset by lower copper sales volumes in line with lower
copper production.
Ore mined was 44% higher than the prior period, driven by increased
ore production from the open pit following completion of waste stripping
associated with the current West Dome mining stages. This was partially
offset by lower ore production from the underground, as more work was
undertaken in the current period on the development of new underground
mining areas for future ore production.
Mill throughput improved by 11% with higher plant utilisation. In the
current period, the mill commenced transition back to an increased
operational run time strategy with the increased availability of higher
grade open pit ore feed.
Gold recovery was 2.6% lower than the prior period driven by a lower
proportion of higher-grade underground ore feed processed and higher
sulphur content of the ore from the open pit.
Copper production of 13,177 tonnes was 3,101 tonnes (or 19%) lower
than the prior period, primarily due to lower copper grades with a lower
proportion of higher grade underground ore feed processed in the
current period.
EBIT of $33 million was 74% higher than the prior period due to higher
revenue more than offsetting higher cost of sales. Higher revenue was
driven by a 17% higher realised gold price and 42% higher realised
Cost of sales (including depreciation) were 24% higher than the prior
period due to a stronger Australian dollar unfavourably impacting costs,
additional costs associated with COVID-19 measures and 11% higher mill
throughput.
AISC of $1,473 per ounce was 15% higher than the prior period, driven by a
stronger Australian dollar negatively impacting site costs, additional costs
associated with COVID-19 measures and increased sustaining capital
expenditure. This was partially offset by the benefit of a higher realised
copper price and lower waste mined.
Key drivers of increased sustaining capital expenditure in the current
period relate to tailings dam lift (TSF7), new tailings dam construction
(TSF8) and pit dewatering.
Free cash flow of $82 million was 61% higher than the prior period due to
higher realised gold and copper prices, higher gold sales volume and a
favourable movement in net working capital. This was partially offset by
higher sustaining capital expenditure, the adverse impact of a stronger
Australian dollar, additional costs associated with COVID-19 measures
and lower copper sales volumes.
Excluding the hedge losses of $99m in the current period, Telfer’s
free cash flow would have been $181 million.
Directors’ Report continuedNewcrest Annual Report 2021 69
For the 12 months ended 30 June
UoM
2021
2020
Change
Change %
tonnes ‘000
tonnes ‘000
tonnes ‘000
grams/tonne
%
ounces
tonnes
ounces
ounces
tonnes
ounces
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$/oz
6,068
23,862
6,733
0.39
53.8
45,922
23,145
114,131
45,643
23,002
111,140
246
237
70
79
9
114
28
70
29
127
(37)
103
2,248
7,052
19,332
5,847
0.39
51.8
38,933
25,302
109,943
37,271
24,432
75,727
185
169
47
63
16
57
21
42
1
64
(18)
63
1,703
(984)
4,530
886
–
2.0
6,989
(2,157)
4,188
8,372
(1,430)
35,413
61
68
23
16
(7)
57
7
28
28
63
(19)
40
545
(14%)
23%
15%
0%
4%
18%
(9%)
4%
22%
(6%)
47%
33%
40%
49%
25%
(44%)
100%
33%
67%
2,800%
98%
(106%)
63%
32%
4.4. Red Chris 17,25
Measure
Operating
Total ore mined
Total material mined
Total material milled
Gold head grade
Gold recovery
Gold produced
Copper produced
Silver produced
Gold sales
Copper sales
Silver sales
Financial
Revenue
Cost of Sales (including depreciation)
Depreciation
EBITDA
EBIT
Operating cash flow
Production stripping
Sustaining capital
Non-Sustaining capital
Total capital expenditure
Free cash flow
All-In Sustaining Cost
All-In Sustaining Cost
On 15 August 2019 Newcrest acquired a 70% interest in and operatorship of
the Red Chris mine and surrounding tenements in British Columbia, Canada.
The production and financial outcomes above represent Newcrest’s
70% ownership of the Red Chris mine, with the current period reflecting
twelve-months of ownership whilst the prior period reflects production
and financial outcomes from 15 August 2019 to 30 June 2020.
Gold production of 45,922 ounces was approximately 3% higher than the
prior period on a normalised basis, primarily driven by a 2% increase in
gold recovery.
Total material mined was approximately 8% higher than the prior period
on a normalised basis, although it was impacted by lower equipment
utilisation due to COVID-19 management measures, unseasonal
rainfall and snow requiring continuous road maintenance, and ongoing
pit dewatering management. Phase 4 was successfully depleted in
March 2021. Mining safely continued in Phase 5 with an optimised pit
design increasing ore tonnes over the life of the Phase. The Phase 7
stripping campaign commenced in March 2021 and is expected to deliver
significant benefits starting in the June quarter of the 2023 financial year.
Mill throughput was approximately 1% higher than the prior period on
a normalised basis, driven by the implementation of advanced process
controls providing stability in the primary grinding circuits while optimising
equipment effectiveness. Although mill throughput was higher in the current
period, high water saturation as a result of unseasonal rainfall caused
material handling issues and impacted on the availability of ex-pit tonnes.
Recovery improved by 2% in the current period, driven by the installation of
donut launders in the flotation circuit, the introduction of short interval control,
process control improvements and an additional cleaner column which
increased residence time in the circuit. The increased recovery was partially
offset by the intermittent loss of the regrind VertiMill, as a result of mechanical
failure upon restart after multiple unplanned power outages in February.
EBIT of $9 million was 44% lower than the prior period primarily driven by
costs associated with COVID-19 measures, higher site costs, and higher
depreciation, partially offset by higher realised gold and copper prices and
improved production performance and resulting higher sales.
AISC of $2,248 per ounce was 32% higher than the prior period primarily
due to higher levels of sustaining capital expenditure, additional costs
associated with COVID-19 measures, and higher levels of infill drilling
activity. This was partially offset by a higher realised copper price.
Free cash flow of negative $37 million was lower than the prior period
primarily driven by increased non-sustaining and sustaining capital
expenditure, increased production stripping activity, increased exploration,
and increased site costs. The increase in exploration primarily relates to
increased drilling activity at Red Chris and the nearby GJ property. This
was partially offset by higher realised gold and copper prices.
Capital expenditure of $127 million was 98% higher than the prior period.
The key drivers of the increased expenditure in the current period reflect
an increase in non-sustaining capital primarily relating to the Block Cave
Pre-Feasibility Study and the Block Cave Early Works Program (which
includes construction of a box cut and exploration decline), together with
higher sustaining capital to support operational improvement and tailings
impoundment area projects, and higher levels of production stripping.
Directors’ Report 70
5. Discussion and Analysis of the Balance Sheet
5.1. Net assets and total equity
Newcrest had net assets and total equity of $10,124 million as at 30 June 2021.
US$m
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Current tax asset
Property, plant and equipment
Goodwill
Other intangible assets
Deferred tax assets
Investment in associates
Other assets
Total assets
Liabilities
Trade and other payables
Current tax liability
Borrowings
Lease liabilities
Other financial liabilities
Provisions
Deferred tax liabilities
Total liabilities
Net assets
Equity
Equity attributable to owners of the parent
Total equity
As at 30 June
2021
2020
Change
Change %
1,873
289
1,505
641
3
9,788
19
32
54
442
68
1,451
305
1,573
546
1
8,809
17
24
65
386
65
422
(16)
(68)
95
2
979
2
8
(11)
56
3
14,714
13,242
1,472
(577)
(107)
(1,635)
(62)
(110)
(735)
(1,364)
(4,590)
10,124
10,124
10,124
(520)
(23)
(2,017)
(58)
(274)
(623)
(1,114)
(4,629)
8,613
8,613
8,613
(57)
(84)
382
(4)
164
(112)
(250)
39
1,511
1,511
1,511
29%
(5%)
(4%)
17%
200%
11%
12%
33%
(17%)
15%
5%
11%
(11%)
(365%)
19%
(7%)
60%
(18%)
(22%)
1%
18%
18%
18%
Directors’ Report continuedNewcrest Annual Report 2021 71
5.2. Financial metrics
5.2.1 Net debt and gearing
Net debt (comprising total borrowings and lease liabilities less cash and cash equivalents) as at 30 June 2021 was a net cash position of $176 million,
compared to net debt of $624 million in the prior period. All of Newcrest’s borrowings are US dollar denominated. The gearing ratio (net debt as a
proportion of net debt and total equity) as at 30 June 2021 was negative 1.8%, a decrease from 6.8% as at 30 June 2020, and comfortably within
Newcrest’s financial policy target of being less than 25%.
Components of the movement in net debt and gearing are outlined in the table below.
US$m
Corporate bonds – unsecured
Other loans*
Capitalised transaction costs on facilities
Total borrowings
Lease liabilities
Total debt
Less cash and cash equivalents
(Net cash) or net debt
Total equity
Total capital (Net cash) or net debt and total equity
Gearing (Net cash) or net debt/total capital
* Represents interest-bearing liabilities acquired as part of the Red Chris acquisition.
5.2.2 Leverage Ratio and Interest Coverage Ratio
As at 30 June
2021
1,650
–
(15)
1,635
62
1,697
(1,873)
(176)
10,124
9,948
(1.8%)
2020
Change
Change %
2,030
4
(17)
2,017
58
2,075
(1,451)
624
8,613
9,237
6.8%
(380)
(4)
2
(382)
4
(378)
(422)
(800)
1,511
711
(8.6)
(19%)
(100%)
12%
(19%)
7%
(18%)
(29%)
(128%)
18%
8%
(126%)
Newcrest’s leverage ratio (net debt to EBITDA) remains comfortably within the financial policy target of being less than 2.0 times EBITDA on a trailing
12 month basis. As at 30 June 2021, Newcrest’s positive net cash position and increased earnings (EBITDA) resulted in a negative leverage ratio outcome
of 0.1 times, a decrease of 0.4 times compared to 30 June 2020.
US$m
(Net cash) or net debt
EBITDA6 (trailing 12 months)
Leverage ratio (times)
Newcrest’s interest coverage ratio increased to 40.7 as at 30 June 2021.
US$m
EBITDA 6
Less facility fees and other costs
Less discount unwind on provisions
Less debt extinguishment and related costs
Adjusted EBITDA
Net interest expense
Less facility fees and other costs
Less discount unwind on provisions
Less debt extinguishment and related costs
Net Interest Payable
Interest Coverage ratio
As at 30 June
2021
(176)
2,443
(0.1)
2021
2,443
(17)
(6)
(20)
2,400
102
(17)
(6)
(20)
59
40.7
2020
624
1,835
0.3
Change
Change %
(800)
608
(0.4)
(128%)
33%
(133%)
For the 12 months ended 30 June
2020
Change
Change %
1,835
(15)
(7)
–
1,813
102
(15)
(7)
–
80
22.7
608
(2)
1
(20)
587
0
(2)
1
(20)
(21)
18.0
33%
(13%)
14%
–
32%
–
(13%)
14%
–
(26%)
79%
Directors’ Report 72
5. Discussion and Analysis of the Balance Sheet continued
5.2. Financial metrics continued
5.2.3 Liquidity coverage
Newcrest had $3,873 million of cash and committed undrawn bank facilities as at 30 June 2021.
US$m
As at 30 June 2021
Cash and cash equivalents
Bilateral bank debt facilities
Liquidity coverage
As at 30 June 2020
Cash and cash equivalents
Bilateral bank debt facilities
Liquidity coverage
Facility
utilised
Available
liquidity
Facility limit
n/a
–
–
n/a
–
–
1,873
2,000
3,873
1,451
2,000
3,451
n/a
2,000
2,000
n/a
2,000
2,000
6. Non-IFRS Financial Information
Newcrest results are reported under International Financial Reporting Standards (IFRS). This document includes certain non-IFRS financial information
within the meaning of ASIC Regulatory Guide 230: ‘Disclosing non-IFRS financial information’ published by ASIC and within the meaning of Canadian
Securities Administrators Staff Notice 52-306 – Non-GAAP Financial Measures.
Such information includes: ‘Underlying profit’ (profit or loss after tax before significant items attributable to owners of the Company); ‘EBITDA’ (earnings
before interest, tax, depreciation and amortisation, and significant items); EBIT (earnings before interest, tax and significant items); ‘EBITDA Margin’
(EBITDA expressed as a percentage of revenue); ‘EBIT Margin’ (EBIT expressed as a percentage of revenue); ‘Leverage ratio (net debt to EBITDA)’
(calculated as net debt divided by EBITDA for the preceding 12 months); ‘Free Cash Flow’ (calculated as cash flow from operating activities less cash
flow related to investing activities, with Free Cash Flow for each operating site calculated as Free Cash Flow before interest, tax and intercompany
transactions); ‘Free Cash Flow before M&A activity’ (being ‘Free Cash Flow’ excluding acquisitions, investments in associates and divestments); and ‘AISC’
(All-In Sustaining Cost) and ‘AIC’ (All-In Cost) as per updated World Gold Council Guidance Note on Non-GAAP Metrics released November 2018. AISC
will vary from period to period as a result of various factors including production performance, timing of sales and the level of sustaining capital and the
relative contribution of each asset. AISC Margin reflects the average realised gold price less the AISC per ounce sold.
These measures are used internally by Management to assess the performance of the business and make decisions on the allocation of resources and
are included in this report to provide greater understanding of the underlying financial performance of Newcrest’s operations. The non-IFRS information
has not been subject to audit or review by Newcrest’s external auditor and should be used in addition to IFRS information. Such non-IFRS financial
information/non-GAAP financial measures do not have a standardised meaning prescribed by IFRS and may be calculated differently by other companies.
Although Newcrest believes these non-IFRS/non-GAAP financial measures provide useful information to investors in measuring the financial performance
and condition of its business, investors are cautioned not to place undue reliance on any non-IFRS financial information/non-GAAP financial measures
included in this document. When reviewing business performance, this non-IFRS information should be used in addition to, and not as a replacement of,
measures prepared in accordance with IFRS, available on Newcrest’s website and the ASX and SEDAR platforms.
The non-IFRS 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, noting that:
– Sustaining and Major project (non-sustaining) capital are reconciled to investing cash flow in section 3.3;
– Free cash flow is reconciled to the cash flow statement in section 3.
Directors’ Report continuedNewcrest Annual Report 2021 73
6.1. Reconciliation of Statutory profit to Underlying profit
Underlying profit, EBIT and EBITDA is reported by Newcrest to provide greater understanding of the underlying business performance of its operations
and the Group. These measures exclude 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 and asset impairment
and write-down charges. Statutory profit and Underlying profit both represent profit after tax amounts attributable to Newcrest shareholders.
In the current period, Statutory profit was equal to Underlying profit.
Profit after tax attributable to Newcrest shareholders
US$m
Statutory profit 5
Total significant items
Underlying profit 6
Profit after tax attributable to Newcrest shareholders
US$m
Statutory profit 5
Write-down of Gosowong tax assets
Write-down of property, plant and equipment at Gosowong
Major transaction and integration costs
Debt extinguishment and other finance costs
Underlying profit 6
Before Tax and
Non-controlling
interest
1,668
–
1,668
Before Tax and
Non-controlling
interest
997
–
20
15
69
1,101
6.2. Reconciliation of Underlying profit to EBIT and EBITDA
US$m
Underlying profit 6
Non-controlling interests
Income tax expense
Net finance costs
EBIT 6
Depreciation and amortisation
EBITDA 6
For the 12 months ended 30 June 2021
Non-controlling
interest
After tax and
Non-controlling
interest
–
–
–
1,164
–
1,164
Tax
(504)
–
(504)
For the 12 months ended 30 June 2020
Tax
(350)
37
–
(4)
(21)
(338)
Non-controlling
interest
After tax and
Non-controlling
interest
–
(8)
(5)
–
–
(13)
For the 12 months
ended 30 June
2021
1,164
–
504
102
1,770
673
647
29
15
11
48
750
2020
750
1
338
102
1,191
644
2,443
1,835
Directors’ Report 74
6. Non-IFRS Financial Information continued
6.3. Reconciliation of All-In Sustaining Cost and All-In Cost to cost of sales
“All-In Sustaining Cost” and “All-In Cost” are non-IFRS measures which Newcrest has adopted since the guidance was released by the World Gold
Council in June 2013.
The World Gold Council released an updated guidance note in November 2018, which Newcrest fully applied from 1 July 2019.
Gold sales (koz)
Cost of sales
Depreciation and amortisation
By-product revenue
Gold concentrate treatment and refining deductions
Corporate costs
Sustaining exploration
Sustaining leases
Sustaining production stripping 7
Underground mine development
Sustaining capital expenditure
Rehabilitation accretion and amortisation
All-In Sustaining Costs 7
Growth and development expenditure
Non-sustaining capital expenditure*
Non-sustaining production stripping
Non-sustaining exploration
Non-sustaining leases
All-In Cost
For the 12 months ended 30 June
2021
2020
Reference
US$m
US$/oz
US$m
US$/oz
6.3.1
6.3.2
6.3.3
6.3.4
6.3.7
6.3.5
6.3.5
6.3.6
6.7
6.3.4
6.3.6
6.3.5
6.3.7
1,996
2,805
(650)
(1,040)
48
109
12
26
143
(4)
371
17
1,837
11
588
5
103
7
2,551
1,406
(326)
(521)
24
55
6
13
71
(2)
186
8
920
5
294
3
52
4
1,278
2,143
2,568
(622)
(684)
40
80
13
27
147
(7)
270
16
1,848
15
272
–
100
2
2,237
1,199
(291)
(319)
19
37
6
13
68
(3)
126
7
862
8
127
–
46
1
1,044
* Represents spend on major projects that are designed to increase the net present value of the applicable mine and are not related to current production. Significant
projects in the current period include the Cadia Plant Expansion, PC2-3 development at Cadia, the Cadia Molybdenum Plant and the Seepage Barrier Feasibility Study, the
Phase 14A Pre-Feasibility Study and Front End Recovery uplift projects at Lihir.
6.3.1. Cost of sales
US$m
Cost of sales as per Note 5(b) of the consolidated financial statements
6.3.2. Depreciation and amortisation
US$m
Depreciation and amortisation per Note 5(b) of the consolidated financial statements
For the 12 months
ended 30 June
2021
2,805
2020
2,568
For the 12 months
ended 30 June
2021
650
2020
622
Directors’ Report continuedNewcrest Annual Report 2021 6.3.3. By-product revenue
US$m
Copper concentrate sales revenue
Copper concentrate treatment and refining deductions
Total copper sales revenue per Note 5(a) of the consolidated financial statements
Silver sales revenue
Silver concentrate treatment and refining deductions
Total silver sales revenue per Note 5(a) of the consolidated financial statements
Total By-product revenue
6.3.4. Corporate costs
US$m
Corporate administration expenses per Note 5(c) of the consolidated financial statements
Less: Corporate depreciation
Less: Growth and development expenditure
Total Corporate costs
6.3.5. Production stripping and underground mine development
US$m
Sustaining production stripping
Underground mine development
Non-sustaining production stripping
Total production stripping and underground mine development
Underground mine development
Production stripping per Note 11 of the consolidated financial statements
Total production stripping and underground mine development
6.3.6. Capital expenditure
US$m
Payments for property, plant and equipment, development and feasibility studies
per consolidated financial statements
Information systems development per consolidated financial statements
Total capital expenditure
Sustaining capital expenditure (per 3.3 of the Operating and Financial Review)
Non-sustaining capital expenditure (per 3.3 of the Operating and Financial Review)
Capitalised Leases (per 3.3 of the Operating and Financial Review)
Total capital expenditure
Sustaining capital expenditure related to integration (reclassified as growth and development)
Total capital expenditure (per 6.3 of the Operating and Financial Review)
75
For the 12 months
ended 30 June
2021
2020
1,137
(120)
1,017
26
(3)
23
1,040
778
(108)
670
16
(2)
14
684
For the 12 months
ended 30 June
2021
2020
143
(23)
(11)
109
117
(22)
(15)
80
For the 12 months
ended 30 June
2021
2020
143
(4)
5
144
(4)
148
144
147
(7)
–
140
(7)
147
140
For the 12 months
ended 30 June
2021
2020
940
20
960
376
595
(11)
960
–
960
529
15
544
275
273
(4)
544
(2)
542
Directors’ Report 76
6. Non-IFRS Financial Information continued
6.3. Reconciliation of All-In Sustaining Cost and All-In Cost to cost of sales continued
6.3.7. Exploration expenditure
US$m
Exploration and evaluation expenditure per consolidated financial statements
Sustaining exploration (per 6.3 of the Operating and Financial Review
Non-sustaining exploration (per 6.3 of the Operating and Financial Review)
Total exploration expenditure
6.4. Earnings per share
US$ cents
Earnings per share (basic) per Note 8 of the consolidated financial statements
Earnings per share (diluted) per Note 8 of the consolidated financial statements
6.5. Dividends per share
US$m
Total dividends paid per Note 9(a) of the consolidated financial statements
Total issued capital per Note 26(b) of the consolidated financial statements
Dividends paid per share
6.6. Reconciliation of Return on Capital Employed (ROCE)
For the 12 months
ended 30 June
2021
2020
115
12
103
115
113
13
100
113
For the 12 months
ended 30 June
2021
142.5
142.1
2020
83.4
83.1
For the 12 months
ended 30 June
2021
2020
266
817,289,692
169
816,071,894
32.5
22.0
ROCE is “Return on Capital Employed” and is reported by Newcrest to provide greater understanding of the underlying business performance of
its operations and the Group. ROCE is calculated as EBIT before significant items expressed as a percentage of average total capital employed
(net debt and total equity).
$m
EBIT 6
Total capital (net debt and total equity) – as at 30 June 2019
Total capital (net debt and total equity) – as at 30 June 2020
Total capital (net debt and total equity) – as at 30 June 2021
Average total capital employed
Return on Capital Employed
For the 12 months
ended 30 June
2021
1,770
–
9,237
9,948
9,593
18.5%
2020
1,191
8,026
9,237
–
8,632
13.8%
Directors’ Report continuedNewcrest Annual Report 2021 77
6.7. Reconciliation of Newcrest’s Operational Performance including its 32% attributable share of Fruta del Norte
through its 32% equity interest in Lundin Gold Inc
Gold Production 4
Gold production – Newcrest operations
Gold production – Fruta del Norte (32%)
Gold production
All-In Sustaining Cost 4,7
All-In Sustaining Cost – Newcrest operations
All-In Sustaining Cost – Fruta del Norte (32%)
All-In Sustaining Cost
Gold ounces sold – Newcrest operations
Gold ounces sold – Fruta del Norte (32%)
Total gold ounces sold
All-In Sustaining Cost – Newcrest operations
All-In Sustaining Cost – Fruta del Norte (32%)
All-In Sustaining Cost
All-In Sustaining Cost margin 7
Realised gold price 16
All-In Sustaining Cost – Newcrest operations
All-In Sustaining Cost margin
7. Risks
For the 12 months
ended 30 June
UoM
2021
2020
oz
oz
oz
1,964,037
129,285
2,093,322
2,154,696
16,422
2,171,118
For the 12 months
ended 30 June
2021
1,837
91
1,928
1,996,243
120,181
2,116,425
920
753
911
2020
1,848
0
1,848
2,142,741
0
2,142,741
862
0
862
For the 12 months
ended 30 June
2021
1,796
920
876
2020
1,530
862
668
UoM
$m
$m
$m
oz
oz
oz
$/oz
$/oz
$/oz
UoM
$/oz
$/oz
$/oz
Newcrest’s Purpose is “Creating a brighter future for people through safe and responsible mining”. In pursuit of this, Newcrest is focused on the following
five pillars and fulfilling the associated aspirations by 2025:
– We are a safe and sustainable business: Everyone goes home safe and healthy every day, and communities trust us because of our environmental
and social performance;
– We have the best people: We have a high-performance, inclusive culture where everyone can thrive and excel;
– We are outstanding operators: We safely operate our assets to their full potential;
– We are a leader in innovation and creativity: We create lasting value through audacious breakthroughs; and
– We grow profitably: We have an industry leading portfolio that delivers superior returns and growth.
Newcrest’s business, operating and financial results and performance are subject to various risks and uncertainties, some of which are beyond Newcrest’s
reasonable control. Set out below are matters which Newcrest has assessed as having the potential to have a material impact on the business, operating
and/or financial results and performance and fulfilment of the aspirations of the Group. These matters may arise individually, simultaneously or in combination.
The matters identified below are not necessarily listed in order of importance and are not intended as an exhaustive list of all the risks and uncertainties
associated with Newcrest’s business. Additional risks and uncertainties not presently known to Management and the Board, or that Management and the
Board currently believe to be immaterial or manageable, may adversely affect Newcrest’s business.
Newcrest has a Risk Management Framework and process in place to identify those risks that may have a material impact on the Group. Material Risks
are documented and monitored with the implementation of preventative and mitigating processes and controls. Implemented processes and controls may
not prevent a material unwanted event from occurring or eliminate the potential impact entirely. Further, Newcrest’s business, operating and/or financial
results and performance may be materially impacted should any such actions and controls fail or be disrupted.
Further information on Newcrest’s approach to risk management is set out in Newcrest’s Corporate Governance Statement.
Directors’ Report 78
7. Risks continued
Fluctuations in external
economic drivers
External Risks
External economic drivers (including macroeconomic, metal prices, exchange rates and costs)
Market price of gold and copper
Newcrest’s revenue is principally derived from the sale of gold and copper based on prevailing market prices.
Fluctuations in gold prices can occur due to numerous factors beyond Newcrest’s control, including macroeconomic
and geopolitical factors (such as financial and banking stability, global and regional political events and policies
including monetary policy easing, inflation and changes in inflationary expectations, interest rates including negative
interest rate environments, global economic growth expectations, and actual or expected gold purchases and/or sales
by central banks), speculative positions taken by investors or traders, changes in demand for gold (including gold
used in fabrication such as for design, jewellery and other industrial uses, and changes due to product substitution),
changes in supply for gold from mine production and from scrap recycling, as well as gold hedging and de-hedging
by gold producers.
Fluctuations in copper prices can occur due to numerous factors beyond Newcrest’s control, including the worldwide
balance of copper demand and supply, rates of global economic growth, the rate of development of new mines and
closure of existing mines, trends in industrial production and conditions in the electricity, housing and automotive
industries, economic growth and geopolitical conditions worldwide and particularly in China, which is the largest
consumer of refined copper in the world, speculative investment positions in copper and copper futures, the availability
and cost of substitute materials, and availability and cost of appropriate smelting and refining arrangements and recovery
rate through the smelting and refining processes.
Newcrest is predominantly an unhedged producer, although Newcrest has hedges over a portion of Telfer’s future
planned gold production to FY23. Telfer is a large-scale, low-grade mine and its profitability and cash flow are both very
sensitive to the realised Australian dollar gold price.
Lower gold and/or copper prices may adversely affect Newcrest’s financial condition and performance.
Foreign exchange rate fluctuations
Given the geographic spread of Newcrest’s operations, its earnings, cash flows and balance sheet are exposed to
multiple currencies, including a portion of spend at each operation being denominated in the local currency. The relative
movement of these currencies (particularly the Australian dollar) against the US dollar may have a significant impact
on Newcrest’s financial results and cash flows, which are reported in US dollars. Newcrest does not hedge its foreign
exchange transaction exposures although it may hedge certain major capital expenditures to the functional currency
of the project or operation.
The presentation currency of the Group is the US dollar. Newcrest’s parent entity and all Australian entities use the
Australian dollar as their functional currency, and Red Chris uses the Canadian dollar as its functional currency. All other
material entities, including Lihir, use the US dollar as their functional currency.
Directors’ Report continuedNewcrest Annual Report 2021 79
Fluctuations in external
economic drivers continued
Increased costs, capital and commodity inputs
Operating costs are subject to variations due to a number of factors, some of which are specific to a particular mine site,
including changing ore characteristics and metallurgy, changes in the ratio of ore to waste as the mine plan follows the
sequence of extracting the ore body, surface and underground haulage distances, underground geotechnical conditions
and the level of sustaining capital invested to maintain operations.
In addition, operating costs and capital expenditure are, to a significant extent, driven by external economic conditions
impacting the cost of commodity inputs consumed in extracting and processing ore (including but not limited to,
electricity, water, fuel, chemical reagents, explosives, tyres and steel), and labour costs associated with those activities.
Newcrest currently hedges a portion of its expected fuel requirements. Other input costs are generally not hedged.
Where it considers appropriate, Newcrest enters into short term, medium term or evergreen contracts at fixed prices
or fixed prices subject to price rise and fall mechanisms.
Examples of impacts
Actual or forecasted lower metal prices, and/or adverse movements in exchange rates and/or adverse movements
in operating costs may:
– change the economic viability of mining operations, particularly higher cost mining operations, which may result
in decisions to alter production plans or the suspension or closure of mining operations;
– reduce the market value of Newcrest’s gold or copper inventory and Newcrest’s estimates of Mineral Resources and
Ore Reserves;
– result in Newcrest curtailing or suspending its exploration activities, with the result that depleted Ore Reserves may
not be replaced and/or unmined Ore Reserves or Mineral Resources may not be mined;
– affect Newcrest’s future operating activities and financial results through changes to proposed project
developments; and
– result in changes in the estimation of the recoverable amount of Newcrest’s assets when assessing potential
accounting impairment of those assets.
Newcrest looks to manage the impact of adverse movements in these factors by seeking to be a relatively low-cost gold
producer, maintaining a strong balance sheet, and having sufficient liquid funds and committed undrawn bank facilities
available to meet the Group’s financial commitments.
Holding all other factors constant, examples of estimated potential financial impacts in the 2022 Financial Year of metal
prices and exchange rates are approximately as follows:
Element
Realised gold price
Realised copper price
AUD:USD exchange rate
Change
Impact on
Estimated Impact
+/-$10/oz
+/-$0.05/lb
+/-A$0.01
Revenue
Revenue
EBIT
+/-$18m
+/-$12m
-/+$17m
Directors’ Report 80
7. Risks continued
Political events,
Government actions,
changes in law and
regulation and inability
to maintain title
External Risks continued
Political events, actions by governments and tax authorities
Newcrest has exploration, development and production activities that are subject to political, economic, social, regulatory
and other risks and uncertainties.
These risks and uncertainties are unpredictable, vary from country to country and include but are not limited to law
and order issues (including varying government capacity to respond), political instability, civil unrest, rebellion and civil
society opposition, expropriation and/or nationalisation, changes in government ownership levels in projects, fraud,
bribery and corruption, restrictions on access to foreign exchange and/or repatriation of cash, earnings or capital, land
ownership disputes and tenement access issues, disputes with local communities, renegotiation or nullification of
existing concessions, licences, permits and contracts, the public health system management of health infections and
diseases and the imposition of international sanctions or border closures, each of which could have a significant impact
on Newcrest.
There is also a risk that governments could review laws, legislative decisions (such as the grant of tenements),
contractual arrangements or amend government policy, without notice or industry consultation. If, in one or more
of Newcrest’s countries of operations, we were not able to obtain or maintain necessary permits, authorisations
or agreements to implement planned projects or continue our operations under conditions or contracts or within
timeframes that make such plans and operations economic, or if legal, ownership, fiscal conditions (including royalties
and duties), banking and exchange controls (including controls pertaining to the holding of cash and remittance of profits
and capital to the parent company), employment, environmental and social laws and regimes were to unexpectedly
change, our operating results and financial condition could be materially impacted.
These risks have become more prevalent in recent years, and in particular there has been an increasing social and
political focus on:
– the revenue derived by governments and other stakeholders from mining activities, which has resulted in announced
reviews of the policy and legislative regimes applicable to mining in a number of the jurisdictions in which Newcrest
has interests (including Papua New Guinea and Chile);
– national control of and benefit from natural resources, with proposed reforms regarding government or landowner
participation in mining activities, limits on foreign ownership of mining or exploration interests and/or forced
divestiture (with or without adequate compensation), and a broad reform agenda in relation to mining legislation,
environmental stewardship, significant royalty increases and local business opportunities and employment; and
– Environmental, Social, and Governance (ESG) credentials for the mining industry in general and particularly for issues
relevant to civil society that could create unrest, suspension of mining operations or materially damage reputation.
In Papua New Guinea (PNG), there is a political focus on future policy directions, including in relation to the extractives
sector. The Government has stated it wants to increase benefits for PNG from extractive projects as part of its “Take
Back PNG” approach. Potential policy changes could include introducing a new production sharing regime for minerals
and oil/gas, amending the existing Mining Act and/or changing the level and manner of local equity participation in
projects, taxation regimes, banking and foreign exchange controls, and/or controls pertaining to the holding of cash and
remittance of profits and capital to the parent company.
On 24 April 2020 the PNG Government announced that the Special Mining Lease for the Porgera mining operation
(SML 1) would not be renewed. It subsequently amended the Mining Act and issued a new Special Mining Lease 11
for Porgera to Kumul Mineral Holdings Limited (a State-owned company). The PNG Government is now negotiating
with the Porgera JV participants to establish new arrangements for restarting and operating Porgera. The parties have
signed a Framework Agreement and are negotiating final definitive agreements. The PNG Government has stated that
the decision not to renew SML 1 related to alleged issues specifically related to environmental damages claims and
resettlement at the Porgera mine and has no bearing on any other operations, including Lihir, or advanced exploration
projects, including Wafi-Golpu. The PNG Prime Minister stated that Wafi-Golpu remained one of the Government’s
priority projects for development.
Directors’ Report continuedNewcrest Annual Report 2021 81
Political events,
Government actions,
changes in law and
regulation and inability
to maintain title
continued
More recently, the PNG Government has prepared and submitted to Parliament a proposed new organic law to
introduce a production sharing regime for the mining sector. The proposed organic law will require the approval of a
two thirds majority of Parliament and, if passed in its current proposed form, purports to transfer ownership of minerals
from the PNG State to State-owned entities who would then be responsible for negotiating mineral production sharing
arrangements. As currently drafted, the bill containing the proposed organic law will not apply to Lihir, but could
potentially apply to Wafi-Golpu if a Mining Lease or Mining Development Contract is not in place before the effective
date for the proposed organic law, which the PNG Prime Minister has indicated is intended to be 2025. The bill is subject
to amendment by Parliament.
There is also the potential for legal challenges to the Wafi-Golpu permitting process as it progresses towards completion,
including by provincial governments, landowner groups and civil society organisations. For example, in January 2019
the Governor of Morobe Province commenced a judicial review application against the State of PNG in relation to a
Memorandum of Understanding (MOU) between the State of PNG and the Wafi-Golpu Joint Venture (WGJV) signed in
December 2018. Those proceedings (and stay order) were dismissed by the National Court in February 2020 and the
Governor appealed the matter to the Supreme Court. In March 2021 the Governor commenced a new judicial review
application against the State challenging the grant of an environmental permit for Wafi-Golpu. Any such legal challenges
may adversely impact the Wafi-Golpu permitting process. WGJV is currently engaging with the State of PNG to progress
permitting of the Wafi-Golpu Project and has commenced discussions in relation to the Special Mining Lease. The timing
for completing the discussions is uncertain and there is no assurance of the outcomes.
In Canada, the nature and extent of First Nations rights and title remains the subject of active debate, claims and
litigation, particularly in British Columbia where the Red Chris mine is located. First Nations in British Columbia have
made claims in respect of Aboriginal rights and title to substantial portions of land and water in the province. Some of
these claims are made outside of Treaty and other processes. The effect of such claims on any particular area of land will
not be determinable until the exact nature of historical use, occupancy and rights to such property have been clarified
by a decision of the Canadian courts or definition in a treaty. First Nations in British Columbia are seeking settlements
with respect to these claims, including compensation from governments, and are seeking rights to act as regulatory
authorities within their traditional territories. The effect of these claims cannot be estimated at this time. The federal and
provincial governments in Canada have been seeking to negotiate settlements with Aboriginal groups throughout British
Columbia in order to resolve many of these claims. Although none of these claims have impacted the Red Chris mine, the
issues surrounding Aboriginal title and rights remain to be resolved. On 10 June 2021 the Province of British Columbia
announced the signing of a Shared Prosperity Agreement with the Tahltan Nation as represented by the Tahltan Central
Government (TCG), Iskut Band and Tahltan Band, which amongst other things, sets the foundation to collaboratively
achieve long-term comprehensive reconciliation and land-use predictability. On 15 June 2021, the Province was directed
by Order in Council to negotiate an agreement under section 7 of the Declaration on the Rights of Indigenous Peoples Act
(2019) with the TCG with respect to the Red Chris mine which would require that decisions under the BC Environmental
Assessment Act (BC EAA) either (a) would be exercised jointly by the Province and TCG; or (b) could only be exercised
by the Province if the prior informed consent of the TCG has been obtained. Decisions under the BC EAA will be required
for the construction and operation of a block cave mine at Red Chris.
In Western Australia, where Telfer and Havieron are located, the Government has proposed to repeal the existing Aboriginal
Heritage Act 1972 (WA) and replace it with a new regime for the protection of Aboriginal cultural heritage. A bill for the new
Aboriginal Cultural Heritage Act is expected to be introduced to the Western Australian parliament in the second half of
2021. Newcrest has agreed to work with the Western Desert Lands Aboriginal Corporation to review the existing heritage
protocol under its Indigenous Land Use Agreement which applies to Telfer and Havieron. It is expected that this review will
need to take into account changes to cultural heritage laws arising from the introduction of the new bill.
In Ecuador, a relatively new large-scale mining jurisdiction, policies and regulations are evolving amid a broader debate
on the benefits and impacts of mining. Potential future legal challenges around community consent and seeking to
restrict mining activities in Ecuador present a risk to the mining industry. The new President and parliament elected
in 2021 may consider additional policy and regulation that could impact mining. While the President-elect is largely
supportive of business, the country is yet to set a clear policy position on mining. A number of countries within the
Latin American region, including Chile, are looking at ways to increase government revenues from mining in response
to the COVID-19 pandemic’s negative impact on the economy.
There can be no certainty as to what changes might be made to relevant law or policy in the jurisdictions where the
Group has current or potential future interests, or the impact that any such changes may have on Newcrest’s ability
to own and operate its mining and related interests and to otherwise conduct its business in those jurisdictions.
Directors’ Report 82
7. Risks continued
Political events,
Government actions,
changes in law and
regulation and inability
to maintain title
continued
External Risks continued
Changes in law and regulation and inability to maintain title
Newcrest’s current and future mining operations, development projects and exploration activities are subject to various
laws, policies and regulations and to obtaining and maintaining the necessary titles, authorisations, permits and licences,
and associated land access and other arrangements with landowners and local communities and various layers of
Government, which authorise those activities under the relevant law (Authorisations). In addition, Newcrest is subject
to law and regulation as a listed entity in Australia, Canada and Papua New Guinea.
Changes in law, policies or regulations, or to the manner in which they are interpreted or applied to Newcrest may have
the potential to materially impact the value of a particular operation, development project, exploration assets or the Group
as a whole. Failure to comply with legal requirements may result in Newcrest being subject to enforcement actions with
potentially material consequences, such as financial penalties, suspension of operations and forfeiture of assets.
In a number of jurisdictions where Newcrest has existing interests, the legal framework is becoming increasingly
complex, onerous and subject to change. Changes in laws, policies or regulation, or to the manner in which they are
interpreted or applied, may result in material additional expenditure, taxes or costs, restrictions on the movement of
funds, or interruption to, or operation of, Newcrest’s activities. Disputes arising from the application or interpretation of
applicable laws, policies or regulations in the countries where Newcrest operates could also adversely impact Newcrest’s
operations, development projects, exploration assets, financial performance and/or value.
There can be no guarantee that Newcrest will be able to successfully obtain and maintain the necessary Authorisations
or obtain and maintain the necessary Authorisations on terms acceptable to Newcrest, that renewal of existing
Authorisations will be granted in a timely manner or on terms acceptable to Newcrest, or that Newcrest will be in a
position to comply with all conditions that are imposed. Authorisations held by or granted to Newcrest may also be
subject to challenge by third parties which, if successful, could impact on Newcrest’s exploration, development and/or
mining and/or processing activities.
Although Newcrest believes it has taken reasonable measures to acquire the rights needed to undertake its operations,
develop its projects and undertake other activities as currently conducted, some risk exists that some titles and access
rights may be defective. No assurance can be given that such claims are not subject to unregistered, undetected or other
claims or interests which could be materially adverse to Newcrest or its operations. While Newcrest has used its best
efforts to ensure title to all its properties and secured access to surface rights, these titles or rights may be disputed,
which could result in costly litigation or disruption of operations. Surface access issues have the potential to result in
the delay of planned exploration programs, development projects and/or changes in the nature or scale of existing
operations and these delays may be significant. Newcrest expects that it will be able to resolve these issues if and as
they arise, however, there can be no assurance that this will be the case and future acquisitions, relocation benefits
and legal and related costs may be material, which may impact Newcrest’s ability to effectively operate in relevant
geographic areas.
Changes to taxation and royalty laws
Newcrest has operations and conducts business in multiple jurisdictions, and it is subject to the taxation and royalty laws
and regulations of each such jurisdiction. The tax laws and regulations are complicated and subject to change. Further,
international agencies such as the Organization for Economic Cooperation and Development have been coordinating
negotiations amongst countries in respect of cross border and global tax initiatives, which if introduced, could impact
Newcrest adversely through additional tax costs, increased compliance and litigation risks. Newcrest seeks to mitigate
these risks by monitoring tax policy, legislation and regulations and engaging with relevant authorities. Newcrest also
participates in tax reform initiatives through industry bodies and supports tax transparency initiatives to highlight our
fiscal contribution in the various jurisdictions in which we operate. Newcrest may also be subject to review, audit and
assessment in the ordinary course of its operations. Changes in taxation and/or royalty laws and regulations or the
results of audits and assessments could result in higher taxes and/or royalties being payable, require payment of taxes
and/or royalties due from previous years or result in significant penalties on any assessed and unpaid taxes and/or
royalties, which could adversely affect Newcrest’s profitability. Taxes may also adversely affect Newcrest’s ability to
effectively repatriate earnings and otherwise deploy its assets.
Directors’ Report continuedNewcrest Annual Report 2021 83
Climate Change
Newcrest has exposure to a range of climate change risks and opportunities related to the transition to a lower-carbon
economy including political, policy and legal developments, technology, reputation, increased capital costs, cost of inputs
and raw materials, access to external funding and insurances. Gold and copper mining operations are energy intensive
and in the short to medium term, Newcrest expects to continue to rely heavily on fossil fuels as an energy source.
In May 2021 Newcrest set a goal of net zero carbon emissions by 2050, which relates to its operational (Scope 1 and
Scope 2) emissions, although Newcrest will also strive to work across its value chain to reduce Scope 3 emissions.
This goal is in addition to the announcement by Newcrest in June 2019 of a 30% reduction in greenhouse gas (GHG)
emissions per tonne of ore treated by 2030 against a 2018 baseline. To inform investment decisions, Newcrest has also
adopted a protocol for applying shadow carbon prices of US$25/tonne and US$50/tonne CO2-e for jurisdictions where
there are no regulated carbon prices.
In Financial Year 2021, Newcrest continued to build on the progressive implementation of the Taskforce on Climate-
related Financial Disclosures (TCFD) recommendations by undertaking an assessment of the transition risks and
opportunities, and the physical risks, to address the Strategy element of the TCFD recommendations. The selected
scenarios, which assess the potential climate change impacts for transition risks and opportunities over the life of
the mines, include the Stated Policies Scenario (STEPS) (which reflects the impact of existing policy frameworks and
announced policy intentions) and the Sustainable Development Scenario (SDS) (which aims to hold global temperature
rise to well below 2°C). For physical risks, the selected scenarios comprise the Representative Concentration Pathway
4.5 and 8.5 (otherwise referred to as RCP4.5 and RCP8.5). RCP4.5 is an intermediate-emissions scenario consistent with
a future with relatively ambitious emissions reductions but falls short of the 2°C limit/1.5°C aim agreed on in the Paris
Agreement. RCP8.5 is the high-emissions scenario, consistent with a future with no policy changes to reduce emissions
and characterised by increasing GHG emissions that lead to high atmospheric GHG concentrations.
Under the TCFD framework, Climate Financial Driver Analysis (CFDA) was used to identify potential financial impacts of
the transition risks and opportunities pursuant to the selected scenarios. The results of the CFDA indicate a risk of cost
increases in the following areas:
– Carbon pricing
– Increased regulation in response to climate change
– Diesel price
– Oil price
– Uptake of low carbon technologies
However, there is opportunity for these potential risks to be offset by strong demand and prices for copper, together
with Newcrest’s expected increase in copper production.
Under RCP4.5 and RCP8.5 scenarios, the following intrinsic physical risk areas have been identified for Newcrest’s
operating sites:
– Cadia – water scarcity, flood, extreme heat, heat stress, wildfire and wind.
– Telfer – water scarcity, flood, extreme heat, heat stress, wildfire, wind and cyclones.
– Red Chris – water scarcity, flood, wildfire, wind and extreme cold.
– Lihir – water scarcity, flood, extreme heat, heat stress, wind and sea level rise.
Possible adaptation measures and strategies have been identified for the physical risk areas outlined above.
The output of this work on transition and physical risks and opportunities will continue to be refined and will inform
Newcrest’s long-term strategic planning towards implementation of Newcrest’s commitment to net zero carbon
emissions by 2050, in addition to the ongoing implementation of the TCFD framework.
On 16 December 2020, Newcrest announced that it entered into a 15-year renewable Power Purchase Agreement
(PPA) with a wind farm developer in relation to its Cadia mine in New South Wales, Australia. The PPA, together with
the forecast decarbonisation of NSW electricity generation, is expected to deliver a ~20% reduction in Newcrest’s
greenhouse gas emissions intensity as it will provide Newcrest with access to large scale generation certificates which
Newcrest intends to surrender to achieve a reduction in its greenhouse gas emissions. This PPA is a significant step
towards achieving Newcrest’s target of a 30% greenhouse gas emissions intensity reduction by 2030.
Newcrest has also developed GHG Management Plans for each operating site to understand abatement opportunities.
There are no assurances that Newcrest will be able to meet its stated climate change goals, nor that it will be able to
address all climate change risks, which may impact Newcrest’s competitive position, its operating and financial results,
and its financial condition.
Directors’ Report 84
7. Risks continued
Capital and Liquidity
Financial Risks
Newcrest has designed its capital structure to seek to have sufficient liquidity available to meet the Group’s financial
commitments. Newcrest has a range of debt facilities with external financiers including unsecured committed bilateral
bank debt facilities and corporate unsecured senior notes (or ‘bonds’) and has structured these facilities to have varying
maturities so that its refinancing obligations are staggered.
Newcrest anticipates expenditures over the next several years in connection with the development of new projects,
maintenance and expansion of existing projects, activities to facilitate mining of orebodies, along with sustaining capital
expenditure across operations, and, potentially, the acquisition of new projects. Newcrest may from time to time draw
down under its available debt facilities or seek additional external funding such as through asset divestitures, further
equity or debt issues or additional bank debt, or it may need to defer expenditure. Newcrest’s ability to service its current
funding arrangements and to raise and service any additional funding or to meet conditions applicable to current
or future funding arrangements is a function of a number of factors, including (without limitation), macroeconomic
conditions, funding market conditions, future gold and copper prices, Newcrest retaining its investment grade credit
rating, Newcrest’s operational and financial performance, and cash flow and debt position at the time. Newcrest’s ability
to access external funding on an efficient basis may be constrained by a dislocation in these markets at the time of
planned issuance.
If Newcrest is unable to meet its financial obligations or is unable to obtain additional financing on acceptable terms,
its business, operating and financial condition and results may be adversely affected.
Counterparty credit risk
Newcrest is exposed to counterparties defaulting on their payment obligations which may adversely affect Newcrest’s
financial condition and performance. Newcrest limits its counterparty credit risk in a variety of ways.
Credit risk on cash and cash equivalents is reduced through maximum investment limits being applied to banks
and financial institutions based on their credit ratings. Where possible, Newcrest holds funds with banks or financial
institutions with credit ratings of at least A- (S&P) equivalent. Due to banking and foreign exchange regulations in some
of the countries in which Newcrest operates, funds may be held with banks or financial institutions with lower credit
ratings. Newcrest only enters into derivative financial instruments with banks or financial institutions with credit ratings
of at least BBB (S&P) equivalent.
All concentrate customers who wish to trade on open account credit terms are subject to credit risk analysis. Bullion is
largely sold to our lending banks on a spot price basis to minimise credit exposure.
Newcrest is exposed to counterparty risk arising from a potential failure of an insurer on Newcrest’s panel in the event
of a valid claim. Newcrest limits its insurer counterparty risk by diversification of insurers across the Newcrest portfolio
and insures with insurance companies with a credit rating of at least A- (S&P) equivalent where possible.
Newcrest is also exposed to counterparty default and credit risk through two strategic transactions undertaken in 2020.
In April 2020, Newcrest acquired for $460 million the gold prepay and stream facilities and an offtake agreement in
respect of Lundin Gold Inc.’s Fruta del Norte mine (the Facilities), details of which are located on Newcrest’s website.
In January 2020, Newcrest announced the divestment of its interest in Gosowong to PT Indotan Halmahera Bangkit
(Indotan), for a total consideration of $90 million, of which $30 million was deferred and, subject to extension, becomes
payable in September 2021. There can be no certainty that Lundin Gold Inc. will be able to service the Facilities, nor that
Indotan will make payment for the remaining consideration for Gosowong.
Newcrest maintains a range of insurance policies to assist in mitigating the impact of events which could have a
significant adverse effect on its operations and profitability. Newcrest’s insurance policies carry deductibles and limits
which will lead to Newcrest not recovering the full monetary impact of an insured event. Newcrest’s insurances do not
cover all actual or potential risks associated with its business. Newcrest may elect not to insure or to self-insure against
certain risks, such as where insurance is not available, where the premium associated with insuring against the risk is
considered excessive, or if the risk is considered to have a low likelihood of eventuating. The occurrence of events for
which Newcrest is not insured may adversely affect its cash flows and overall profitability.
Uninsured Risk
Directors’ Report continuedNewcrest Annual Report 2021 85
Asset impairments,
write-downs and
restructure costs
In accordance with Newcrest’s accounting policies and processes, the carrying amounts of all non-financial assets
are reviewed yearly and half-yearly to determine whether there is an indicator of impairment. Where an indicator of
impairment exists, a formal estimate of the recoverable amount is made. Impairment is recognised when the carrying
amount exceeds the recoverable amount. The recoverable amount of each cash generating unit (CGU) is estimated using
its fair value less costs of disposal.
Failure to discover new ore
reserves or to enhance and
realise new ore reserves
Significant judgments and assumptions are required in making estimates of fair value. This is particularly relevant in
the assessment of long-life assets. The CGU valuations are subject to variability in key assumptions including, but not
limited to, long-term gold and copper prices, currency exchange rates, discount rates, production profiles and operating
and capital costs. An adverse change in one of more of the assumptions used to estimate fair value could result in a
reduction in a CGU’s fair value. Life of mine (LOM) production and operating and capital cost assumptions are based
on Newcrest’s latest budget, quarterly forecast and/or longer-term LOM plans. The projections include sensitivities on
carbon price scenarios ranging between $25 and $50 a tonne of CO2-e for jurisdictions where there is no regulated
carbon price. The projections also include expected cost improvements, reflecting Newcrest’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.
No assurance can be given as to the absence of significant impairment charges in future periods, including as a result
of further operational reviews, a change in any of the underlying valuation assumptions, or a deterioration in market or
operating conditions. If future impairment losses are incurred, Newcrest’s earnings and fiscal position in the period in
which it records the loss could be materially adversely impacted.
Exploration, project evaluation and project development
Strategic Risks
Newcrest’s current and future business, operating and financial performance and results are impacted by the discovery
of new mineral prospects and actual performance of developing and operating mines and process plants. Results may
differ significantly from estimates determined at the time the relevant project was approved for development. Newcrest’s
current or future development activities may not result in expansion or replacement of current production, or one or more
new production sites or facilities may be less profitable than anticipated or may not be profitable at all.
Newcrest’s ability to sustain or increase its current level of production in the future is in part dependent on the success of
its exploration and acquisition activities in replacing gold and copper reserves depleted by production, the development
of new projects and the expansion of existing operations. The risks associated with sustaining or increasing production
through acquisition is increased by the level of competition over these development opportunities. Additionally, in the
last decade, the time from discovery to production has increased significantly as a result of a variety of factors, including
increases in capital requirements, social and environmental considerations, cultural heritage requirements, economic
conditions, remote locations, and the complexity and depth of ore bodies.
Mine development and expansion projects require significant expenditures during the development phase before
production is possible. Projects are subject to the completion of successful studies, social, cultural heritage and
environmental assessments, issuance of necessary governmental permits and availability of adequate financing.
Expansion projects may rely on the operating history at the existing operation to estimate production and operating
costs but there cannot be certainty that results will be the same for the expansion. Particularly for development
projects, estimates of proven and probable Ore Reserves and cash operating costs are, to a large extent, based upon
the interpretation of geologic data obtained from drill holes and other sampling techniques. They are also based upon
feasibility studies that derive estimates of production and cash operating costs based upon anticipated tonnage and
grades of ore to be mined and processed, the configuration of the ore body, expected recovery rates of gold from the ore,
estimated operating costs, and other modifying factors. As a result, it is possible that actual capital and operating costs
and economic returns will differ significantly from those currently estimated for a project prior to production.
In the absence of exploration success, or additions to Newcrest’s mineral inventory to support future operations through
development activities, expansions or acquisitions, Newcrest will be unable to replace Ore Reserves and Mineral
Resources depleted by operations.
Directors’ Report 86
7. Risks continued
Failure to discover new ore
reserves or to enhance and
realise new ore reserves
continued
Strategic Risks continued
Exploration and project evaluation
Exploration activities are speculative in nature and often require substantial expenditure on exploration surveys, drilling and
sampling as a basis on which to establish the presence, extent and estimated grade (metal content) of mineralised material.
Even if significant mineralisation is discovered it may take additional time and further financial investment to determine
whether Ore Reserves and/or Mineral Resources exist to support a development decision and to obtain necessary
ore body knowledge to assess the technical and economic viability of mining projects. During that time the economic
viability of the project may change due to fluctuations in factors that affect both revenue and costs, including metal
prices, foreign exchange rates, the required return on capital, regulatory requirements, tax regimes and future cost
of development and mining operations.
Competition to replace reserves
Newcrest evaluates potential acquisition and development opportunities for mineral deposits, exploration or
development properties and operating mines. Newcrest’s decision to acquire or develop these properties is based on
a variety of factors, including historical Newcrest operating results, estimates and assumptions regarding the extent
and quality of mineralisation, resources and reserves, assessment of the potential for further discoveries or growth in
resources and reserves, development and capital costs, cash and other operating costs, expected future commodity
prices, projected economic returns, fiscal and regulatory frameworks, evaluations of existing or potential liabilities
associated with the relevant assets and how these factors may change in future. Other than historical operating results
(if applicable), these factors are uncertain and could have an impact on revenue, cash and other operating results, as well
as the process used to estimate Mineral Resources and Ore Reserves.
Resources and reserves
Mineral Resources and Ore Reserves estimates are necessarily imprecise and involve subjective judgements regarding
a number of factors including (but not limited to) grade distribution and/or mineralisation, the ability to economically
extract and process the mineralisation, future commodity prices, exchange rates, operating costs, transport costs, capital
expenditures, royalties and other costs. Such estimates relate to matters outside Newcrest’s reasonable control and
involve geological interpretation and statistical analysis which may subsequently prove to be unreliable or flawed.
Newcrest’s annual Mineral Resources and Ore Reserves statement (most recently issued on 11 February 2021) is based
upon a number of factors, including, without limitation, actual resource exploration drilling and production results,
geological interpretations, historical production performance, mining dilution and ore loss, metallurgical recovery,
economic assumptions (such as future commodity prices and exchange rates) and operating and other costs. Variability
in 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 may impact upon the value attributable to Newcrest’s mineral inventory and/or
the assessment of realisable value of one or more of Newcrest’s assets and/or depreciation expense. Mineral Resources
and Ore Reserves restatements could negatively affect Newcrest’s operating and financial results, as well as its prospects.
No assurance can be given that the Mineral Resources or Ore Reserves referred to in this document will be recovered
at the quality or yield presented or that downgrades of reserves and resources will not occur. There is no assurance that
inferred Mineral Resource estimates, or even Measured and Indicated Mineral Resource estimates, are capable of being
directly reclassified as Ore Reserves under the JORC Code. The inclusion of Mineral Resource estimates should not be
regarded as a representation that these amounts can be converted to Ore Reserves or economically exploited. Investors
are cautioned not to place reliance on Mineral Resource estimates, particularly Inferred Mineral Resource estimates.
Joint venture risk
Joint venture arrangements
Newcrest has joint venture interests, including its interests in Wafi-Golpu in Papua New Guinea, the Red Chris mine
in Canada, the Havieron Project in Western Australia and the Namosi Joint Venture – Waisoi Project in Fiji. These
operations are subject to the risks normally associated with the conduct of joint ventures which include (but are not
limited to) disagreement with joint venture partners on how to develop and operate the mines or projects efficiently,
inability of joint venture partners to meet their financial and other joint venture commitments and particular risks
associated with entities 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 share of project costs. The existence or
occurrence of one or more of these circumstances or events may have a negative impact on Newcrest’s future business,
operating and financial performance and results, and/or value of the underlying asset.
Directors’ Report continuedNewcrest Annual Report 2021 87
Inability to make or to
integrate new acquisitions
Operational failures or
catastrophes and natural
hazards
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 an adverse effect on its business, operating results and financial condition. Business
combinations and acquisitions entail a number of risks including the integration of acquisitions to realise synergies,
unanticipated costs and liabilities, inability to realise targeted upsides, unanticipated issues that impact operations and
inability to realise other expected benefits. Newcrest may also be liable for the acts or omissions of previous owners of
the acquired business or otherwise exposed to liabilities that were unforeseen or greater than anticipated. These and
other factors may result in reductions in the Mineral Resources and Ore Reserves estimates for the acquired business,
and/or impact upon the value attributable to or derived from the acquired business.
Operational Risks
Newcrest’s mining operations are subject to operating risks and hazards including (without limitation) geotechnical,
geothermal and hydrogeological challenges, unanticipated ground conditions, failure of tailings facilities, industrial
incidents, infrastructure and equipment under-performance or failure, shortage of material supplies or other supply
chain failures, transportation and logistics issues in relation to Newcrest’s workforce and equipment, underperformance
of key suppliers or contractors, natural events (such as earthquakes, tsunami, floods, bushfire) and environmental
incidents, health and safety related incidents, and interruptions and delays due to community and/or security issues. The
occurrence of any of these risks or hazards could impact the operating performance of Newcrest’s operations including
through increased costs, and decreased production, and result in a material adverse impact on Newcrest’s production,
cash flows or financial condition.
An increase in worldwide or regional demand for critical resources such as drilling equipment, processing equipment, key
consumables and skilled labour may cause unanticipated cost increases and delays in delivery times, thereby impacting
Newcrest’s operating costs, capital expenditures and production schedules.
A key operational risk for Newcrest is the availability and price of fuel, power and water to support mining and mineral
processing activities. Large amounts of power and large volumes of water are used in the extraction and processing of
minerals and metals. Apart from Cadia, our operations are located in remote areas and the availability of infrastructure
and key inputs, such as water and power, at a reasonable cost, cannot be assured. Power and water are integral
requirements for exploration, development and production facilities on mineral properties. Even a temporary interruption
of power or water supply could materially affect an operation. There is no guarantee that we will secure power, water and
access rights to land going forward or on reasonable terms.
The state of New South Wales was impacted by a severe drought into 2020. Cadia implemented water saving initiatives
in the plant and optimisation of onsite bores and other water sources. In addition, rainfall in the region and the purchase
of water licences on the water trading market has resulted in improved levels of water being captured in on site storage
facilities. Newcrest’s latest internal modelling indicates that even under a return-to-drought scenario, Cadia has enough
water to sustain at least five years of uninterrupted operations. However, beyond that period, if the drought returned,
production at Cadia may be impacted.
The storage of tailings and other by-products from mining at Newcrest’s operations poses a risk to the safety of
employees and surrounding communities and environment if the integrity of those structures is affected. Tailings storage
facilities are progressively constructed throughout the life of an operation and remain in place after mine closure.
Should there be a failure in the integrity of a tailings facility, there is a risk that tailings material may release from the
facility and cause material harm to people and the environment. Such an occurrence could severely damage Newcrest’s
reputation and standing. It may also subject Newcrest to material regulatory action, penalties and claims, and may lead
to the suspension or disruption of Newcrest’s operations and projects. During the current period we issued our new
group standard on Tailings and Water Storage which is aligned to the International Council on Mining & Metals (ICMM)
Preventing Catastrophic Failure of Tailings Storage Facilities position statement and sets the controls for Newcrest to
meet its obligations under the Global Industry Standard on Tailings Management (GISTM). As a member of the ICMM we
are committed to conforming with the GISTM by August 2025.
Some of Newcrest’s operations are in areas known to be seismically active and are subject to the risks of earthquakes
and related risks of tidal surges and tsunamis, which are difficult to predict. Some of Newcrest’s operations may also
experience other specific operating challenges relating to ground conditions, seismic activity and rock temperature.
Newcrest faces particular geotechnical, geothermal and hydrogeological challenges, in particular due to the trend toward
more complex deposits, deeper and larger pits, and the use of deep, bulk underground mining techniques. This leads
to higher pit walls, more complex underground environments and increased exposure to geotechnical, geothermal and
hydrogeological impacts.
Directors’ Report 88
7. Risks continued
Operational failures or
catastrophes and natural
hazards continued
Information technology
and cyber risk
Operational Risks continued
There are a number of risks and uncertainties associated with the block cave mining methods applied by Newcrest at
its Cadia operations and elsewhere. Risks include that a cave may not propagate as anticipated, excessive air gaps may
form during the cave propagation, unplanned ground movement may occur due to changes in stresses released in the
surrounding rock, or mining induced seismicity is larger or more frequent than anticipated. Excessive water ingress,
disturbance and the presence of fine materials may also give rise to unplanned release of material of varying properties
and/or water through drawbells.
The success of Newcrest at some of its operations depends, in part, upon the implementation of Newcrest’s engineering
solutions to particular geotechnical, hydrogeological and geothermal conditions. At Lihir, for example, significant removal
of both groundwater and sea water inflow and geothermal control is required before and during mining.
A failure to safely resolve any unexpected problems relating to these conditions at a commercially reasonable cost may
result in damage to infrastructure or equipment and/or injury to personnel and may adversely impact upon continuing
operations, project development decisions, exploration investment decisions, Mineral Resource and Ore Reserves
estimates and the assessment of the recoverable amount of Newcrest’s assets.
No assurances can be given that unanticipated adverse geotechnical, geothermal and hydrogeological 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 Newcrest’s operating results and financial position.
Newcrest’s operations are supported by and dependent on IT systems, consisting of infrastructure, networks,
applications, and service providers. Newcrest could be subject to network and systems interference or disruptions from
a number of sources, including (without limitation) security breaches, cyber attacks and system defects. The impact of
IT systems interference or disruption could include production downtime, operational delays, destruction or corruption
of data, disclosure of personal or commercially sensitive information and data breaches. Although security measures
and disaster recovery plans are in place for all of Newcrest’s major sites and critical IT systems, any such interference
or disruption could have a material impact on Newcrest’s business, operations or financial condition and performance.
In addition, Newcrest is dependent on its IT systems for the conduct of its business processes. Newcrest relies on the
accuracy, capacity and security of its IT systems for the operation of many of its business processes and to comply with
regulatory, legal and tax requirements. A disruption in, or failure of, Newcrest’s IT systems could adversely affect its
business processes.
While Newcrest maintains some of its critical IT systems, it is also dependent on third-parties to provide certain IT
services. Despite the security measures that Newcrest has implemented, including those related to cybersecurity, its
systems could be breached or damaged by computer viruses.
Cybersecurity risk is increasingly difficult to identify and quantify and cannot be fully mitigated because of the rapidly
evolving nature of the threats, targets and consequences. Unauthorised parties may attempt to gain access to these
systems or Newcrest’s information through fraud or other means of deceiving its third-party service providers, employees
or vendors. Newcrest may be required to incur significant costs to protect against and remediate the damage caused by
such disruptions or system failures in the future.
Directors’ Report continuedNewcrest Annual Report 2021 89
Failure to attract and
retain key employees
and effectively manage
industrial relations issues
Reliance on contractors
Risks associated with
gold dore and mineral
concentrates
Newcrest seeks to attract and retain employees and third-party contractors with the appropriate skills and experience
necessary to continue to operate its business. A loss of key personnel or a failure to attract appropriately skilled and
experienced personnel could affect its operations and financial condition. There can be no assurance that Newcrest will
be able to attract and retain suitably qualified and experienced local or national personnel, or that persons trained by
Newcrest will be retained in the future. Newcrest values its people and has policies, procedures and frameworks in place
to mitigate this risk. Newcrest focuses on diversity and inclusion in the workplace and developing its people at all levels.
Newcrest also seeks to build a future supply of industry labour by actively promoting mining and the resources industry
as a compelling and attractive career proposition.
In a number of jurisdictions where Newcrest has mining and related interests, there are also local requirements,
contractual obligations and expectations regarding the extent to which local and national persons and businesses are
directly engaged in the mining and related activities which may result in disruptions to Newcrest’s activities where
relevant requirements, obligations and/or expectations are not met. There can be no assurance that Newcrest will be
able to engage competent and suitably experienced local businesses or that disruptions will not occur in the future which
may have an adverse effect on Newcrest’s business.
Unions are present and have a legal right to represent eligible employees at Cadia and Telfer. There are ongoing legal
proceedings involving Red Chris regarding Union certification of the Red Chris site. Depending on the outcome of the
Red Chris legal proceedings we may need to negotiate a collective bargaining agreement with the United Steelworkers
Union in respect of eligible Red Chris mine employees.
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, which could occur at any of Newcrest’s sites in any locations,
could cause production delays, increased labour costs, adversely impact Newcrest’s ability to meet its production
forecasts and have a material impact on Newcrest’s business operations or financial condition and performance.
Some aspects of Newcrest’s production, development and exploration activities are conducted by contractors. As a result,
Newcrest’s business, operating and financial performance and results may be negatively impacted by the availability and
performance of these contractors and their financial strength. The risks associated with contractors at Newcrest’s sites
includes the risk of the contractor or its sub-contractors being involved in a safety, environmental or other ESG-related
incident and the potential for interruption to Newcrest’s operations due to a contractor becoming insolvent.
Newcrest produces gold dore which is currently delivered to gold refineries in Australia with associated risks including
penalties from producing dore outside of the contractual specifications, theft and fluctuating transportation charges.
Transportation of the dore is also subject to numerous risks including delays in delivery of shipments, terrorism
and weather conditions. Sales of gold dore may also be adversely impacted by delays and disruption at Newcrest’s
operations or the operations of one or more of the receiving refineries and consequent declarations of force majeure
at Newcrest’s or its buyer’s operations.
In addition to gold dore, Newcrest produces mineral concentrates which are exported by ocean vessels to smelters,
located predominantly in Asia, with associated risks including fluctuating smelter charges, marine transportation
charges and inland freight charges. Transportation of the concentrate is also subject to numerous risks including delays
in delivery of shipments, terrorism, loss of or reduced access to export ports, weather conditions and environmental
liabilities in the event of an accident or spill. Sales of concentrate may also be adversely impacted by disruption at
Newcrest’s operations or the operations of one or more of the receiving smelters and consequent declarations of force
majeure at Newcrest’s or buyer’s operations. Additionally, the quality of mineral concentrates, including the presence of
impurities and deleterious substances, is subject to restrictions on import which vary across jurisdictions and may impact
upon the saleability or price realised for the mineral concentrate.
Directors’ Report 90
7. Risks continued
Corporate culture and
business conduct
Legal proceedings,
investigations and disputes
Anti-bribery and
anti-corruption laws
Governance and Compliance Risk
Newcrest’s reputation and licence to operate is dependent upon ongoing responsible, lawful and ethical business conduct.
Failure to do so can result in serious consequences, ranging from public allegations of misbehaviour and reputational
damage through to fines, regulatory intervention or investigation, temporary or permanent loss of licences, litigation
and/or loss of business. Newcrest’s Management, standards, policies, controls and training instil and reinforce a culture
across the organisation whereby employees are required to act lawfully and encouraged to act respectfully and ethically,
in a socially responsible manner. Mandatory Code of Conduct training is provided to all employees, officers, embedded
contractors and consultants and training and communications in relation to key policies including, but not limited to
anti-bribery, fraud and sanctions, continuous disclosure and insider trading prohibitions is provided to personnel in high
risk roles to promote an understanding of Newcrest’s legal obligations and acceptable business conduct.
Newcrest has implemented a group-wide framework and compliance programs to ensure that adequate controls
and procedures are in place to mitigate against potential risks in relation to key risk areas, including anti-bribery
and corruption, fraud, conflicts of interest, privacy and sanctions. However, there is a risk that Newcrest employees
or contractors will fail to adhere to group policies, standards, and procedures that provide guidance on ethical and
responsible business conduct and drive legal compliance, which could have a material adverse impact on financial
performance, financial condition and prospects, as well as Newcrest’s reputation. Reputational loss may lead to
increased challenges in developing and maintaining community and landowner relations, decreased investor confidence
and negative impacts on Newcrest’s ability to operate and advance its projects, which also may adversely impact
Newcrest’s financial performance, financial condition and prospects.
Achievement of strategic goals is dependent on the right company culture. As such Newcrest has established
aspirations, standards and expectations for its workforce and is consciously looking to improve and shape the
organisation’s culture by focusing on leadership behaviours, organisational systems and workforce engagement. This is a
commitment made by the Executive Management team, is the responsibility of all senior leaders and is the expectation of
the workforce. Delivering on this commitment to employees is critical for retention of key talent and for creating the target
High-Performing, Inclusive Culture that drives collaboration, creativity and an owner’s mindset. Newcrest is conducting
training on inclusive leadership skills for all leaders across the organization. Policies and processes reinforce the values
and behaviours expected in the workplace.
Legal proceedings, investigations and disputes (including tax audits and disputes) could have a material adverse effect
on Newcrest’s financial condition and its financial and operating results. Newcrest engages in activities that can result
in substantial injury or damage, which may expose it to legal proceedings, investigations and disputes in the ordinary
course of its business regarding personal injury and wrongful death claims, labour and landowner disputes, as well as
commercial disputes with customers, suppliers and service providers. Also, the tax authorities in the jurisdictions in which
Newcrest operates could dispute tax positions held by it based on changes in law, jurisprudence, policy or interpretation.
Newcrest may also be found liable for the wrongful acts or omissions of its contractors or service providers.
Legal proceedings, investigations and disputes (including tax audits and disputes) have the potential to negatively impact
upon Newcrest’s business, operating and financial performance and results. Regardless of the ultimate outcome of such
proceedings, investigations and disputes, and whether involving regulatory action or civil or criminal claims, there may be
a material adverse impact on Newcrest as a result of the associated costs (some of which may not be recoverable) and
Management time.
Newcrest’s Financial Statements include liabilities for certain current and/or potential litigation involving Newcrest.
Assessments and estimates made by Newcrest of claims and legal proceedings are based on the information available to
Management at the time and involve significant Management judgment. Adverse outcomes in such legal proceedings in
excess of the amounts that Newcrest has provided for, or changes in Management’s evaluations or predictions about the
proceedings, could have a material adverse effect on Newcrest’s financial condition and operating results.
Newcrest may be subject to potential fraud, bribery, corruption and money laundering risks associated with the business
in jurisdictions where it operates. Australian, Canadian, Papua New Guinean, United States and other anti-fraud,
anti-bribery, anti-corruption and anti-money laundering laws, conventions, regulations, and enforcement procedures, and
corresponding compliance obligations, have become more stringent in recent years. Failure to comply with applicable
legal and regulatory requirements and to maintain appropriate management and internal control frameworks to address
such compliance risks often carry substantial penalties and impose obligations and controls to prevent bribery by others
on Newcrest’s behalf. There can be no assurances that Newcrest’s internal controls will always protect it from reckless or
other inappropriate acts committed by its intermediaries, associates, directors, officers, employees or agents. Violations
of these laws, or allegations of such violations, could expose it to potential fines, penalties and other civil and/or criminal
litigation and have a material adverse effect on its business, financial position and performance and reputation.
Directors’ Report continuedNewcrest Annual Report 2021 91
COVID-19
Newcrest’s business and operations, and that of its suppliers and customers, may be adversely affected by the novel
coronavirus (COVID-19) pandemic or other pandemics, outbreaks of communicable diseases and/or other adverse public
health developments.
Health, Safety and Sustainability
COVID-19 was declared a global pandemic in March 2020, causing significant disruption across a number of
geographies, industries and markets, including global supply chain disruptions and shortages, which could have an
adverse impact on Newcrest’s people, communities, suppliers or otherwise on its business, financial condition and
results of operations. Actions by Australian and foreign governments to address the pandemic, including travel bans and
business closures, may also have a significant adverse effect on the markets in which Newcrest conducts business.
Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the COVID-19
pandemic on Newcrest’s business (or on the operations of other businesses on which it relies), and there is no guarantee
that Newcrest’s efforts to address the adverse impacts of COVID-19 will be effective.
Our operations have been impacted as a result of the pandemic, mainly in relation to travel-related restrictions limiting
the movement of people to and from sites. Costs associated with managing COVID-19 have also increased, amounting to
approximately $70 million in the 2021 financial year and are estimated to be in the range of $35 to 45 million in the 2022
financial year.
Any further or prolonged disruptions relating to COVID-19 or any other adverse public health developments could
materially and adversely affect our supply chains and/or labour force (and that of our suppliers). The extent to which
COVID-19 will impact Newcrest’s business and its financial results will depend on future developments, which remain
highly uncertain and cannot be predicted. Such developments may include the geographic spread of the virus, the
uptake of vaccinations, viral mutations and the ongoing efficacy of vaccines, the severity of the disease, the duration
of the pandemic, the actions that may be taken by various governmental authorities in response to the pandemic,
the impact on contracts and agreements to which Newcrest is a party, the impact on the markets in which Newcrest
operates and the global economy generally. For example, Newcrest is required to observe COVID-related government
controls and to date these have included travel restrictions across national borders and sometimes within countries.
We are actively considering various scenarios up to and including voluntary or mandated full or partial suspension of
operations in response to external factors. Our Business Continuity Planning also considers how to return to normal
operations as restrictions ease, or are planned to ease, in some jurisdictions.
In 2020, Lundin Gold Inc (Lundin Gold), in which Newcrest owns a 32% equity interest, temporarily suspended operations
for a period of approximately 3 months at its Fruta del Norte mine in Ecuador amid growing concerns regarding the spread
of COVID-19. A further period of suspension, depending on the length, could have an adverse impact on Newcrest’s
investment in Lundin Gold and the return on Newcrest’s investment in the Fruta del Norte finance facilities.
From August 2020 Newcrest experienced positive COVID-19 cases at Lihir. At the date of this report the number of
cases testing positive for COVID-19 at Lihir remains at levels that are within the capability of the care and treatment and
isolation facilities, with the majority of these cases continuing to be asymptomatic. Newcrest continues to strengthen its
COVID-19 controls at Lihir, focusing on spread containment through extensive contact tracing and isolation procedures.
Following the travel suspension announced by the Australian Government between Papua New Guinea and Australia
in March 2021, charter flights resumed with restricted capacity. As at the date of this report the limited commercial flight
availability between Port Moresby and Brisbane continues to be utilised. Newcrest personnel movements are required
to fit within Government imposed international arrival quotas in Australia. The quotas can be changed without warning.
No material impacts to gold production at Lihir have occurred to date. However, as announced in the March 2021
quarterly report, the ability to attract labour, travel restrictions, contact tracing and associated isolation requirements
has resulted in an impact to total material mined. Should these conditions persist or worsen, there is the potential
for production to be impacted. Persistence of the pandemic continues to create difficulty in retaining, attracting and
recruiting personnel to PNG and could impact future production should adequate skills not be able to be recruited.
No assurance can be given as to the potential impact that COVID-19 may have on Newcrest’s business, results of
operations, cash flows or financial condition. To the extent the COVID-19 pandemic adversely affects Newcrest’s business
and financial results, it may also have the effect of heightening many of the other risks described in this section and may
have an adverse material impact on Newcrest’s operating and financial results, financial condition and liquidity position.
During the COVID-19 pandemic it may be necessary for some of our operations to be placed into temporary care
and maintenance if workforce safety and/or potential supply constraints are not appropriately managed. Ongoing
contingency planning by each site for a variety of COVID-19 scenarios includes potential care and maintenance. Internal
and government travel approvals, quarantine measures and testing programs along with the global rollout of COVID19
vaccination programs help to manage the potential risk of temporary health related care and maintenance.
Directors’ Report 92
7. Risks continued
Health and safety
Health, Safety and Sustainability continued
There are numerous occupational health and safety risks associated with mining and metallurgical processes such as
travel to and from operations, the operation of heavy and complex machinery in challenging geographic locations and
exposure to hazardous substances. These hazards may cause personal injury and/or loss of life to Newcrest’s personnel,
suppliers, customers or other third parties, damage to property and contamination of the environment, which may result
in the suspension of operations and the imposition of civil or criminal penalties, including fines, expenses for remediation
and claims brought by governmental entities or third parties.
Newcrest has in place a full health, safety and environment management system with associated standards, tools and
governance processes to ensure hazards are identified, effectively managed and that controls are effective.
Newcrest’s Safety Transformation Plan has been designed to manage the fatality risks in the business by improving
safety culture, increasing the effectiveness of critical controls and improving process safety by designing, building and
maintaining Newcrest’s operations to a higher standard.
Health and hygiene reviews are conducted with a view to identifying the risks to people. These include, but are not
limited to, musculoskeletal disorders, fatigue, mental health illnesses and exposure to noise, diesel particulate matter,
silica and acid mist. Unforeseen or past workplace exposures may lead to long-term health issues and potential
compensation liabilities.
Newcrest has also established a program to review its approach to psychological safety risks associated with sexual
harassment in the workplace, consistent with the recommendations of the Respect@Work: Sexual Harassment National
Inquiry Report (2020) by the Australian Human Rights Commission.
The global nature of Newcrest’s operation means that employees may be affected by mosquito borne diseases such
as malaria, dengue fever or zika virus. Other potential health impacts include tuberculosis, and viral outbreaks causing
respiratory disease such as the COVID-19 pandemic. The outbreak of communicable diseases and other adverse public
health developments could adversely affect Newcrest’s business operations and/or the businesses of its customers
and suppliers which consequently could have a material adverse effect on Newcrest’s business, financial condition and
results of operations, particularly if such outbreaks and developments are inadequately controlled.
Directors’ Report continuedNewcrest Annual Report 2021 93
Environment and closure
Mining and processing operations and development activities have inherent risks and liabilities associated with potential
harm to the environment and the management of waste products. Newcrest’s activities are therefore subject to extensive
environmental law and regulation in the various jurisdictions in which it operates. Compliance with these laws requires
significant expenditure and non-compliance may potentially result in fines or requests for improvement actions from the
regulator or could result in reputational harm.
Newcrest monitors its regulatory obligations on an ongoing basis and has systems in place to track and report against
these requirements and commitments. This extends to voluntary commitments such as the Cyanide Code, the ICMM 10
Principles for Sustainable Development and the World Gold Council Responsible Gold Mining Principles.
Newcrest’s operations may create a risk of exposure to hazardous materials. Newcrest uses hazardous material (for
example, cyanide at some operations) and generates waste products that must be disposed of either through offsite
facilities or onsite permitted landfills and waste management areas.
Mining and ore refining processes at Newcrest sites also generate waste by-products such as tailings to be managed (by
the use of tailings storage facilities or, in the case of Lihir and as proposed at Wafi-Golpu, deep sea tailings placement)
and waste rock (to be managed in waste rock dumps or in the case of Lihir, permitted barge dumping locations).
Geochemical reactions within long-term waste rock dumps or low-grade ore stockpiles may also lead to the generation
of acid and metalliferous drainage that needs to be managed. Appropriate management of waste is a key consideration
in Newcrest’s operations. There is still a risk that such hazardous materials and waste products may cause harm to the
environment, which may subject Newcrest to regulatory action and financial penalties and may lead to disruptions of its
operations and projects and cause it reputational harm.
Mining operations can also impact flows and water quality in surface and ground water bodies and remedial measures
may be required to prevent or minimise such impacts. Impacts to biodiversity and air quality can also occur from these
activities and requires active management and planning to minimise their adverse effects. The management of run-off
water and the potential impacts of acid mine drainage is an important part of developing and operating mines, so as to
mitigate the risk of entrained contaminants and sediment being dispersed into the receiving environment including rivers
and ground water reservoirs.
Newcrest is required to close its operations and rehabilitate the lands that it disturbs during the exploration and
operating phases in accordance with applicable mining and environmental laws and regulations. A closure plan and an
estimate of closure and rehabilitation liabilities is prepared for each Newcrest operation. The closure and rehabilitation
liability estimates are based on current knowledge and assumptions, however actual costs at the time of closure and
rehabilitation may vary materially. In addition, adverse or deteriorating external economic conditions may bring forward
mine closure and associated closure and rehabilitation costs.
The occurrence of an environmental incident has the potential to cause significant adverse reactions in the local
community, which may impact Newcrest’s reputation, result in additional costs, lead to disruptions of Newcrest’s
operations and projects or lead to regulatory action, which may include financial penalties.
In addition, environmental laws and regulations are continually changing. A number of governments or governmental
bodies have introduced or are contemplating regulatory change in response to the potential impacts of climate change,
including mandatory renewable energy targets or potential carbon trading or carbon price regimes. If Newcrest’s
environmental compliance obligations were to change as a result of changes in the laws and regulations, or if
unanticipated environmental conditions were to arise at any of Newcrest’s projects or developments, its expenses and
provisions may increase, and its production may decrease, to reflect these changes. If material, Newcrest’s operating
and financial results and financial condition could be negatively impacted.
Directors’ Report 94
7. Risks continued
Failure to maintain
community relations
Health, Safety and Sustainability continued
Newcrest’s relationship with the communities in proximity to its operations and on whose land it operates is an
essential part of ensuring success of its existing operations, exploration and the construction and development of its
projects. A failure to manage relationships with the communities may lead to local dissatisfaction, which, in turn, may
lead to interruptions to Newcrest’s operations, development projects and exploration activities. Specific challenges in
community relations include community concerns over management of social, environmental, and cultural heritage
impacts, increasing expectations regarding the level of benefits that communities receive, concerns focused on the level
of transparency regarding the payment of compensation, and the provision of other benefits to affected landholders and
the wider community. These expectations have gained momentum with an increasing focus on ESG and the degree
to which companies undertake responsible community investment, respect the rights of Traditional Owners and First
Nations Peoples, ensure responsible management of human rights risks, and deliver humanitarian support during natural
disasters and health crises.
Typically, where Newcrest has exploration activities, development projects or operations, it enters into agreements with
Indigenous communities, local landholders and the wider local community. These agreements may include (but are not
limited to) compensation, co-management and other benefits and may be subject to periodic review. The negotiation
and/or review of agreements, including components such as business development, participation, co-management, and
compensation and other benefits involves complicated and sensitive issues, associated expectations and often competing
interests, which Newcrest seeks to manage respectfully. The nature and subject matter of these negotiations may result
in community unrest which, in some instances, results in interruptions to Newcrest’s exploration programs, operational
activities or delays to project implementation. Confidentiality clauses in agreements negotiated with Indigenous
organisations may limit the ability of the parties including Indigenous communities to speak out on issues of concern.
Newcrest proactively encourages parties to come together to better understand and work through issues collaboratively.
This includes people speaking freely with each other about their concerns to reach a mutually acceptable resolution.
For example, the community agreements in place with customary landowners in relation to Newcrest’s Lihir operation in
Papua New Guinea have been the subject of several drawn out reviews. The duration of each review process is a result
of the important and complex issues covered by the agreements and the competing interests of different landowner
groups. During prior reviews, Lihir has experienced intermittent disruptions as a result of community unrest regarding
the progress of the review negotiations and intra-community issues. Although community issues are generally resolved
within a short period, there can be no assurance that further disputes will not arise with the customary landowners
and other communities from time to time which, if prolonged, could lead to disruptions to Newcrest’s operations and
development projects.
In addition, there is a level of public concern relating to the perceived impact of mining activities on the environment
and on the communities located near, and impacted by, such activities. Certain non-government and community-based
organisations are vocal critics of the mining industry and its practices, including in relation to cultural heritage
management, due diligence processes associated with human rights including modern slavery risk management, the
use of hazardous substances in processing activities, and the use of deep sea tailings placement. Adverse publicity
generated by non-government-organisations 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 Newcrest’s relationships
with communities in proximity to its operations. No assurance can be given that incidents will not arise that generate
community grievances associated with Newcrest’s activities and potentially cause operational disruptions or delays to
project development until resolved.
Directors’ Report continuedNewcrest Annual Report 2021 95
Indigenous peoples,
engagement and
Cultural Heritage
There is heightened public scrutiny of agreements between mining companies and Indigenous communities, how
industry engages with Indigenous communities, and how companies manage cultural heritage with Indigenous
communities.
Human Rights
Various international and national, state and provincial laws, regulations, codes, resolutions, conventions, guidelines,
treaties, and other principles and considerations relate to the rights of Indigenous peoples, including the requirement to
secure the Free, Prior and Informed Consent of these communities for Newcrest’s activities. Some of these jurisdictions
impose obligations on government with respect to the statutory rights of Indigenous people and/or impose non-statutory
obligations that derive from these rights. Some mandate consultation with Indigenous people regarding actions which
may affect Indigenous peoples, including actions to approve or grant mining rights or permits.
The obligations of government and private parties under the various international and national requirements, principles
and considerations pertaining to Indigenous people continue to evolve and be defined. This is the case in British
Columbia where Red Chris is located, Western Australia where Telfer and Havieron are located, in Papua New Guinea
where Lihir and Wafi-Golpu are located, and in Fiji where the Namosi Joint Venture – Waisoi Project is located. In some
countries, governments have, for example, introduced, or are contemplating, regulatory change to ensure the spirit and
intent of the United Nations Declaration on the Rights of Indigenous Peoples is enshrined in legislation. Newcrest’s
current and future operations are subject to a risk that one or more groups of Indigenous people may oppose continued
operation, further development, or new development of its projects or operations. Opposition by Indigenous people to
Newcrest’s activities may require modification of, or preclude operation or development of, its projects or may require the
entering into of additional agreements with Indigenous people, beyond those to which Newcrest has previously entered
into, which may result in additional costs. Claims and protests of Indigenous peoples may disrupt or delay activities,
including permitting, at Newcrest’s operations.
There is emerging legislation in multiple jurisdictions which is intensifying investor, shareholder and public scrutiny
concerning human rights issues that include forced labour, child labour and other slavery-like practices; displacement of
local communities, discrimination by race, age, gender, sexuality and other protected attributes, and underpayment for
labour or services provided. Failure to identify and respond to human rights issues can lead to costly and disruptive legal
action, investor divestment, negative publicity, reputational damage and significant financial loss.
Respect for human rights is considered a fundamental business responsibility under the UN Guiding Principles on
Business and Human Rights (UNGPs) and is a reflected commitment in Newcrest’s Human Rights Policy. In addition to
the UNGPs, the 2018 Australian Modern Slavery Act has introduced a new statutory reporting requirement on the risk
of modern slavery in the operations and supply chain of a reporting entity (and its owned and controlled entities). Under
the Act, companies such as Newcrest must possess a clear policy on human rights management supported by best
practices for responsible global conduct. This includes a focus on due diligence and the requirement to assess real and
potential human rights issues, act on findings, track responses, and communicate how issues are being managed.
Human rights groups are increasingly scrutinising the extractive industry, particularly where the industry operates in
more complex socioeconomic and socio-political jurisdictions. The extractive industry in these regions is particularly
prone to complaints and/or legal disputes in connection with human rights risks associated with large scale land
acquisition and resettlement of people; adverse environmental impacts; livelihoods and health; the use of migrant labour,
child labour and forced labour; the use of private security firms; Indigenous peoples; and risks arising from operations in
areas that are conflict affected areas and/or that host artisanal mining activities.
Directors’ Report 96
REMUNERATION REPORT
19 August 2021
Dear Shareholder
On behalf of the Board of Newcrest, we are pleased to provide our Remuneration Report for the year ended 30 June 2021, for which we seek your
support at our Annual General Meeting (AGM) in November 2021.
This report explains the links between Newcrest’s Executive remuneration framework and outcomes and Newcrest’s strategy and performance.
Year in review
During the 2021 financial year, Newcrest delivered a record free cash flow and increased dividends for the sixth consecutive year.
From an operating perspective, Newcrest’s gold production was 4% lower than the prior period, with lower production reflecting the divestment
of Gosowong in the prior period (March 2020), the expected decline in grade at Cadia, lower mill throughput at Lihir, and lower recoveries at Telfer.
This decrease in gold production was partially offset by record annual ore tonnes mined and record mill throughput at Cadia, the inclusion of gold
production attributable to Newcrest’s 32% equity interest in Lundin Gold Inc. (the owner of the Fruta del Norte mine), twelve months of Red Chris
production compared to ten and a half months in the prior period and higher mill throughput at Telfer.
Record copper production was 4% higher than the prior period, primarily driven by record annual mill throughput at Cadia, partially offset by lower
grade and recovery at Telfer and Red Chris.
Newcrest’s AISC was 6% higher than the prior period. Notwithstanding a higher AISC per ounce, Newcrest’s AISC margin per ounce increased
31% from the prior period as a result of a higher realised gold price. Newcrest’s record free cash flow of $1,104 million was $1,725 million higher
than the prior period.
In line with Newcrest’s purpose of creating a brighter future for people through safe and responsible mining, Newcrest delivered another twelve-month
period free of fatalities or life-changing injuries and a low Total Recordable Injury Frequency Rate (TRIFR) per million hours worked.
Our survey of Organisational Health has shown a decline over the last two years. We recognise that there are several contributing factors and
these will be areas of significant focus in the upcoming year as we continue to build an inclusive culture.
Newcrest’s interim dividend of US15 cents, combined with the final dividend of US40 cents (to be paid on 30 September 2021), reflects a 120%
increase on the prior year dividends.
KMP changes
On 1 October 2020, Sally-Anne Layman joined the Board as a Non-Executive Director to replace Xiaoling Liu who retired as a Non-Executive
Director with effect from 11 November 2020. On 1 July 2021, Jane McAloon also joined the Board as a Non-Executive Director.
On 5 May 2021 it was announced that Gerard Bond would leave Newcrest shortly after his tenth year in the role in early 2022. A process is
underway to select his successor.
As noted in the 2020 Remuneration Report, Maria Sanz Perez commenced in the role of Chief Legal Risk and Compliance Officer on 1 July 2020,
succeeding Francesca Lee who retired on 31 July 2020.
Remuneration framework
The Board remains committed to ensuring that Newcrest’s remuneration framework is aligned to the Company’s strategy and performance and
that it is effective in attracting, rewarding and retaining high calibre people and driving strong individual and Group performance in the interests
of both the Company and its shareholders and in accordance with the Company’s values and risk profile.
To this end, the structure of, and the performance conditions for, both the Short Term Incentives (STIs) and Long Term Incentives (LTIs) have been
reviewed. Minor changes were made to the structure and performance conditions for the STIs for the 2021 financial year and the 2022 financial
year, particularly in relation to the safety and sustainability performance conditions.
Directors’ Report continuedNewcrest Annual Report 2021 97
Remuneration outcomes
Despite the COVID-19 pandemic presenting many challenges in the 2021 financial year, the pandemic has not caused the Company to reduce
workforce numbers and the incentive programs continued to operate as normal throughout the Company. The Company has adapted to the
situation and with considerable effort by Management has ensured continued safe, profitable operation throughout the 2021 financial year, whilst
implementing control measures to minimise the risk of infection to the workforce, their families and surrounding communities. Costs of around
$70 million were incurred to manage through the pandemic, exceeding budget by $32 million, but these costs were not adjusted out of the results
for incentive calculation purposes.
Given the performance of the business relative to expectations and the performance of the Executive team in the face of considerable pandemic
related challenges, the Board considered above-target remuneration outcomes to be appropriate for the Executive team.
FY21 STI outcomes for Executive KMP ranged from 64.7% to 70.7% of the maximum possible award, driven in part by strong operational and
financial performance that scored 149% of Target against a scorecard of business performance metrics (including particularly strong cashflow
and progress against sustainability targets). In arriving at this result, and consistent with standard processes, the Board adjusted the score
downwards by making a number of standard exclusions, including a significant portion of the favourable metal price movements. The Board also
used discretion to make relatively minor adjustments to reverse the impacts of a seismic event at Telfer and one-off costs resulting from early
extinguishment of debt.
65.7% of the 2017 LTIs vested during the 2021 financial year, representing performance for the three years to 30 June 2020. While Newcrest
delivered a Total Shareholder Return of 35.4% over the period, this did not result in vesting under the relative Total Shareholder Return component
of the LTI.
Following benchmarking undertaken by the Board’s independent remuneration adviser against the ASX 11 – 40 companies, an ASX Custom Peer
Group and major Global Gold comparators, as described at section 4.1 of this Report, no Executives received increases in total fixed remuneration
(TFR) in the 2021 financial year other than the Chief People and Sustainability Officer, who received a 6.7% increase effective 1 October 2020
in recognition of the increase in scope of the role. The 2022 remuneration review was completed after the end of the 2021 financial year review.
On the basis of a similar benchmarking review, no fixed remuneration increase will be made for Sandeep Biswas or Gerard Bond, but other
Executives will receive fixed pay increases averaging 2.8%.
Board fees were also reviewed in light of benchmarking, and an increase of 5% came into effect on 1 January 2021, the first increase in base Board
fees since 2011 (other than adjustments to reflect increases in the superannuation contribution). A further review was undertaken at the end of
FY21 and it was determined that NED fees would remain unchanged for the 2022 financial year.
We continue to welcome shareholder feedback and thank you for your support.
Philip Aiken AM
Chairman, Human Resources and Remuneration Committee
Directors’ Report 98
Remuneration Report
This Report details the remuneration arrangements in place for the key management personnel (KMP) of Newcrest, being those people who had authority
for planning, directing and controlling the activities of the Company during the 2021 financial year.
The KMP for the 2021 financial year comprised all members of the Executive Committee and the Non-Executive Directors (NEDs).
This Report has been audited under section 308(3C) of the Corporations Act 2001.
Contents
Section 1
Key Management Personnel
Section 2
Remuneration Snapshot
Section 3
Remuneration Governance
Section 4
Executive Remuneration Framework
Section 5
Remuneration Outcomes
Section 6
Executive Service Agreements and Termination Arrangements
Section 7
Non-Executive Directors’ Remuneration
Section 8
Shareholdings
Section 9
Statutory Tables
99
99
101
102
111
115
116
116
118
Directors’ Report continuedNewcrest Annual Report 2021 99
1. Key Management Personnel (KMP)
The following table sets out the Company’s KMP during the 2021 financial year. Each of the KMP was KMP for all of the 2021 financial year, unless
stated otherwise.
Name
Executive Directors
Sandeep Biswas
Gerard Bond (1)
Other Executives
Lisa Ali
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Former Executives
Francesca Lee
Role
Managing Director and Chief Executive Officer (CEO)
Finance Director and Chief Financial Officer (CFO)
Chief People & Sustainability Officer (CPSO)
Chief Operating Officer (COO) – Papua New Guinea
Chief Legal, Risk & Compliance Officer (CLRCO)
Chief Development Officer (CDO)
Chief Operating Officer (COO) – Australia & Americas
Chief Technical & Projects Officer (CTPO)
Chief Legal, Risk & Compliance Officer (CLRCO)
1 Jul 20 – 31 Jul 20
Non-Executive Directors
Peter Hay
Philip Aiken AM
Roger Higgins
Vickki McFadden
Peter Tomsett
Sally-Anne Layman
Former Non-Executive Directors
Xiaoling Liu
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
(1) On 5 May 2021, it was announced that Gerard Bond would leave Newcrest in early 2022.
1 Oct 20 – 30 Jun 21
1 Jul 20 – 11 Nov 20
Subsequent to the end of the 2021 financial year, Jane McAloon joined the Board as a Non-Executive Director with effect from 1 July 2021.
2. Remuneration Snapshot
2.1. Key remuneration outcomes for the 2021 financial year
Executive Remuneration
STI Outcomes
LTI Outcomes
NED Remuneration
The Chief People and
Sustainability Officer received an
increase in TFR of 6.7%, effective
1 October 2020, in recognition
of the increase in scope of the
role. There was no change to
TFR of any other Executive as
part of the 2020 annual salary
review process.
The average STI outcome
for the 2021 financial year for
Executives was 68.1% of the
maximum opportunity, based on
the assessment of business and
personal measures.
Following a benchmarking review
of NED fees, base Board fees
were increased by 5%, effective
1 January 2021.
No change was made to
Committee fees.
During the 2021 financial year, 65.7%
of the 2017 LTIs vested reflecting the
Company’s performance over the
three year performance period to
30 June 2020.
The 2018 LTIs (which were granted
in the 2019 financial year) are
expected to vest on or around
21 November 2021 and it is
anticipated that the vesting levels
will be in the range of 60% to 70%.
Directors’ Report 100
2. Remuneration Snapshot continued
2.2. Actual Remuneration
The table below details the cash and value of other benefits actually received by the Executives in the 2021 financial year in their capacity as KMP. This is
a voluntary disclosure to provide shareholders with increased clarity and transparency in relation to Executive remuneration. It includes the value of LTI
Rights and STI Shares that vested during their period as KMP during the year. See section 9.1 for the statutory remuneration table that has been prepared
in accordance with statutory obligations and Australian Accounting Standards.
Actual Executive Remuneration for the 2021 financial year
Executive
Sandeep Biswas
Gerard Bond
Lisa Ali
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Former Executive
Francesca Lee
TFR (1)
US$’000
STI Paid
as cash (2)
US$’000
Other
Benefits (3)
US$’000
LTI Rights
Vested (4)
US$’000
Restricted
STI Shares
Vested (5)
US$’000
Sign On
Rights
Vested (6)
US$’000
Total
US$’000
1,792
747
588
635
597
560
635
635
68
752
253
42
119
–
40
160
–
132
20
3
112
2
224
3
34
282
–
2,392
563
–
358
–
75
358
–
291
1,137
371
–
202
–
–
212
–
215
–
–
–
–
–
–
–
78
–
6,093
1,937
742
1,316
821
678
1,399
995
706
Notes to Actual Executive Remuneration
(1) TFR (Total Fixed Remuneration) comprises base salary, superannuation contributions and payment of unused annual leave entitlements for former executives. For new
or former Executives, TFR has been pro-rated for time served as KMP during the financial year.
(2) Represents amounts paid for STIs relating to performance for the 2020 financial year. The cash component for the 2020 financial year was paid in October 2020.
(3) Comprises cash payments for travel costs, relocation assistance, non-monetary benefits such as parking, insurance and applicable fringe benefits tax paid on benefits.
It includes:
• Payment of US$112,000 (A$150,000) in relocation support paid to Lisa Ali;
• Payments totalling US$224,000 (A$300,000) in relocation support paid to Maria Sanz Perez;
• Payments totalling US$280,000 (A$375,000) as a sign on bonus paid to Suresh Vadnagra (which was granted on his commencement in May 2020 in compensation
for benefits forfeited on leaving his previous employer, and paid in the current financial year).
(4) Represents 2017 LTIs that vested on 23 November 2020. The Shares issued on vesting remain subject to a one year holding lock (i.e. they are included in this column,
but are not available for trading until 23 November 2021). The value of the Rights has been determined based on the share price at the close of business on the vesting date
of A$28.33 (US$20.67).
(5) On 12 March 2021, ordinary Newcrest shares were released by Pacific Custodians Pty Ltd as trustee for the Newcrest Employee Share Trust to:
• Sandeep Biswas (39,094), Gerard Bond (12,816), Craig Jones (7,042) and Philip Stephenson (7,473) on vesting of restricted STIs awarded for the 2018 financial year.
• Sandeep Biswas (22,019), Gerard Bond (7,139), Craig Jones (3,809) and Philip Stephenson (3,940) on vesting of restricted STIs awarded for the 2019 financial year.
The value of the restricted STI Shares which vested has been determined based on the share price at the close of business on the vesting date of A$24.02 (US$18.61).
On 26 October 2020, ordinary Newcrest shares were released by Pacific Custodians Pty Ltd as trustee for the Newcrest Employee Share Trust to Francesca Lee (6,473)
on vesting of restricted STIs awarded for the 2018 financial year. The value of the restricted STI Shares which vested has been determined based on the share price at the
close of business on the vesting date of A$30.52 (US$21.71).
On 19 November 2020, ordinary Newcrest shares were released by Pacific Custodians Pty Ltd as trustee for the Newcrest Employee Share Trust to Francesca Lee (3,627)
on vesting of restricted STIs awarded for the 2019 financial year. The value of the restricted STI Shares which vested has been determined based on the share price at the
close of business on the vesting date of A$28.31 (US$20.65).
(6) Represents the Sign On Rights issued to Suresh Vadnagra that vested on the 18 May 2021. The value of the Rights has been determined based on the share price at the
close of business on the vesting date of A$28.66 (US$22.21).
TFR and Other Benefits have been translated from Australian dollars to US dollars using an average exchange rate of 0.7467. STI paid as cash, LTI Rights
vested, Restricted STI Shares vested and Sign-on Rights vested have been translated at the rate applicable on the date of the event. For restricted STI
Shares, the vesting date is the date the trading restriction is lifted.
Directors’ Report continuedNewcrest Annual Report 2021
101
2.3. Changes planned for the 2022 financial year
Executive Total Fixed Remuneration
STI
LTI
NED Remuneration
No fixed remuneration increase will
be made for Sandeep Biswas or
Gerard Bond. Other executives will receive
fixed pay increases averaging 2.8%,
following a benchmarking review.
Minor changes have been made to the
STI Business measures for the 2022
financial year. These changes have been
made to increase focus on key safety and
sustainability metrics. Weightings remain
broadly similar.
2.4. Currency
No material changes are
proposed at this stage.
NED fees will remain
unchanged for the 2022
financial year.
Unless otherwise indicated, the currency used in this Report is US dollars which represents Newcrest’s reporting (presentation) currency.
Executive remuneration, which is paid in Australian dollars, is translated into US dollars for reporting purposes at a rate of A$1.00:US$0.7467. The TFR for
Executives in Australian dollars is shown in section 5.1 to enable comparisons to be made in future years without the impact of changes in exchange rates.
The NED fees in Australian dollars are shown in section 7.3.
3. Remuneration Governance
Board
HRR Committee
Takes an active role in the governance and oversight of Newcrest’s remuneration policies and has overall responsibility for
ensuring that the Company’s remuneration strategy aligns with Newcrest’s short and long term business objectives and risk
profile. The Board approves the remuneration arrangements for the CEO, upon recommendation from the Human Resources
and Remuneration (HRR) Committee. No Executive is involved in deciding his or her own remuneration.
Established by the Board to review, formulate and make recommendations to the Board in relation to matters within its
Charter, including the remuneration arrangements of the CEO, Executives and the NEDs, and oversee the major components
of the Board’s approved remuneration strategy.
The Charter for the HRR Committee is available on the Company’s website: www.newcrest.com.au/about-us/corporate-governance.
External Remuneration
Consultants
Current members of the HRR Committee are Phillip Aiken AM (Chairman), Vickki McFadden, Roger Higgins and
Jane McAloon, who are each independent NEDs. All Directors are invited to attend HRR Committee meetings.
Engaged by the HRR Committee to provide advice on remuneration related issues.
During the 2021 financial year, KPMG provided advice, including:
– benchmarking data for CEO, Executive and NED remuneration; and
– information and insights with respect to market practices and trends in remuneration within ASX listed and global gold
companies.
KPMG did not provide a remuneration recommendation as defined by the Corporations Act 2001.
The Company’s External Remuneration Consultants Policy sets out protocols governing the engagement of external
remuneration consultants.
Directors’ Report 102
4. Executive Remuneration Framework
4.1. Remuneration Strategy and Guiding Principles
Our remuneration strategy is to provide market-competitive remuneration, having regard to the size and complexity of the Company, the scope of each
role, and the impact the Executive can have on Company performance.
The guiding principles of our remuneration strategy are as set out below.
Strategy and Purpose
Values and culture
Shareholders
Performance
Market
Drive execution of key objectives, which align with the
Company’s strategy and short, medium and longer
term performance objectives, and will deliver long
term growth in shareholder value and is consistent
with the Company’s risk appetite. This includes our
commitment to safety and sustainability.
Incorporate
framework and
processes that
reinforce our values
and culture.
Align interests
of Executives
with those of
shareholders.
Provide appropriate
levels of “at risk”
performance pay to
encourage, recognise
and reward high
performance.
Attract and retain
talented, high
performing Executives
by reference to
comparable roles.
Executive remuneration packages are benchmarked against comparable roles in:
– ASX listed companies with market capitalisations ranked between 11 – 40;
– a customised peer group comprising largely industrial, materials, energy and utilities companies of comparable scale and international complexity; and
– the following global gold mining companies: Yamana Gold Inc, Freeport-McMoran Copper & Gold, Agnico Eagle Mines Limited, AngloGold Ashanti
Ltd, Barrick Gold Corporation, Gold Fields Ltd, Kinross Gold Corporation, Newmont Corporation, Kirkland Lake Gold Limited, Evolution Mining Limited
and Northern Star Resources Limited.
TFR is targeted at the 50th percentile for comparable roles and experience/skills, while the total remuneration package for each Executive
(inclusive of both fixed and variable remuneration) is targeted at up to the 75th percentile for comparable roles and experience/skills.
4.2. Components of the Executive Remuneration Framework
The table below outlines the remuneration components for the 2021 financial year for all Executives. Further details regarding each of the remuneration
components are provided in sections 4.3 to 4.5.
Remuneration Type
Fixed Remuneration
Variable/At-Risk Remuneration
Component
Delivery
Composition
Total Fixed Remuneration (TFR)
Short Term Incentive (STI)
Long Term Incentive (LTI)
Cash
Base salary plus superannuation
contributions in line with statutory
obligations, and any salary
packaged amounts.
50% of STI award paid in
cash after the financial year.
50% of STI award as shares,
with one half restricted for
one year and the other half
for two years.
Rights with a 3 year vesting
period and shares allocated
on vesting subject to a one
year holding lock.
Equity
Link with strategic
objectives
Set to attract, retain, motivate
and reward high quality executive
talent to deliver on the Company’s
strategy.
Outcomes based on a combination of business performance
and personal measures.
Subject to clawback and overarching Board discretion.
Designed to:
– align interests of shareholders and Executives through
an appropriate level of “at risk” pay and by delivering
50% in restricted equity;
– motivate and reward for increasing shareholder value
by meeting or exceeding Company and individual
objectives; and
– support the financial and strategic direction of the
business through performance measures.
Outcomes based on ROCE,
comparative cost position
and relative TSR.
Subject to clawback and
overarching Board discretion.
Designed to:
– align interests of
shareholders and
Executives through an
appropriate level of “at
risk” pay and by delivering
100% in equity; and
– encourage Executives
to focus on the key
performance drivers
which underpin the
Company’s strategy to
deliver long term growth
in shareholder value.
Directors’ Report continuedNewcrest Annual Report 2021 103
The diagram below illustrates how the different components of Executive remuneration provided in respect of the 2021 financial year are delivered over
a four year period.
Salary
Paid throughout year
50% cash
25% restricted shares
25% restricted shares
STI
Performance Period
(12 months)
Restriction
Restriction
Paid Oct 2021
Released Oct 2022
Released Oct 2023
Awarded as Rights
LTI
Performance Period
(3 years)
Vests as shares
Unlocked
Holding lock
Nov 2020
Nov 2023
Nov 2024
FY21
FY22
FY23
FY24
FY25
Newcrest’s mix of remuneration components, expressed as a percentage of “maximum” earning opportunity, for current Executives for the 2021 financial
year is illustrated in the following graphs. Although the components of TFR, STI and LTI are described separately, they should be viewed as part of an
integrated package.
Remuneration Mix as a Percentage of Maximum FY21 (%)
37.5
31.6
31.25
26.7
20.8
20.8
20.8
21.1
21.1
26.3
18.75
18.75
31.25
20.0
20.0
33.3
LTI
STI (Deferred)
STI (Cash)
TFR
CEO
CFO
COO, CDO & CTPO
CPSO & CLRCO
The “at risk” components are subject to deliberately challenging financial and non-financial performance conditions. The potential “maximum” earning
opportunity shown above is not expected to be achieved each year, but is designed to only be achieved in respect of exceptional performance. There
is no STI awarded unless a threshold level of performance is achieved.
100
80
60
40
20
0
Directors’ Report 104
4. Executive Remuneration Framework continued
4.3. Total Fixed Remuneration (TFR)
Feature
Composition
Description
TFR comprises base salary, superannuation contributions in line with statutory obligations, and any salary packaged
amounts (for example, novated lease vehicles). TFR is paid in Australian dollars.
Relevant Considerations
TFR is determined on an individual basis, considering the scope of the role, the individual’s skills and expertise, individual
and group performance, market movements and competitiveness.
Review
TFR is reviewed annually. The Chief People and Sustainability Officer received an increase in TFR of 6.7%, effective
1 October 2020, in recognition of the significant increase in scope of the role, specifically the addition of Health,
Safety, Environment and Security. There was no change to TFR of any other Executive as part of the 2020 annual
salary review process.
After the end of the financial year, a benchmarking review of TFR took place and Executives, other than Sandeep Biswas
and Gerard Bond, will receive increases in fixed pay averaging 2.8% on 1 October 2021.
4.4. Short Term Incentive
4.4.1. Key features of the STI award for the 2021 financial year
Feature
Participation
Opportunity
Rules
Performance Period
Performance Conditions
Description
All Executives are eligible to participate.
For “at target” performance, the CEO has the opportunity to receive 100% of TFR; the CFO has the opportunity to receive
80% of TFR; and the other Executives have the opportunity to receive 60% of TFR. Each Executive has the opportunity
to receive double the “at target” percentage for exceptional performance (‘maximum’ STI opportunity).
The STIs for the 2021 financial year are governed by the Equity Incentive Plan Rules.
The performance period is the financial year preceding the payment date of the STI. For the 2021 financial year, the
performance period was 1 July 2020 to 30 June 2021.
Performance conditions are a mix of personal and business measures. Robust threshold, target and maximum targets are
established for all measures to drive high levels of business and individual performance. The specific personal measures
applicable to each KMP may change from year to year to reflect business priorities. The relative weightings of these
categories may also change from year to year to best reflect each Executive’s priorities. The annual budget generally
forms the basis for the “target” performance set by the Board.
Further details in relation to the personal STI measures and the outcomes are described in section 5.3.1 and the business
measures, are described in section 4.4.2.
The diagram below illustrates the indicative weighting of the performance conditions, using the CEO’s FY21 personal
conditions as an example.
Safety & Sustainability 12.5%
People 12.5%
Operating
Performance
35%
40%
Personal
measures
Technology & Innovation 10%
Profitable Growth
30%
60%
Business
measures
Safety
20%
Sustainability 10%
Earnings
25%
Costs
20%
Free Cash Flow
25%
Directors’ Report continuedNewcrest Annual Report 2021
105
Feature
Description
Calculation of STI Award
to Executives
Payment, Delivery
and Deferral
STI Amount ($) = ((40% x personal outcome) + (60% x business outcome)) x “At Target” STI% x TFR
Business and personal measures are scored out of 200%, with 50% for threshold performance, 100% for target
performance and 200% for maximum performance. Business or personal measures that fail to meet the threshold target
score 0%. If the overall average of the five personal measures is below 50%, the CEO (in the case of an award to the
other Executives) or the Board (in the case of an award to the CEO) has the discretion not to make an STI award to that
participant. Accordingly, the minimum value of the STI Award is nil.
For Executives, the STI for the 2021 financial year is delivered 50% in cash and 50% in restricted shares in October 2021,
following finalisation of the audited annual Company results and the approval of all personal outcomes. Of the restricted
component, half of the restricted shares is to be released after 12 months after the allocation date (in October 2022)
and the remainder after two years after the allocation date (in October 2023). Restricted shares remain on foot if the
Executive resigns before the shares are released from the restriction, unless the Board determines otherwise. During
the restriction period, the Executives are entitled to dividends and voting rights attaching to their restricted shares.
For allocation purposes, the value of each STI restricted share will be calculated using the five trading day volume
weighted average price (VWAP) of Newcrest’s share price immediately preceding the date of payment of the cash
portion of the STI Award, unless such price is assessed as not being fairly representative of the market price, in which
case an alternative and representative VWAP will be agreed by the HRR Committee.
Cessation of Employment
Except at the discretion of the Board:
– if a participant resigns or is dismissed for cause during the Performance Period, the participant may not be eligible
to receive an STI award for that financial year;
– if a participant ceases employment for any other reason during the Performance Period, the STI award will be
reduced on a pro rata basis, but will remain payable in the ordinary course;
– if a participant is dismissed for cause while the restricted shares are subject to restrictions, the restricted shares will
be forfeited;
– if the participant resigns while the restricted shares are subject to restrictions, the participant will be entitled to retain
their restricted shares and the shares will remain on foot for the balance of the restriction period and then be released.
The Board will have the discretion to increase the STI restriction period for some or all of the STI restricted shares on
foot, from 1 year to 2 years;
– if the participant ceases employment for any other reason while the restricted shares are subject to restrictions, the
participant will be entitled to retain their restricted shares and the shares will remain on foot for the balance of the
restriction period and then be released.
In general, the Board has the discretion to reduce or forfeit an STI award, or to seek recovery from a participant, if an
event or circumstance has occurred which has resulted in an inappropriate benefit being conferred on a participant
(including in the case of fraud, dishonesty, gross misconduct by the Executive or if the outcomes are the result of material
error or misstatement of the financial accounts). The discretion may be exercised for a period of two years from the
vesting or award date.
Clawback
Overriding Board Discretion
The Board retains overriding discretion to adjust the final STI outcome. This is an important measure to ensure any
STI award is appropriate in the circumstances.
Directors’ Report 106
4. Executive Remuneration Framework continued
4.4. Short Term Incentive continued
4.4.2. STI performance conditions for the 2021 financial year in detail
Business measures for the 2021 financial year
Business Measure
Weighting Reason the Performance Measure Was Adopted
Safety
TRIFR (1) (5%)
Quality of Serious Incident Investigations (5%) (2)
Critical Control Management (CCM) (3)
Action Close Out on time (5%)
Process Safety incident reviews (5%) (4)
20%
The Company is committed to reinforcing a strong safety culture and improving safety
leadership. As such, the measures and targets are reviewed annually to meet the
aspirations of the Safety Transformation Plan. The combined measures maintain a
focus on safety performance, as measured by TRIFR, drive critical actions and ensure
effective controls are in place to help prevent fatalities and/or serious injuries.
Sustainability
Greenhouse gas emissions (GHG) (5%)
Improved water efficiency (5%)
10%
These measures were introduced to increase the focus on sustainability. They are
intended to incentivise site development and implementation of emission reduction
plans and water efficiency plans.
Earnings
Adjusted Net Profit/(Loss) After Tax
and Before Significant Items
Costs
AISC per ounce (5)
Free Cash Flow
(FCF)
25%
20%
25%
They were chosen as methods of assessing sustainability performance because they
are, as far as practicable, objective, measurable and an appropriate way to assess key
components that contribute to the overall sustainability goals of the Company.
The earnings target is a direct financial measurement of the Company’s performance,
providing a strong alignment to the interests of shareholders. The results are based
on the statutory profit of the Group adjusted for the effect of commodity prices,
foreign exchange rates and other significant items determined by the Board which are
considered to be outside the control of Management. It provides a strong reflection
of production delivery, operational efficiency and cost management.
This measure is a highly relevant short and long term measure which is consistent with
the Company’s strategy of focussing on sustainable cash generation and profitability.
It is the primary unit cost measure in the gold industry, and is visible and readily
understood. It is based on publicly disclosed and reconciled results and is therefore a
reliable measure for use by the Company, adjusted for the effect of commodity prices
and foreign exchange rates and other significant items determined by the Board which
are considered to be outside the control of Management.
FCF is a highly relevant short and long term measure. It reflects cost and capital
management and production efficiencies. FCF is necessary to fund growth
opportunities, repay debt and ultimately pay dividends to shareholders. It is based on
publicly disclosed and reconciled results and is adjusted for the effect of commodity
prices and foreign exchange rates and other significant items determined by the Board
which are considered to be outside the control of Management.
(1) TRIFR is the total number of recordable injuries per million hours worked. It is a lagging indicator of safety performance.
(2) Quality of Serious Incident Investigations focuses on assessing the quality of investigations and ensuring that actions arising as an outcome of an SPI investigation have
been implemented.
(3) CCM action close out focuses on the timely completion of all actions identified following a Systems Verification (SV) or Field Critical Control Check (FCCC). CCM is the
second pillar of Newcrest’s Safety Transformation Plan and is focussed on verifying that effective controls are in place and working for every high risk task.
(4) Process Safety Improvement focuses on the completion rate of all actions detailed in each site’s Process Safety Improvement Plan and targets wider system risks,
such as operating plant designs, and chemical and energy hazards.
(5) All-In Sustaining Cost metrics as per World Gold Council Guidance Note on Non-GAAP metrics. Refer to section 6 of the Operating and Financial Review.
Personal measures for the 2021 financial year
For the 2021 financial year, the key elements of the personal performance measures for Sandeep Biswas were set by the Board to align with the
Company’s strategic goals and taking into account the Company’s key material risks. The personal performance measures were selected to recognise
the important role that the CEO plays in personally advancing the Company’s strategic objectives of improving the safety, people and sustainability
performance of the Company, its operating performance, profitable growth and technology and innovation.
The personal performance measures for other Executives for the 2021 financial year focussed on their areas of responsibility which, in the case of the
operational Executives, included safety, people, production, operating performance and business improvement, material risk management, technology
and innovation, sustainability and profitable growth. Non-financial targets are generally aligned to core values, including safety, organisational health and
key strategic and growth objectives. If there is a fatality within the area of accountability of an Executive, the Board may exercise discretion to adjust the
assessment of the personal safety measure, including a zero award, where appropriate.
Further detail as to the personal measures for the CEO, CFO and other Executives, and outcomes with respect to such measures is set out in section 5.3.1.
Directors’ Report continuedNewcrest Annual Report 2021 107
4.4.3. STIs for the 20 20 financial year
The terms that applied to the 2020 financial year STI award in respect of the performance period from 1 July 2019 to 30 June 2020, were described in detail
in the 2020 Remuneration Report.
4.4.4. STIs for the 2022 financial year
Minor changes have been made to the STI Business measures for the 2022 financial year. These changes have been made to increase focus on key
safety and sustainability metrics, specifically TRIFR, SPI Action Verification and Investigation Quality, and the timely completion of actions related to the
abatement of Greenhouse Gases and Water Intensity. The overall weightings of the five categories (Safety, Sustainability, Earnings, Cost and Free Cash
Flow) remain unchanged.
4.5. Long Term Incentive
4.5.1. Key features of the 2020 LTIs (under which Rights were issued during the 2021 financial year)
Feature
Equity type
Description
Allocations are in the form of rights to shares in the Company (Rights). Upon vesting, each Right is automatically exercised
at a nil exercise price and the Executive receives one fully paid ordinary share for each Right (subject to a 12 month holding
lock). As the Rights represent a participant’s ‘at risk’ long term incentive component of their remuneration package, the
Rights are granted at no cost to the participant. Rights are automatically exercised and do not have an expiry date.
Rules
The 2020 LTIs are governed by the Equity Incentive Plan Rules.
Maximum LTI Opportunity
The maximum LTI opportunity is 180% of TFR for the CEO, 120% of TFR for the CFO, 100% of TFR for the COOs, CDO
and CTPO, and 80% of TFR for the other Executives. Section 4.2 indicates the value of the grants expressed as a
percentage of the total remuneration package.
Grant Date
LTI Grant Value
The grant date was 18 November 2020 and Rights will vest, subject to the satisfaction of the performance conditions,
on 18 November 2023. The total number of Rights issued to, and held by, each Executive is summarised in section 9.4.
For allocation purposes, the value of each Right was calculated based on the face value of the underlying security,
using the five day VWAP of Newcrest’s share price immediately preceding the grant date (A$29.2146).
Performance period
The performance period is the three financial years commencing on 1 July 2020.
Performance Conditions
2020 LTI Rights issued are subject to the Performance Conditions shown below:
Comparative
cost position
33%
Relative total
shareholder
return
33%
ROCE
33%
Vesting
The Performance Conditions have been set to align with the long-term goals and performance of Newcrest and the
generation of shareholder returns. Further details in relation to the Performance Conditions are detailed in section 4.5.2.
Rights vest three years from the grant date subject to the Performance Conditions being met. Rights are automatically
exercised on vesting. On vesting of the Rights, the Board has the discretion, subject to the Equity Incentive Plan Rules, to
satisfy the vesting obligations by the issue of new shares, transfer of existing shares purchased on-market or by paying
a cash equivalent amount. The practice in recent years has been to satisfy the vesting obligations by allocating shares
purchased on-market.
Directors’ Report 108
4. Executive Remuneration Framework continued
4.5. Long Term Incentive continued
4.5.1. Key features of the 2020 LTIs (under which Rights were issued during the 2021 financial year) continued
Feature
Holding lock
Dividends
Clawback
Description
For Executives, shares received on the vesting and automatic exercise of Rights are subject to a 12 month holding lock.
No dividends are paid on unvested Rights. Shares allocated on the vesting and automatic exercise of Rights and subject
to the holding lock have the right to receive dividends (when applicable).
In general, the Board has the discretion to reduce, forfeit or lapse an LTI award for a participant if an event or circumstance
has occurred which has resulted in an inappropriate benefit being conferred on a participant (including in the case of
fraud, dishonesty, gross misconduct by the Executive or if the outcomes are the result of material error or misstatement
of the financial accounts). The discretion may be exercised for a period of two years from the vesting or grant date.
Cessation of employment
Except at the discretion of the Board:
– if a participant gives a notice of resignation or is dismissed for cause, unvested Rights will lapse on cessation of
employment; and
– if a participant ceases employment for any other reason, a pro-rata number of unvested Rights will remain on foot and
vest subject to satisfaction of the applicable performance conditions and any holding lock in the terms of grant.
For all leavers, any restricted shares will be released after expiration of the holding lock period (subject to the Board
exercising a discretion under the clawback policy).
Change of control
The Board may exercise its discretion to allow all or some unvested Rights to vest if a change of control event occurs.
Where there is an actual change in control of the Company then, unless the Board determines otherwise, unvested
Rights will immediately vest or cease to be subject to restrictions on a pro rata basis having regard to the portion of the
vesting period that has elapsed.
Retesting
There is no retesting. Rights that do not vest based on performance over the three year performance period will lapse.
Overriding Board discretion
The Board retains overriding discretion to adjust the final LTI outcome. This is an important measure to ensure any
LTI award is appropriate in the circumstances.
4.5.2. 2020 LTI performance conditions in detail
2020 LTI Performance Conditions
Component
Assessment
Reason for adoption of the Performance Measure
Comparative Cost Position
The Company’s measure for the Comparative
Cost Position performance condition is the AISC
per ounce, adopted by the Company in relation
to costs reporting.
The vesting scale for this measure is as follows:
– 0% vests if Comparative Costs are at or
above the 50th percentile;
– 40% vests if Comparative Costs are less than
the 50th percentile;
The AISC per ounce incorporates costs related
to sustaining production.
– 100% vests if Comparative Costs are below
the 25th percentile.
This measure is closely aligned to Newcrest’s
strategic objective to be a low cost producer and
aligned to our relative value proposition for gold
equity investors.
The AISC per ounce result is a sound basis for the
Company to use in assessing comparative cost
as it is based on publicly disclosed results.
Straight line vesting occurs between these
thresholds.
The Comparative Costs measure will be
assessed using peer data for the period from
1 July 2020 until 30 June 2023.
Performance over the three year performance
period, is compared against other entities based
on data sourced from an independent provider
selected by the Board. The entities that are
included in the independent provider’s database
can change from year to year (such as where
additional companies begin to report AISC, or
where there are mergers and demergers). Cost
performance for each of the three years of the
performance period is averaged to determine
the number of Rights that may be exercised in
relation to this performance measure.
Directors’ Report continuedNewcrest Annual Report 2021 109
Component
Assessment
Reason for adoption of the Performance Measure
Return on Capital Employed (ROCE)
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.
For each of the three years of the performance
period ROCE is averaged to determine the
number of Rights that may be exercised in
relation to this performance measure.
Average capital employed is calculated as
a simple average of opening and closing
balances. If material equity transactions (for
example, significant equity issuances or asset
impairments) occur such that the simple average
is not representative of actual performance, the
average capital employed for the year is adjusted
for the effect of these transactions.
Average capital employed for the purpose of this
calculation excludes approved capital invested in
long-dated projects until commercial production is
achieved, so as not to discourage Management’s
pursuit of long-dated growth options.
Relative Total Shareholder Return (TSR)
Relative TSR is a measure of performance over
time that combines share price appreciation
and dividends paid to show the total return to
the shareholder, expressed as an annualised
percentage. Relative TSR is a measure of the
Company’s TSR performance against that of
other gold companies.
The vesting scale for this measure is as follows:
– 0% vests if ROCE is less than 6%;
– 30% vests if ROCE is 6%;
– 100% vests if ROCE is 13% or more.
Straight line vesting occurs between these
thresholds.
These targets, including the threshold of
6% ROCE, have been reviewed by the Board
during the year and, on the basis that they
remain appropriate, have been left unchanged.
The targets are designed to exceed Newcrest’s
Weighted Average Cost of Capital whilst
also incentivising returns that are higher
than comparable industries in the prevailing
economic conditions.
ROCE aligns Management action and company
outcomes closely with long term shareholder value.
ROCE provides a balance to the other LTI metrics
as it serves as a counter to “buying” success.
ROCE is also based on publicly disclosed and
reconciled results and is therefore a sound basis
for the Company to use in assessing value.
Impairments are excluded from the capital base in
the year in which they occur, such that the return
is on a pre-impairment basis and LTI participants
do not benefit from the impairment. However,
the post impairment capital base is used in the
calculation of returns in subsequent years so as to
not de-incentivise current or new management.
Relative TSR will be measured by comparing
Newcrest’s AUD share price performance
against the S&P TSX Global Gold Index over
three years.
Rather than rely on spot price, the performance
calculations will reference the six month period
immediately prior to the start (1 January 2020 –
30 June 2020) and the end (1 January 2023 –
30 June 2023) of the performance period.
The treatment of dividend and capital
adjustments will be in accordance with the
adjustments made by the data provider.
The vesting schedule for this measure is detailed
below.
– 0% vests if Relative TSR is below the Index;
– 50% vests if Relative TSR is equal to
the Index;
– 100% vests if Relative TSR exceeds the Index
by 18 percentage points or more.
Straight line vesting occurs between these
thresholds.
The Relative TSR measure provides alignment
between the outcomes of vesting of the 2020 LTIs
and the returns experienced by shareholders, in
order to specifically encourage outperformance
against other gold mining companies.
The S&P TSX Global Gold Index is the most
appropriate comparison point for Newcrest to use
for the Relative TSR measure because:
– As a gold mining company, Newcrest’s share
price performance is significantly impacted
by fluctuations in the gold price. Accordingly,
it is appropriate to compare Newcrest’s
performance to that of other gold mining
companies.
– There are few ASX-listed gold mining
companies which act as a directly relevant
comparison to Newcrest given the differences
in scale, and it is therefore considered that a
comparison with international peers is more
appropriate.
– Rather than hand-pick a selection of peer
gold mining companies from various stock
exchanges globally, the Board considers that
Newcrest’s performance should be compared
to the S&P TSX Global Gold Index as each of
Newcrest’s major peers are constituents in the
S&P TSX Global Gold Index.
Directors’ Report 110
4. Executive Remuneration Framework continued
4.5. Long Term Incentive continued
4.5.3. Outlook for 2021 LTI Performance Conditions (2022 financial year)
LTI Performance Conditions for the 2021 LTIs will be structurally identical to those which apply to the 2020 LTIs.
4.5.4. LTIs for past financial years
The terms that apply to the 2017, 2018, and 2019 LTIs, which vested or will vest in the 2021, 2022 and 2023 financial years respectively, are described
in detail in the 2018, 2019 and 2020 Remuneration Reports respectively.
4.6. Sign-on arrangements
The following Sign-On arrangements for Executives were granted during the 2021 financial year to compensate for forgone entitlements. They are
governed by the Equity Incentive Plan Rules.
Performance conditions were imposed to ensure that the Executive does not become entitled to the sign-on benefits in the event of underperformance.
The CEO will assess performance against the relevant conditions, given that the Executives are direct reports to the CEO.
Recipient
Grant Date
Award
Maria Sanz Perez
27 July 2020
22,386 sign-on rights (face value of A$700,000)
with a nil exercise price, granted in compensation
for benefits that were forfeited on leaving her
previous employer. The Executive receives one
fully paid ordinary share for each right that is
automatically exercised. Any sign-on rights that do
not vest at the end of the vesting period will lapse.
Vesting Date
All sign-on rights are
expected to vest in
August 2021, subject to
the Securities Dealing
Policy.
Vesting/Payment
Conditions
Adequate performance and
continuing employment
(other than in limited
circumstances).
As set out in the 2020 Remuneration Report:
– 7,000 sign-on rights were granted to Suresh Vadnagra in the 2020 financial year, in compensation for benefits forfeited on leaving his previous
employer. Of these, 3,500 vested in the 2021 financial year. The remaining 3,500 sign-on rights granted to Suresh are due to vest on 18 May 2022 (or as
soon as possible afterwards in accordance with Newcrest’s Securities Dealing Policy), subject to adequate performance and continuing employment
(other than in limited circumstances). The cash component of Suresh’s sign-on arrangements is noted in section 9.1; and
– A$150,000 cash was awarded to Lisa Ali on 28 August 2020 to provide for relocation support following the satisfactory completion of her probation
period. This is also noted in section 9.1.
In addition, A$300,000 cash was paid to Maria Sanz Perez to provide relocation support. Payments were made in two equal parts after commencement
and the satisfactory completion of her probation period. This is also noted in section 9.1.
Directors’ Report continuedNewcrest Annual Report 2021 111
5. Remuneration Outcomes
5.1. Total Fixed Remuneration (TFR) for the 2021 financial year
Set out below is the TFR for the current Executives as at 30 June 2021, shown in Australian dollars. TFR comprises base salary and superannuation
contributions and any salary packaged amounts (for example, novated lease vehicles). This information is provided in Australian dollars to enable
comparisons to be made in future years, without the impact of changes in exchange rates. The increase in TFR for Lisa Ali was in recognition of the
significant increase in scope of her role, specifically the addition of Health, Safety, Environment and Security.
Name
Sandeep Biswas
Gerard Bond
Lisa Ali
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
TFR A$
30 June 2021
TFR A$
30 June 2020
% Increase
2,400,000
1,000,000
800,000
850,000
800,000
750,000
850,000
850,000
2,400,000
1,000,000
750,000
850,000
–
750,000
850,000
850,000
0.0%
0.0%
6.7%
0.0%
–
0.0%
0.0%
0.0%
5.2. Newcrest’s Financial Performance for the past 5 financial years
The following table provides a summary of the key financial results for Newcrest over the past five financial years.
Five Year Summary of Newcrest’s Financial Performance
Year Ended 30 June
Statutory profit
Underlying profit (1)
Cash flows from operating activities
Free cash flow (2)
Free cash flow (before M&A activity) (2)
EBITDA Margin
EBIT Margin
Net Debt to EBITDA (3)
ROCE
Gearing (4)
Share price at 30 June (5)
Earnings per share (6)
Basic
Underlying
Dividends (7)
Gold produced
All-in sustaining cost (8)
Average realised gold price
Measure
US$ million
US$ million
US$ million
US$ million
US$ million
%
%
Times
%
%
A$
US cents/share
US cents/share
US cents/share
000’s ounces
US$/oz sold
US$/oz
2021
1,164
1,164
2,302
1,104
1,125
53.4
38.7
(0.1)
18.5
(1.8)
25.28
142.5
142.1
55.0
2,093
911
1,796
2020
2019
2018
2017
647
750
1,471
(621)
670
46.8
30.4
0.3
13.8
6.8
31.53
83.4
83.1
25.0
2,171
862
1,530
561
561
1,487
804
878
44.6
24.7
0.2
11.2
4.9
31.95
73.0
72.8
22.0
2,488
738
1,269
202
459
1,434
601
828
43.9
21.7
0.7
8.8
12.2
21.80
26.3
59.8
18.5
2,346
835
1,308
308
394
1,467
739
829
40.5
20.7
1.1
7.9
16.6
20.16
40.2
51.4
15.0
2,381
787
1,263
This table includes non-IFRS financial information. Refer to section 6 of the Operating and Financial Review for an explanation and reconciliation of
non-IFRS terms.
(1) Underlying profit is profit after tax before significant items attributable to owners of the parent.
(2) Free cash flow is calculated as cash flow from operating activities less cash flow related to investing activities. Free cash flow (before M&A activity) is calculated as free
cash flow excluding investing activities relating to M&A investments and business divestments.
(3) Net debt to EBITDA is calculated as net debt at the end of the reporting period divided by the rolling 12 month EBITDA.
(4) Gearing ratio is calculated as net debt at the end of the reporting period divided by net debt plus equity.
(5) Opening share price on 1 July 2016 was A$23.00.
(6) Basic EPS is calculated as net profit after tax and non-controlling interests (statutory profit) divided by the weighted average number of ordinary shares. Underlying
earnings per share is calculated as net profit after tax and non-controlling interests and before significant items (underlying profit) divided by the weighted average number
of ordinary shares.
(7) Represents dividends determined in respect of the financial year.
(8) AISC metrics as per World Gold Council Guidance Note on Non-GAAP Metrics. See section 4.4.2 for further detail. Newcrest’s AISC will vary from period to period as a
result of various factors including production performance, timing of sales, the level of sustaining capital and the relative contribution of each asset.
Directors’ Report 112
5. Remuneration Outcomes continued
5.2. Newcrest’s Financial Performance for the past 5 financial years continued
The graphs below show Newcrest’s performance over the last five years for metrics used for multiple years to determine the business component of
STI awards, before any adjustments as a result of the exercise of Board discretion. Where no values are shown in the graphs for particular years, they
represent years where it was not a business performance measure for STI purposes.
TRIFR
3.3
2.4
2.3
2.6
2.3
Quality of SPI Incident
Investigations (%)
Critical Control Management
Action Close Out (%)
100
88
99
88
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Statutory Profit (US$m)
Underlying Profit (US$m)
Process Safety Incident Reviews (%)
1,164
1,164
96
647
561
308
202
750
561
394
459
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Free Cashflow before M&A Activity
(US$m)
1,125
829
828
878
670
AISC (US$ per oz sold)
911
862
835
787
738
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
5.3. STI Outcomes for 2021 financial year
5.3.1. Performance against STI objectives
STI outcomes are determined based on business and personal performance. When assessing personal performance, as well as considering the outcomes,
consideration is given to whether the outcomes have been achieved in a manner that is consistent with the Company’s values and standards and risk
management processes.
Directors’ Report continuedNewcrest Annual Report 2021 Element
Weight Performance (1)
Description
THRESHOLD
TARGET
MAXIMUM
113
Business Measures
60%
Safety (1) – TRIFR
Safety (2) – Quality of SPI
Incident Investigations
Safety (3) – Critical
Control Management
Action Close Out on time
Safety (4) – Process
Safety incident reviews
Sustainability (1) –
Greenhouse gas
emissions
Sustainability (2) –
Improved water efficiency
3%
3%
3%
3%
3%
3%
Earnings – NPAT before
significant items (US$m)
15%
Cost – AISC/oz (US$)
12%
Cash flow: FCF (US$m)
15%
Total Business outcome
Personal Measures
(Sandeep Biswas – CEO)
40%
Safety and Sustainability
5%
People
5%
Operating Performance
14%
Technology & Innovation
4%
Profitable Growth
12%
Personal Measures
(Gerard Bond – CFO)
40%
Safety and Sustainability
3%
People
5%
Operating Performance
16%
– TRIFR of 2.26 was below the target of 2.4.
– 88% investigation quality and 98% action verification
exceeded Target.
– 99% completion of CCM Action close outs on time, which was
above the Maximum level.
– 96% of Process Safety incident review actions were completed
on time, which was above the Target.
– Abatement plans were developed ahead of schedule and
more actions were closed on time than was required to
achieve Maximum.
– Efficiency plans were developed ahead of schedule and
more actions were closed on time than was required to
achieve Maximum.
– Outcome of $752m (above Target), inclusive of adjustments (1)
(which reduced the outcome from Maximum as per the
reconciliation on the next page).
– Outcome of $993/oz (below Target), inclusive of adjustments (1)
(which reduced the outcome from above Target).
– Outcome of $848m, inclusive of adjustments (1) (which reduced
the outcome but still achieved Maximum).
– The total business outcome was 149%.
– Excellent progress on Process Safety roadmap, actions and
incidents, and good progress on embedding protocols for
delivering on industry commitments.
– Organisational Health was below minimum.
– Gender diversity and organisational capability improved.
– Achieved Maximum for Free Cash Flow and Edge L4 cash
delivery. Gold production was around Target and Risk Culture
demonstrably matured.
– Exceeded Targets for probability weighted NPV for innovation
portfolio and for progress of and towards breakthroughs, eg. high
temperature explosives, automated mining, selective steep wall
pits, in-mine sensing and hive mining.
– Excellent exploration results at Red Chris and Havieron, and
development well progressed. Most aspects of Cadia expansion
on or ahead of Target.
– Significantly exceeded targets on majority of Modern Slavery
priorities.
– Excellent talent management.
– Missed Minimum for Organisational Health.
– Achieved Maximum for Free Cash Flow and Edge L4 cash delivery.
Group site costs missed Minimum but Group capex was on scope
and on budget.
Technology & Innovation
2%
– Significantly exceeded Target on Cadia’s Power Purchase
14%
40%
Profitable Growth
Personal Measures
(other Executives)
Individual measures
based on initiatives and
key project deliverables
linked to company
strategy and performance
Agreement.
– Exceeded Target on Business Development projects. Successful
TSX listing and implementation.
– Outcomes against individual measures for the remaining
Executives ranged from 0% (9% of all objectives) to 200%
(10% of all objectives).
(1) As described in section 4.4.2, adjustments are for the effect of commodity prices, foreign exchange rates, transactions related to M&A activity and other items determined
by the Board which are considered to be outside the control of Management and/or in the interests of shareholders. The Board uses guiding principles to apply
adjustments consistently each year, where the Board considers it appropriate to do so. In FY21 the Board used discretion to make minor adjustments to the financial metrics
to reverse the costs of a seismic event at Telfer and one-off costs resulting from early extinguishment of debt. COVID-19 led to additional unbudgeted costs (primarily
related to labour, medical and accommodation) of $32 million (pre-tax) and had further productivity impacts. The Board determined that no adjustment would be made
to reflect these additional COVID-19 related costs. The unadjusted values for financial business metrics are NPAT ($1,164m), FCF ($1,104m) and AISC ($911/oz).
Directors’ Report 114
5. Remuneration Outcomes continued
5.3. STI Outcomes for 2021 financial year continued
5.3.1. Performance against STI objectives continued
A reconciliation of the Earnings measure outcome to statutory profit is detailed below:
Statutory profit
Add back: Significant items after tax (1)
Underlying profit
Adjust: Board agreed adjustments (2)
Earnings measure
2021
US$m
1,164
–
1,164
(412)
752
2020
US$m
647
103
750
(285)
465
(1) Refer to section 2.7 of the Operating and Financial Review for details of significant items.
(2) Represents adjustments for the effect of commodity prices, foreign exchange rates and other significant items determined by the Board which are considered to be outside
the control of Management.
A reconciliation of the Free Cash Flow measure outcome to the statutory cashflow is detailed below:
Cash flows from operating activities
Cash flows from investment activities
Free cash flow
Add back: M&A activity (1)
Free cash flow (before M&A activity)
Adjust: Board agreed adjustments (2)
Free Cash Flow measure
2021
US$m
2,302
(1,198)
1,104
21
1,125
(277)
848
2020
US$m
1,471
(2,092)
(621)
1,291
670
(256)
414
(1) Refer to section 3 of the Operating and Financial Review for details.
(2) Represents adjustments for the effect of commodity prices, foreign exchange rates and other significant items determined by the Board which are considered to be outside
the control of Management.
5.3.2. STI outcomes for all Executives for the 2021 financial year
The table below summarises achievement against the performance conditions and final STI outcomes for all Executives for the 2021 financial year.
Executive
Sandeep Biswas
Gerard Bond
Lisa Ali
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Former Executives
Francesca Lee
% of STI
Target
Awarded (1)
Total STI
Awarded (2)
US$’000
Proportion
of Total STI
Restricted
(%) (3)
% of Max STI
Opportunity
Forgone
139.8
139.8
135.4
133.4
134.6
137.4
141.4
133.8
129.4
2,505
835
485
508
482
462
538
510
36
50
50
50
50
50
50
50
50
50
30.1
30.1
32.3
33.3
32.7
31.3
29.3
33.1
35.3
(1) The assessment against personal measures for the Executives (which represent 40% of the award) ranged from 50% to 65% of maximum.
(2) Amounts have been translated from Australian dollars to US dollars using the average exchange rate for the financial year.
(3) Proportion of the Total STI awarded which will comprise restricted shares.
Directors’ Report continuedNewcrest Annual Report 2021 115
5.4. Vesting Outcomes for 2017 LTIs
Following the completion of the performance period from 1 July 2017 to 30 June 2020, the 2017 LTI Rights vested on 23 November 2020 at 65.66% of
maximum based on the assessment of performance against the applicable measures.
Element
Weighting
Performance Achieved
Comparative Cost
ROCE
Relative Total Shareholder
Return (TSR)
TOTAL VESTING
33.3%
33.3%
33.3%
24th percentile (3-yr avg)
12.7% (3-yr avg) (1)
NCM share price underperformed the S&P/TSX
Global Gold Total Return Index by 6.5 percentage points
over the period
Percentage of Total
LTI Award Vesting
33.3%
32.3%
0.00%
65.66%
(34.34% lapsed)
(1) The 3-year ROCE average includes adjustments to FY18 consistent with adjustments that applied for the purposes of the STI for the 2018 financial year. This reflected
adjustments for non-controllable items such as the 2017 Cadia seismic event. In addition, adjustments have been made to allow for Development Projects that are not yet in
commercial production. This amounted to an average reduction in the Capital Employed of $980m, representing approximately 12% of the pre-adjusted Capital Employed.
5.5. Estimated Vesting of LTI Rights in the 2022 financial year (2018 LTIs)
The 2018 LTI Rights are expected to vest on or about 21 November 2021. The vesting outcome is not yet known, but it is anticipated that it will be in
the range of 60% to 70%. The performance conditions which apply to the 2018 LTIs are the same as for the 2017 LTIs detailed above, i.e.: Comparative
Cost (33.3%), ROCE (33.3%) and Relative TSR (33.3%). Additional details on the performance standards attached to each performance condition were
disclosed in the 2019 Remuneration Report.
6. Executive Service Agreements and Termination Arrangements for KMP
Remuneration and other terms of employment for the Executives are formalised in Executive Service Agreements (ESAs). Each of the ESAs provides for
the payment of fixed remuneration, an opportunity to participate in incentive plans (performance based at risk remuneration), employer superannuation
contributions, other benefits such as, death and disablement insurance cover via the Newcrest Superannuation Plan, and salary continuance cover.
The ESAs do not have a fixed end date. The remuneration for each Executive during the 2021 financial year is detailed in sections 2.2 and 9.1, and positions
held are detailed in section 1.
Set out below is a summary of the minimum notice periods for termination set out in the ESAs. The difference in notice period for the Executives arose
due to a general change in policy.
Executive notice
Newcrest notice
Notice for cause
Sandeep Biswas
Gerard Bond
Lisa Ali
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
3 months
3 months
6 months
6 months
6 months
6 months
6 months
6 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
12 months
Immediate
Immediate
Immediate
Immediate
Immediate
Immediate
Immediate
Immediate
On cessation of employment, STI or LTI awards vest, lapse or are forfeited in accordance with the relevant plan rules. Refer to sections 4.4 and 4.5 for
further details.
During the 2021 financial year, one Executive, being Francesca Lee, ceased employment with the Company. The treatment of Francesca Lee’s LTI and
STI awards is set out in sections 9.1 and 9.2. No termination benefits were provided to Francesca Lee.
During the 2021 financial year, it was announced that Gerard Bond would leave Newcrest in early 2022. On cessation, under the terms of his employment
agreement, Gerard Bond is entitled to receive payment in lieu of notice (where applicable) and his statutory entitlements (including accrued annual and
long service leave), and retain a portion of his equity incentives (which will continue to be treated in accordance with the applicable terms of grant and
plan rules). Details of Gerard Bond’s arrangements will be disclosed in Newcrest’s 2022 Remuneration Report.
Directors’ Report 116
7. Non-Executive Directors’ Remuneration
7.1. Remuneration Policy
The Non-Executive Director (NED) fees and other terms of appointment are set by the Board. NEDs are paid by way of a fixed Director’s fee and
Committee fees commensurate with their respective time commitments and responsibilities. The level and structure of the fees is based upon the need
for the Company to attract and retain NEDs of suitable calibre, the demands of the role and prevailing market conditions.
In order to maintain impartiality and independence, NEDs do not receive any performance-related remuneration and are not entitled to participate in the
Company’s short and long term incentive schemes. NEDs are not provided with any retirement benefits, other than statutory superannuation contributions.
7.2. Fee Pool
The maximum amount of fees (including superannuation contributions) that can be paid to NEDs is capped by a pool approved by shareholders. At the
Annual General Meeting held on 28 October 2010, shareholders approved the current aggregate fee pool of A$2,700,000 per annum (US$2,016,090).
7.3. Fee Structure
In reviewing the level of fees, the Board obtains independent market data from its remuneration adviser, KPMG, primarily (but not exclusively) in relation
to ASX listed companies with market capitalisations ranked between 11–40. Base Board fees were increased by 5% with effect from 1 January 2021 as a
result of the 2020 review. No change was made to Committee fees. No change is intended to be made to base Board or Committee fees during the 2022
financial year. The aggregate fees are currently 28% below the aggregate fee pool approved by shareholders.
The table below outlines the main Board and Committee fees as at 30 June 2021.
Fees (per annum) (1)
Board (2)
Audit & Risk Committee
Safety & Sustainability Committee
HRR Committee
Chairman
Member
A$’000
US$’000
A$’000
US$’000
630
55
44
44
470
41
33
33
210
28
22
22
157
21
16
16
(1) Board and Committee fees have been translated from Australian dollars to US dollars using the average exchange rate for the 2021 financial year.
(2) The Chairperson of the Board does not receive any additional payments for his role as Chairman or Member of any Committee.
Under the Company’s Constitution, NEDs may be reimbursed for reasonable travel, accommodation and other expenses incurred while engaged on the
business of the Company. NEDs may also be remunerated for additional services, for example, if they undertake specialist or consulting work on behalf of
the Company outside the scope of their normal Director’s duties. No fees for additional services were paid to NEDs for the current or prior financial year.
8. Shareholdings
8.1. Minimum Shareholding Policy
The Company has a Minimum Shareholding Requirement Policy which requires that KMP hold at least the following value of Newcrest shares. The intent
of the policy is to align the interests of KMP with those of our shareholders. Progress is monitored on a regular basis. As at 30 June 2021, each current KMP
who has been KMP for at least the period set out below has met this requirement.
Minimum requirement
Deadline for achieving shareholding
(from the later of appointment or
1 July 2015)
CEO
Executives
NEDs
100% of TFR in shares
50% of TFR in shares
One year’s total annual fees in shares
5 years
5 years
3 years
Directors’ Report continuedNewcrest Annual Report 2021 117
8.2. Executive Shareholdings
A summary of current shareholdings of Executives, including their closely related parties, as at 30 June 2021 are set out below.
Executive
Sandeep Biswas
Gerard Bond
Lisa Ali
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Former Executives
Francesca Lee
Granted as remuneration
Opening
balance (1)
STIs (2)
LTIs (3)
Net other
movements (4)
Closing
balance (5)
Value based
on VWAP (6)
A$’000
Percentage
of TFR
%
524,482
155,541
–
72,942
–
–
103,221
–
33,852
11,386
1,874
5,350
–
1,804
7,192
–
115,747
27,259
–
17,334
–
3,606
17,334
–
(93,027)
(58,620)
–
(48,911)
7,000
(1,695)
–
3,500
581,054
135,566
1,874
46,715
7,000
3,715
127,747
3,500
16,795
3,918
54
1,350
202
107
3,692
101
78,895
–
–
–
78,895
2,280
700
392
7
159
25
14
434
12
315
(1) Opening balance is as at 1 July 2020 for all Executives.
(2) Remuneration granted in FY21 includes shares allocated on 14 October 2020 in respect of 50% of an Executive’s STI award for the STIs for the 2020 financial year. The
number of shares granted was determined using the 5 day VWAP of A$30.9806, calculated over the period 7 to 13 October 2020, being the five trading days prior to the
date the cash STI payment was made.
(3) Represents the shares acquired on vesting and automatic exercise of 2017 LTI Rights.
(4) Net other movements represents the sale or purchase of shares.
(5) The closing balance is as at 30 June 2021 for current Executives, and as at the date of cessation of employment for former Executives.
(6) Based on VWAP for the period 1 July 2020 to 30 June 2021 of A$28.9046.
8.3. Non-Executive Directors’ Shareholdings
A summary of current shareholdings of NEDs, including their closely related parties, as at 30 June 2021 is set out below.
Non-Executive Directors
Peter Hay
Philip Aiken AM
Roger Higgins
Sally-Anne Layman
Vickki McFadden
Peter Tomsett
Former Non-Executive Directors
Xiaoling Liu
Opening
balance (1)
Net other
Movements (2)
Closing
balance (3)
Value based
on VWAP (4)
A$’000
Percentage
of ongoing
annual fees
%
56,318
18,411
13,675
–
11,272
21,172
14,172
873
285
–
4,150
174
328
57,191
18,696
13,675
4,150
11,446
21,500
–
14,172
1,653
540
395
120
331
621
n/a
262
196
143
46
115
239
n/a
(1) Opening balance is as at 1 July 2020.
(2) Net other movements represents the sale or purchase of shares or the acquisition of shares through the dividend reinvestment plan by Non-Executive Directors.
(3) For current Non-Executive Directors, the closing balance is as at 30 June 2021.
(4) Based on VWAP for the period 1 July 2020 to 30 June 2021 of A$28.9046.
8.4. Securities Dealing Policy
The Company has a Securities Dealing Policy which prohibits the use by Directors, Executives and employees of hedging and derivatives such as caps,
collars, warrants or similar products in relation to Newcrest securities, including shares acquired under the Company’s equity incentive schemes, whether
or not they are vested. The Policy also prohibits entry into transactions in associated products that operate to limit the economic risk of their security
or interest holdings in the Company. Employees are not permitted to enter into margin loans in relation to Newcrest securities at any time without prior
approval from the Chairman or Company Secretary. The Policy is available on the Company’s website at https://www.newcrest.com/about-newcrest/
corporate-governance.https://www.newcrest.com/about-newcrest/corporate-governance.
Directors’ Report 118
9. Statutory Tables
9.1. Executive Remuneration
Short Term
Short
Term
Incentive
US$’000
(B)
Other
Cash
Benefits
US$’000
(C)
Salary
US$’000
(A)
Long
Term
Post-
Employ-
ment
Share-Based Payments
Other
Benefits
US$’000
(D)
Leave
US$’000
(E)
Superan-
nuation
US$’000
(F)
LTI
Rights
US$’000
(G)
STI
Restricted
Shares
US$’000
(H)
Other
US$’000
(I)
Total
US$’000
Perfor-
mance
related
%
(J)
1,776
731
588
618
597
544
618
618
44
6,134
1,597
657
171
549
473
144
549
67
1,253
418
243
254
241
231
269
255
18
3,182
704
237
39
111
124
38
150
–
9
–
37
–
224
–
16
68
–
354
19
–
225
–
–
–
29
190
463
11
3
–
2
–
3
18
2
–
39
25
6
–
2
4
2
33
–
72
40
27
31
9
37
22
38
30
(48)
186
18
4
12
22
9
11
16
5
97
16
16
–
16
–
16
16
16
1
97
14
14
–
14
14
4
14
2
76
3,087
803
258
547
120
140
547
159
1,543
512
243
305
241
231
322
255
–
–
–
–
523
–
–
100
7,735
2,510
1,400
1,751
1,983
1,187
1,844
1,503
76.1
69.0
53.1
63.2
30.4
50.7
61.7
44.5
(36)
73
–
52
105.8
5,625
3,725
623
19,965
2,007
493
71
323
270
–
323
–
3,487
1,358
450
39
227
231
38
269
–
2,612
–
–
–
–
–
–
–
17
17
5,742
1,861
557
1,248
1,125
237
1,383
281
12,434
70.9
63.4
26.8
53.0
55.6
32.1
53.7
0.0
Executives
2021
Sandeep Biswas
Gerard Bond
Lisa Ali
Craig Jones
Maria Sanz Perez (1)
Seil Song
Philip Stephenson
Suresh Vadnagra
Former Executives
Francesca Lee
Total
2020 (2)
Sandeep Biswas
Gerard Bond
Lisa Ali
Craig Jones
Francesca Lee
Seil Song
Philip Stephenson
Suresh Vadnagra
Total
4,207
1,403
(1) Appointed as KMP during the current year financial and therefore no prior year comparison is shown.
(2) Executive remuneration for the 2020 financial year excludes Executives who ceased being an Executive in the 2020 financial year. Total remuneration for these Executives
in 2020 was US$1,378,000.
The table above details the statutory remuneration disclosures as calculated with reference to the Corporations Act 2001 and relevant accounting
standards. All Executives are compensated in Australian dollars. Remuneration has been presented in US dollars, consistent with Newcrest’s presentation
currency. All remuneration components have been translated from Australian dollars to US dollars using an average rate of 0.7467 (2020: 0.6715).
An explanation of the relevant remuneration items included in the table is provided in the associated footnotes. The figures provided in relation to share
based payments (columns H to J) are calculated in accordance with accounting standards and represent the amortised fair value of equity instruments
that have been granted to Executives.
Directors’ Report continuedNewcrest Annual Report 2021 119
Notes to Executive Remuneration
(A) Salaries comprise cash salary and available salary package options grossed up by related fringe benefits tax, where applicable, net of superannuation commitments, paid
during the financial year. For former and new Executives, this balance is pro-rated for time served as KMP during the financial year. Refer to section 1 of this Report for
further information as to the period for which each of the Executives was KMP during the 2021 financial year.
(B) Short Term Incentive refers to cash amounts earned as STIs which are paid in the following financial year.
(C) Other cash benefits comprise travel costs and sign on arrangements to Lisa Ali, Suresh Vadnagra and Maria Sanz Perez as outlined in section 4.6. The sign on
arrangements are being expensed over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the Executive becomes
fully entitled to the sign on arrangement.
(D) Other benefits represents non-monetary benefits such as parking, insurance and applicable fringe benefits tax payable on benefits.
(E) Represents leave entitlements, measured on an accruals basis, and reflects the movement in the entitlements over the year. For former Executives, this includes the
reversal of long service leave expensed in prior years which did not vest upon cessation.
(F) Represents company contributions to superannuation under the Superannuation Guarantee legislation (SGC).
(G) Represents the amortisation of the fair value of LTI Rights over unissued shares. This is calculated in accordance with Australian Accounting Standard AASB 2 Share-based
Payments. The Rights have been valued using a combination of the Monte Carlo simulation and Black-Scholes models. Valuations are as at the Grant Date and, for the
portion of the awards that are not subject to market based hurdles such as TSR, are adjusted for the probability of hurdles being achieved. The amounts disclosed have
been determined by allocating the value of the Rights evenly over the period from grant date to vesting date and, as a result, the table includes Rights that were granted
in prior years.
(H) Represents the 50% of the STI award granted to the Executives which is in the form of restricted shares (refer to section 4.4). Effective from the grant of STIs for the 2020
financial year, on cessation of employment, other than for dismissal for cause, all restricted shares granted as part of the STI remain on foot until the release from restriction
date, including on resignation. Due to this change, the restricted shares granted in respect to the 2021 and 2020 financial year are expensed in the 2021 and 2020 financial
year respectively.
For STI awards granted prior to the 2020 financial year, the restricted amount is being expensed over the period in which the performance and/or service conditions
are fulfilled, ending on the date on which the Executive fully becomes entitled to the award. As a result, the table includes the accounting expense of deferrals from STIs
awarded in prior years.
(I) Represents Sign-On Rights issued to Suresh Vadnagra and Maria Sanz Perez as the equity component of their sign-on grant in accordance with their ESA, as detailed
in section 4.6. The Rights are being expensed over the period in which the performance and service conditions are fulfilled, ending on the date on which the Executive
becomes fully entitled to the award.
(J) Represents performance related remuneration as a percentage of total remuneration. Performance related remuneration comprises cash Short Term Incentive, LTI Rights
and STI Restricted Shares.
9.2. Executives – Changes in Rights Held during the 2021 financial year
Executives
Sandeep Biswas
Gerard Bond
Lisa Ali
Craig Jones
Francesca Lee (7)
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Opening
balance (1)
2020 LTIs
527,150
129,220
17,662
84,604
70,969
–
36,419
84,604
7,000
147,871 (6)
41,075 (6)
21,907
29,095
–
21,907
25,672
29,095
29,095
Other
Grants
–
–
–
–
–
22,386
–
–
–
Rights
Lapsed/
Forfeited (2)
Vested
and/or
Exercised (3)
Closing
balance (4)(5)
(60,536)
(14,257)
–
(9,066)
(36,526)
–
(1,887)
(9,066)
–
(115,747)
(27,259)
–
(17,334)
(14,066)
–
(3,606)
(17,334)
(3,500) (8)
498,738
128,779
39,569
87,299
20,377
44,293
56,598
87,299
32,595
(1) The opening balance is as at 1 July 2020.
(2) Represents 2017 LTI Rights which lapsed or were forfeited (which were granted in the 2018 financial year).
(3) Represents 2017 LTI Rights that vested (which were granted in the 2018 financial year).
(4) The closing balance is assessed on 30 June 2021.
(5) These Rights are ‘at risk’ and will lapse or be forfeited in the event that the minimum prescribed conditions are not met by the Company or individual Executives,
as applicable.
(6) Approval from Newcrest shareholders for the issuance of these Rights to Sandeep Biswas and Gerard Bond was obtained for the purpose of ASX Listing Rule 10.14 at
the 2020 AGM.
(7) A pro-rated number of Rights held by Francesca Lee in the 2017, 2018 and 2019 LTI Plans were forfeited based on her cessation date of 31 July 2020.
(8) Suresh Vadnagra was granted 7,000 sign-on rights in the 2020 financial year, 3,500 of which vested in the 2021 financial year as detailed in section 4.6. The remaining
3,500 sign-on rights granted to Suresh are due to vest on 18 May 2022 (or as soon as possible afterwards in accordance with Newcrest’s Securities Dealing Policy),
subject to adequate performance and continuing employment (other than in limited circumstances).
Directors’ Report 120
9. Statutory Tables continued
9.3. Executives – Total Value of Rights Granted and Exercised during the 2021 financial year
Executives
Sandeep Biswas
Gerard Bond
Lisa Ali
Craig Jones
Francesca Lee
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Accounting Fair Value
of Rights Granted
(A)
US$’000
Value for Rights
Exercised
(B)
US$’000
2,380
661
353
468
–
849
413
468
468
2,392
563
–
358
291
–
75
358
78
The following assumptions have been applied to the table:
(A) The accounting value of the 2020 LTI Rights reflects the fair value of a Right on the Grant Date, being US$16.09 multiplied by the number of Rights granted during the
year. The accounting value of a Sign-on Right granted to Maria Sanz Perez reflects the fair value of the Rights on the Grant Date, being US$22.16, multiplied by the number
of Rights granted during the year. This amount represents the maximum value which will be expensed over the performance period. The minimum value is nil if the
performance and/or service conditions are not met.
(B) The 2021 Rights which were exercised were 2017 LTIs and Sign on Bonus. The value at the exercise date has been determined by the Company’s share price at the close
of business on the exercise date multiplied by the number of Rights exercised during the year ended 30 June 2021 (nil exercise price).
9.4. Executives – Source of Rights Held as at 30 June 2021
Financial Year
Type
Grant Date
VWAP for grant (1)
Future financial years in which rights may vest
Sandeep Biswas
Gerard Bond
Lisa Ali
Craig Jones
Francesca Lee (2)
Maria Sanz Perez (3)
Seil Song (4)
Philip Stephenson
Suresh Vadnagra (5)
FY19
FY20
FY20
FY21
2018 LTI
2019 LTI
Other
2020 LTI
Balance at
30 June 2021
FY21
Other
21 Nov 18
19 Nov 19
29 May 20
18 Nov 2020
27 July 2020
A$20.49
A$30.84
A$28.57
A$29.21
A$31.27
FY22
210,793
48,795
–
30,643
15,984
–
17,568
30,643
–
FY23
140,074
38,909
17,662
27,561
4,393
–
13,358
27,561
–
FY22
–
–
–
–
–
–
–
–
3,500
FY24
147,871
41,075
21,907
29,095
–
21,907
25,672
29,095
29,095
FY22
–
–
–
–
–
22,386
–
–
–
498,738
128,779
39,569
87,299
20,377
44,293
56,598
87,299
32,595
(1) Five day VWAP of Newcrest’s share price prior to the Grant Date is used to determine the number of Rights offered under the 2018 LTI, 2019 LTI and 2020 LTI. Five day VWAP
of Newcrest’s share price for sign-on shares is for the period prior to commencement of employment of Maria Sanz Perez on 1 July 2020.
(2) Rights held by Francesca Lee in the 2018 and 2019 LTI Plans have been pro-rated to her cessation date.
(3) 22,386 sign-on rights were granted to Maria Sanz Perez in part compensation for forgone equity awards with her previous employer. The number of sign-on rights granted
was calculated based on a value of A$700,000 (US$496,000 divided by the VWAP of Newcrest’s share price over the 5 trading days immediately prior to commencement
of employment on 1 July 2020).
(4) All Rights granted to Seil Song under the 2018 and 2019 LTI Plans were granted as GM – Business Development. 50% of the Rights granted in both the 2018 and 2019 LTI
Plans are not subject to Performance Conditions, and shares allocated on vesting are not subject to holding lock.
(5) 7,000 sign-on rights were granted to Suresh Vadnagra in part compensation for forgone equity awards with his previous employer. 3,500 sign-on rights vested as shares
during FY21. The remaining 3,500 sign-on rights will vest during FY22.
Directors’ Report continuedNewcrest Annual Report 2021 121
9.5. Non-Executive Directors Remuneration
Non-Executive Directors
Peter Hay
Philip Aiken AM
Roger Higgins
Sally-Anne Layman
Vickki McFadden
Peter Tomsett
Former Non-Executive Directors
Xiaoling Liu
Total
Short Term
Post
Employment
Board
Fees
US$’000
Committee
Fees
US$’000
Super-
annuation (1)
US$’000
Total (2)
US$’000
443
389
151
131
137
120
104
–
137
120
137
120
54
127
1,163
1,007
–
–
49
44
49
44
22
–
57
52
37
33
13
33
227
206
16
14
2
4
16
14
13
–
16
14
16
14
–
7
79
67
459
403
202
179
202
178
139
–
210
186
190
167
67
167
1,469
1,280
FY
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
(1) Represents Company contributions to superannuation under the SGC and insurance payments.
(2) Non-Executive Directors are compensated in Australian dollars. All remuneration components have been translated from Australian dollars to US dollars using an average
rate of 0.7467 (2020: 0.6715).
9.6. Other Transactions with KMP
There were no loans made, guaranteed or secured, directly or indirectly, by the Company and any of its subsidiaries to KMP or their related parties during
the year. There were no other transactions between the Company or any of its subsidiaries and any KMP or their related parties during the year.
Directors’ Report 122
Auditor’s Independence Declaration
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Auditor’s Independence Declaration to the Directors of Newcrest
Mining Limited
As lead auditor for the audit of the financial report of Newcrest Mining Limited for the financial year
ended 30 June 2021, I declare to the best of my knowledge and belief, there have been:
a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Newcrest Mining Limited and the entities it controlled during the
financial year.
Ernst & Young
Trent van Veen
Partner
19 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Newcrest Annual Report 2021 Consolidated Financial Statements
Consolidated Financial Statements
123
Contents
Consolidated Financial Statements
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 Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Notes to the Consolidated Financial Statements
Introduction
1
2
3
Corporate Information
Basis of Preparation
Critical Accounting Judgements, Estimates
and Assumptions
Performance
4
5
6
7
8
9
Segment Information
Income and Expenses
Significant Items
Income Tax Expense
Earnings per Share (EPS)
Dividends
10
Notes to the Consolidated Statement of Cash Flows
Resource Assets and Liabilities
11
12
13
14
15
16
17
18
19
Property, Plant and Equipment
Impairment of Non-Financial Assets
Inventories
Trade and Other Receivables
Other Assets
Goodwill
Other Intangible Assets
Deferred Tax
Provisions
124
125
126
127
128
129
184
185
129
129
130
131
134
136
136
137
138
138
139
142
145
145
146
146
146
147
149
Capital Structure and Financial Risk Management
20
21
22
23
24
25
26
27
Capital Management and Financial Objectives
Net Cash/Debt
Leases
Other Financial Assets and Liabilities
Financial Risk Management
Fair Value Measurement
Issued Capital
Reserves
Group Structure
28
29
30
31
32
33
34
Other
35
36
37
38
39
40
41
Controlled Entities
Parent Entity Information
Deed of Cross Guarantee
Interest in Joint Operations
Investment in Associates
Acquisition of Red Chris
Business Divestment
Contingencies
Share-Based Payments
Key Management Personnel
Auditors’ Remuneration
New Accounting Standards and Interpretations
Commitments
Events Subsequent to Reporting Date
151
152
154
155
157
164
166
168
169
170
171
173
174
175
177
179
179
181
182
183
183
183
124
Consolidated Income Statement
For the Year Ended 30 June 2021
Revenue
Cost of sales
Gross profit
Exploration expenses
Corporate administration expenses
Other income/(expenses)
Share of profit/(loss) of associates
Write-down of property, plant and equipment
Major transaction and integration costs
Profit before interest and income tax
Finance income
Finance costs
Net finance costs
Profit before income tax
Income tax expense
Profit after income tax
Profit after tax attributable to:
Non-controlling interests
Owners of the parent
Earnings per share (cents per share)
Basic earnings per share
Diluted earnings per share
The above Statement should be read in conjunction with the accompanying notes.
Note
5(a)
5(b)
11
5(c)
5(d)
32
6
6
5(e)
7(a)
8
8
2021
US$m
4,576
(2,805)
1,771
(69)
(143)
185
26
–
–
1,770
27
(129)
(102)
1,668
(504)
1,164
–
1,164
1,164
142.5
142.1
2020
US$m
3,922
(2,568)
1,354
(64)
(117)
55
(37)
(20)
(15)
1,156
19
(190)
(171)
985
(350)
635
(12)
647
635
83.4
83.1
Newcrest Annual Report 2021 Consolidated Statement of Comprehensive Income
For the Year Ended 30 June 2021
Consolidated Financial Statements
125
Profit after income tax
Other comprehensive income/(loss)
Items that may be reclassified subsequently to the Income Statement
Cash flow hedges
Cash flow hedge (gains)/losses transferred to the Income Statement
Cash flow hedge gains/(losses) deferred in equity
Income tax (expense)/benefit
Investments
Share of other comprehensive income/(loss) of associates
Foreign currency translation
Exchange gains/(losses) on translation of foreign operations,
net of hedges of foreign investments and tax
Items that will not be reclassified to the Income Statement
Investments
Fair value gain/(loss) of equity instruments held at fair value
through other comprehensive income (‘FVOCI’)
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income for the year
Total comprehensive income attributable to:
Non-controlling interests
Owners of the parent
The above Statement should be read in conjunction with the accompanying notes.
Note
24(a)
32
2021
US$m
1,164
2020
US$m
635
96
89
(56)
129
3
3
447
447
4
4
583
1,747
–
1,747
1,747
99
(266)
50
(117)
10
10
(86)
(86)
(12)
(12)
(205)
430
(12)
442
430
126
Consolidated Statement of Financial Position
As at 30 June 2021
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Current tax assets
Other assets
Total current assets
Non-current assets
Trade and other receivables
Inventories
Other financial assets
Property, plant and equipment
Goodwill
Other intangible assets
Deferred tax assets
Investment in associates
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Provisions
Current tax liability
Other financial liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Provisions
Deferred tax liabilities
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Equity attributable to owners of the parent
Non-controlling interests
Total equity
The above Statement should be read in conjunction with the accompanying notes.
Note
14
13
23
15
14
13
23
11
16
17
18
32
15
21
22
19
23
21
22
19
18
23
26
27
2021
US$m
1,873
215
562
131
3
51
2,835
74
943
510
9,788
19
32
54
442
17
11,879
14,714
577
–
27
172
107
68
951
1,635
35
563
1,364
42
3,639
4,590
10,124
12,419
(2,272)
(23)
10,124
–
10,124
2020
US$m
1,451
254
549
65
1
52
2,372
51
1,024
481
8,809
17
24
65
386
13
10,870
13,242
520
4
26
129
23
116
818
2,013
32
494
1,114
158
3,811
4,629
8,613
12,403
(3,170)
(620)
8,613
–
8,613
Newcrest Annual Report 2021 Consolidated Statement of Cash Flows
For the Year Ended 30 June 2021
Consolidated Financial Statements
127
Cash flows from operating activities
Profit before income tax
Adjustments for:
Depreciation and amortisation
Write-down of property, plant and equipment
Net finance costs
Net fair value gain on Fruta del Norte finance facilities
Net fair value movements on concentrate receivables
Exploration expenditure written off
Other non-cash items or non-operating items
Change in working capital
Operating cash flows before interest and taxes
Interest received
Interest paid
Income tax paid
Net cash provided by operating activities
Cash flows from investing activities
Payments for plant and equipment, development and feasibility
Production stripping expenditure
Exploration and evaluation expenditure
Information systems development
Net payment for acquisition of Red Chris
Payment for acquisition of Fruta del Norte finance facilities
Net receipts from Fruta del Norte finance facilities
Proceeds from sale of property, plant and equipment
Payments for investments in associates
Cash inflow on sale of subsidiary, net of cash held by the subsidiary
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings:
– Bilateral bank debt
– Corporate bonds
Repayment of borrowings:
– Bilateral bank debt
– Corporate bonds
– Repayment of other loans
Proceeds from equity issue, net of costs
Payment for treasury shares
Other financing activities
Repayment of lease principal
Dividends paid:
– Members of the parent entity
– Non-controlling interests
Net cash used in financing activities
Net increase/(decrease) 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
5(f)
6
4(b)
25(b)
11
10(a)
33(a)
23(b)
32
34(c)
21
21
21
21
10(b)
26
2021
US$m
1,668
673
–
102
(118)
65
69
32
90
2,581
61
(107)
(233)
2,302
(940)
(148)
(115)
(20)
–
–
38
8
(21)
–
2020
US$m
985
644
20
171
(1)
(31)
64
43
(46)
1,849
17
(113)
(282)
1,471
(529)
(147)
(113)
(15)
(769)
(460)
1
2
(82)
20
(1,198)
(2,092)
–
–
–
(380)
(3)
–
(10)
(20)
(32)
(240)
–
(685)
419
1,451
3
1,873
600
1,134
(600)
(1,120)
(29)
771
(25)
(64)
(27)
(154)
(23)
463
(158)
1,600
9
1,451
128
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2021
Attributable to Owners of the Parent
FX
Translation
Reserve
US$m
Hedge
Reserve
US$m
Equity
Settle-
ments
Reserve
US$m
Other
Reserves
US$m
Accu-
mulated
Losses
US$m
123
24
2021
Balance at 1 July 2020
Profit for the year
Other comprehensive income/(loss)
for the year
Total comprehensive income for the year
Transactions with owners in their
capacity as owners
Share-based payments
Shares purchased
Dividends
Shares issued – Dividend
reinvestment plan
Issued
Capital
US$m
12,403
–
–
–
–
(10)
–
26
(575)
–
447
447
–
–
–
–
(192)
–
129
129
–
–
–
–
–
–
–
14
–
–
–
137
Total
US$m
8,613
1,164
583
1,747
(3,170)
1,164
–
1,164
–
–
(266)
14
(10)
(266)
–
26
Non-
controlling
Interests
US$m
–
–
–
–
–
–
–
–
–
–
7
7
–
–
–
–
Balance at 30 June 2021
12,419
(128)
(63)
The above Statement should be read in conjunction with the accompanying notes.
31
(2,272)
10,124
Attributable to Owners of the Parent
2020
Balance at 1 July 2019
Profit for the year
Other comprehensive income/(loss)
for the year
Total comprehensive income for the year
Transactions with owners in their
capacity as owners
Shares issued – Equity raising
(net of costs)
Share-based payments
Shares purchased
Dividends
Shares issued – Dividend
reinvestment plan
Business divestment (Note 34)
Issued
Capital
US$m
11,641
–
–
–
772
–
(25)
–
15
–
FX
Translation
Reserve
US$m
Hedge
Reserve
US$m
(489)
–
(86)
(86)
–
–
–
–
–
–
(75)
–
(117)
(117)
–
–
–
–
–
–
Equity
Settle-
ments
Reserve
US$m
112
–
–
–
–
11
–
–
–
–
Other
Reserves
US$m
26
–
(2)
(2)
–
–
–
–
–
–
Accu-
mulated
Losses
US$m
(3,648)
647
–
647
–
–
–
(169)
–
–
Total
US$m
7,567
647
(205)
442
772
11
(25)
(169)
15
–
Balance at 30 June 2020
12,403
(575)
(192)
123
24
(3,170)
8,613
Non-
controlling
Interests
US$m
64
(12)
–
(12)
–
–
–
(23)
–
(29)
–
The above Statement should be read in conjunction with the accompanying notes.
Total
US$m
8,613
1,164
583
1,747
14
(10)
(266)
26
10,124
Total
US$m
7,631
635
(205)
430
772
11
(25)
(192)
15
(29)
8,613
Newcrest Annual Report 2021 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2021
129
INTRODUCTION
This section provides information about the overall basis of preparation that is considered to be useful in understanding these financial statements.
(b) Adoption of New Accounting Standards Effective
this Financial Year
There are no new accounting standards or interpretations that have
been adopted for the first time in these financial statements.
(c) 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 (subsidiaries) is
presented in Note 28.
Control is achieved when the Group is exposed, or has the rights, to
variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee. The
Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Specifically, the Group controls an investee if, and only
if, the Group has all of the following:
– Power over the investee (i.e. existing rights that give it the current ability
to direct the relevant activities of the investee);
– Exposure, or rights, to variable returns from its involvement with the
investee; and
– The ability to use its power over the investee to affect its returns.
Non-controlling interests in the results and equity of the entities that are
controlled by the Group are shown separately in the Income Statement,
Statement of Comprehensive Income, Statement of Financial Position and
Statement of Changes in Equity respectively.
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’), PNGX Markets Limited
(‘PNGX’) and the Toronto Stock Exchange (‘TSX’). The registered
office of Newcrest Mining Limited is Level 8, 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 2021 was authorised for issue in accordance with a resolution
of the Directors on 19 August 2021.
2. Basis of Preparation
(a) Overview
This 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 also complies with International Financial Reporting
Standards (IFRS) including interpretations as issued by the International
Accounting Standards Board (IASB).
The financial report has been prepared on a historical cost basis, except
for metal concentrate receivables, other financial assets and other financial
liabilities which have been measured at fair value.
The financial report has been presented in United States (US) dollars
and all values are rounded to the nearest US$1,000,000 (US$m) 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.
Discussion of the Group’s significant accounting policies are located
within the applicable notes to the financial statements.
Notes to the Consolidated Financial Statements 130
2. Basis of Preparation continued
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.
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 potentially have a
significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are found within the
following notes:
– Note 11 – Exploration, evaluation and deferred feasibility expenditure
– Note 11 – Production stripping
– Note 11 – Units of production method of depreciation/amortisation
– Note 11 – Ore reserves and mineral resources
– Note 12 – Fair value of CGUs
– Note 13 – Net realisable value of ore stockpiles
– Note 18 – Recovery of deferred tax assets
– Note 19 – Mine rehabilitation provision
– Note 22 – Leases
– Note 24 – Valuation of Fruta del Norte (‘FdN’) finance facilities
– Note 25 – Valuation of power purchase agreement
– Note 36 – Share-based payments
(d) Foreign Currency
Presentation and Functional Currency
The presentation currency of the Group is US 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 parent entity and the Group’s Australian entities have a
functional currency of Australian dollars. Lihir has a functional currency
of US dollars and Red Chris has a functional currency of Canadian dollars.
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 statements are taken
to the Income Statement with the exception of differences on certain US
dollar borrowings (net of cash) held by entities with a functional currency
of Australian dollars 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
recognised in other comprehensive income and accumulated in a reserve
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
The assets and liabilities of subsidiaries with a functional currency other
than US dollars (being the presentation currency of the group) are
translated into US dollars at the exchange rate at the reporting date and
the income statement is translated at the average exchange rate for the
period. On consolidation, exchange differences arising from the translation
of these subsidiaries, translation of net investments in foreign operations
and of the US dollar borrowings (net of cash) designated as hedges of
the net investment are recognised in other comprehensive income and
accumulated in the foreign currency translation reserve. On disposal of a
foreign operation, the component of other comprehensive income relating
to that particular foreign operation is recognised in the Income Statement.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 131
PERFORMANCE
This section highlights the key indicators on how the Group performed in the current year.
4. Segment Information
The Group’s operating segments are based on the internal management
reports that are reviewed and used by the Group’s Executive Committee
in assessing performance. The operating segments represent the Group’s
operating mines and projects which are organised and managed according
to their location and stage.
The Group’s reportable operating segments are:
(a) Segment Results, Segment Assets
and Segment Liabilities
The measurement of segment results is in line with the basis of information
presented to the Group’s Executive Committee for internal management
reporting purposes. The performance of each segment is measured based
on their Revenues, Costs, EBITDA and EBIT (‘Segment Result’).
– Cadia, Australia
– Telfer, Australia
– Lihir, Papua New Guinea
– Red Chris JV (70% interest), Canada (1)
– Gosowong, Indonesia (2)
– Exploration and Projects (3)
(1) Newcrest acquired a 70% interest in the Red Chris JV on 15 August 2019.
Refer to Note 33.
(2) Newcrest divested its 75% share of Gosowong held through its holding in
PT Nusa Halmahera Minerals on 4 March 2020. Refer to Note 34.
(3) Exploration and Projects mainly comprises projects in the exploration, evaluation
and feasibility phase. It includes Havieron (40% interest, with Newcrest
having met the Stage 3 expenditure requirement (US$45 million) under its
farm-in agreement with Greatland Gold plc and being entitled to earn an
additional 20% interest). It also includes Wafi-Golpu JV (50% interest) in PNG,
Namosi JV (72.74% interest) in Fiji, O’Callaghans in Australia and Newcrest’s
global greenfields exploration portfolio.
Segment Revenues represent gold, copper and silver revenue, less
related treatment and refining deductions. All segment revenue is from
third parties.
EBITDA is earnings before interest, tax, depreciation, amortisation and
significant items.
EBIT is earnings before interest, tax and significant items. The
reconciliation of EBIT to profit before tax is shown in Note 4(b).
Capital Expenditure comprises payments for plant and equipment,
production stripping expenditure, assets under construction, mine
development and feasibility expenditure and information systems
development.
Segment assets exclude intercompany receivables. Segment liabilities
exclude intercompany payables.
The Group’s investment in associates is included within the Corporate
and Other segment.
Notes to the Consolidated Financial Statements 132
4. Segment Information continued
(a) Segment Results, Segment Assets and Segment Liabilities continued
2021
Gold
Copper
Silver
Treatment and refining
deductions
Total revenue
EBITDA
Depreciation and amortisation
EBIT (Segment result) (1)
Capital expenditure
Segment assets
Segment liabilities
Net assets/(liabilities)
Cadia
US$m
1,417
853
18
(108)
2,180
1,615
(199)
1,416
571
4,017
848
3,169
Telfer
US$m
Lihir
US$m
Red Chris
US$m
Total
Operations
US$m
Exploration
& Projects (2)
US$m
Corporate
& Other (3)
US$m
660
105
4
(44)
725
137
(104)
33
65
296
355
(59)
1,424
–
1
–
1,425
590
(277)
313
299
5,508
1,383
4,125
83
179
3
(19)
246
79
(70)
9
127
1,151
148
1,003
3,584
1,137
26
(171)
4,576
2,421
(650)
1,771
1,062
10,972
2,734
8,238
–
–
–
–
–
(69)
–
(69)
31
679
81
598
–
–
–
–
–
91
(23)
68
26
3,063
1,775
1,288
Notes:
(1) Refer to Note 4(b) for the reconciliation of segment result to profit before tax.
(2) Includes net assets attributable to Wafi-Golpu JV of US$452 million, Havieron of US$72 million and Namosi JV of US$25 million.
(3) Includes investment in associates, Fruta del Norte finance facilities and eliminations.
2020
Gold
Copper
Silver
Treatment and refining
deductions
Total revenue
EBITDA
Depreciation and
amortisation
EBIT (Segment result) (1)
Capital expenditure
Segment assets
Segment liabilities
Net assets/(liabilities)
Cadia
US$m
1,336
547
10
(91)
1,802
1,301
(163)
1,138
297
3,392
754
2,638
Telfer
US$m
Lihir
US$m
Red Chris (2)
US$m
Goso-
wong (3)
US$m
Total
Operations
US$m
Exploration
Corporate
& Projects (4)
US$m
& Other (5)
US$m
528
92
3
(44)
579
103
(84)
19
56
264
288
(24)
1,196
–
–
–
1,196
465
(295)
170
235
5,554
1,312
4,242
60
139
1
(15)
185
63
(47)
16
64
961
125
836
158
–
2
–
160
44
3,278
778
16
(150)
3,922
1,976
(33)
(622)
11
13
–
–
–
1,354
665
10,171
2,479
7,692
–
–
–
–
–
(64)
–
(64)
13
594
21
573
–
–
–
–
–
(77)
(22)
(99)
17
2,477
2,129
348
Notes:
(1) Refer to Note 4(b) for the reconciliation of segment result to profit before tax.
(2) In August 2019, the Group acquired a 70% interest in Red Chris. Refer to Note 33.
(3) In March 2020, Gosowong was divested. Refer to Note 34.
(4) Includes net assets attributable to Wafi-Golpu JV of US$477 million, Havieron of US$38 million and Namosi JV of US$25 million.
(5) Includes investment in associates, Fruta del Norte finance facilities and eliminations.
Total
Group
US$m
3,584
1,137
26
(171)
4,576
2,443
(673)
1,770
1,119
14,714
4,590
10,124
Total
Group
US$m
3,278
778
16
(150)
3,922
1,835
(644)
1,191
695
13,242
4,629
8,613
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 133
Note
2021
US$m
2020
US$m
4(a)
5(e)
6
6
1,770
27
(129)
(102)
–
–
–
1,668
1,771
–
17
1,727
387
236
168
109
112
49
4,576
4,454
5,554
1,449
397
25
11,879
1,191
19
(190)
(171)
(20)
(15)
(35)
985
1,420
253
–
1,356
309
163
148
115
115
43
3,922
3,628
5,578
1,236
403
25
10,870
(b) Reconciliation of EBIT (Segment Result) to Profit Before Tax
Segment Result
Finance income
Finance costs
Net finance costs
Write-down of property, plant and equipment
Major transaction and integration costs
Significant items
Profit before tax
(c) Geographical Information
Total Revenue (1)
Bullion (2)
Australia
China (including Hong Kong)
Canada
Concentrate (3)
Japan
Korea
Singapore
Switzerland
Philippines
United Kingdom
Other
Total revenue
Non-Current Assets (4)
Australia
Papua New Guinea
Canada
USA
Other
Total non-current assets
(1) Revenue is attributable to geographic location, based on the location of customers. This location may differ to the port of destination.
(2) Bullion sales to one customer amounted to US$521 million (2020: US$439 million).
(3) Concentrate sales to one customer amounted to US$967 million (2020: US$783 million) arising from concentrate sales by Cadia and Telfer.
(4) Non-Current Assets includes deferred tax assets of US$54 million (2020: US$65 million).
Notes to the Consolidated Financial Statements 134
5. Income and Expenses
(a) Revenue
Gold – Bullion
Gold – Concentrate
Gold – Concentrate treatment and refining deductions
Total gold revenue
Copper – Concentrate
Copper – Concentrate treatment and refining deductions
Total copper revenue
Silver – Bullion
Silver – Concentrate
Silver – Concentrate treatment and refining deductions
Total silver revenue
Total revenue (1)
(b) Cost of Sales
Site production costs (2)
Royalties
Treatment and realisation
Inventory movements
Depreciation and amortisation
Total cost of sales
(c) Corporate Administration Expenses
Corporate costs
Corporate depreciation
Share-based payments
Total corporate administration expenses
(d) Other Income/(Expenses)
Net fair value gain/(loss) on gold and copper derivatives and fair value movements on concentrate receivables
Net foreign exchange gain/(loss)
Net fair value movement on Fruta del Norte finance facilities
Other
Total other income/(expenses)
2021
US$m
2020
US$m
1,787
1,797
(48)
3,536
1,137
(120)
1,017
1
25
(3)
23
1,670
1,608
(40)
3,238
778
(108)
670
3
13
(2)
14
4,576
3,922
1,889
143
54
69
2,155
650
2,805
105
23
15
143
124
(57)
118
–
185
1,779
119
48
–
1,946
622
2,568
83
22
12
117
64
(6)
1
(4)
55
(1) Total revenue for the year ended 30 June 2021 comprises of revenue from contracts with customers of US$4,675 million (2020: US$4,004 million) and gold hedge losses
of US$99 million (2020: US$82 million).
(2) Includes benefit of US$8.9 million (2020: nil) in relation to the Canada Emergency Wage Subsidy (CEWS) and US$0.2 million (2020: nil) in relation to the Canada
Emergency Rent Subsidy (CER) recognised as part of the Canadian federal government’s response to the COVID-19 health pandemic which is available to all eligible
Canadian businesses.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 135
2021
US$m
2020
US$m
84
2
17
6
109
20
129
642
21
663
10
673
650
23
673
464
37
15
8
524
97
2
15
7
121
69
190
627
24
651
(7)
644
622
22
644
400
30
12
2
444
(e) Finance Costs
Interest on loans
Interest on leases
Facility fees and other costs
Discount unwind on provisions (Note 19(b))
Debt extinguishment and related costs
Total finance costs
(f) Depreciation and Amortisation
Property, plant and equipment
Intangible assets
Adjustments 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
(g) Employee Benefits Expense
Salaries, wages and other employment benefits
Defined contribution plan expense
Share-based payments
Redundancy expense
Total employee benefits expense
(h) Significant Accounting Policies
Revenue recognition
Revenue from the sale of goods is recognised when the Group satisfies its performance obligations under its contract with the customer, by transferring
such goods to the customer’s control. Control is generally determined to be when risk and title to the goods passes to the customer.
Bullion revenue is recognised at a point in time upon transfer of control to the customer and is measured at the amount to which the Group expects to be
entitled which is based on the deal agreement.
Concentrate revenue is generally recognised upon receipt of the bill of lading when the goods are delivered for shipment under CIF Incoterms. The freight
service on export concentrate contracts with CIF Incoterms represents a separate performance obligation to the transfer of the concentrate product itself
and is separately disclosed where material.
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 four months. Revenue on provisionally priced sales is recognised based on the estimated fair value of the total consideration
receivable and is net of deductions related to treatment and refining charges. Subsequent changes in fair value are recognised in the Income Statement
each period until final settlement and presented as part of ‘Other Income/Expenses’.
Interest income
Interest income on financial assets that are classified as fair value through profit and loss (‘FVTPL’) is accounted for on a contractual rate basis.
Notes to the Consolidated Financial Statements 136
6. Significant Items
Significant items represent 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.
Year ended 30 June 2021
There are no significant items for the year ended 30 June 2021.
Year ended 30 June 2020
Write-down of property, plant and equipment (1)
Write-down of tax assets (1)
Major transaction and integration costs (2)
Debt extinguishment and related costs (3)
Total significant items
Attributable to:
Non-controlling interest (4)
Owners of the parent
Pre-Tax
US$m
Tax
US$m
After tax
US$m
20
–
15
69
104
–
37
(4)
(21)
12
20
37
11
48
116
13
103
116
(1) Represents a write-down of property, plant and equipment, and tax assets (collectively non-current assets) at Gosowong, following the classification of Gosowong as held
for sale as at 31 December 2019. Refer to Note 34 for further details.
(2) Represents transaction costs for the acquisition of the Fruta del Norte finance facilities and business acquisition and integration costs in relation to Red Chris.
(3) Represents finance costs arising from the early repayment of US$750 million of Newcrest’s bonds which were due in November 2021 and the early repayment of
US$370 million of bonds which were due in October 2022.
(4) Relates to the write-down of non-current assets at Gosowong.
7. Income Tax Expense
(a) Reconciliation of Prima Facie Income Tax Expense to Income Tax Expense
per the Income Statement
Accounting profit before tax
Income tax expense calculated at 30%
Recognition and de-recognition of deferred tax balances
Tax effect of (profit)/loss from equity accounted investments
Impact of tax rates applicable outside of Australia
Other items
Adjustments on Significant items:
Write-down of tax assets
Write-down of property, plant and equipment
Income tax expense per the Income Statement
(b) Income Tax Expense Comprises:
Current income tax
Current income tax expense
Adjustments to current income tax of prior periods
Deferred tax (1)
Relating to origination and reversal of temporary differences
Adjustments to deferred tax of prior periods
Income tax expense per the Income Statement
(1) Refer to Note 18(a) for movements in deferred taxes.
2021
US$m
2020
US$m
1,668
500
17
(7)
(13)
7
–
–
–
504
340
(30)
310
146
48
194
504
985
296
5
10
2
(6)
37
6
43
350
211
(19)
192
144
14
158
350
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 8. Earnings per Share (EPS)
EPS (cents per share)
Basic EPS
Diluted EPS
Earnings used in calculating EPS
Earnings used in the calculation of basic and diluted EPS:
Profit after income tax attributable to owners of the parent
Weighted average number of shares
Share data used in the calculation of basic and diluted EPS:
Weighted average number of ordinary shares used in calculating basic EPS
Effect of dilutive securities: share rights
Adjusted weighted average number of ordinary shares used in calculating diluted EPS
137
2021
US¢
142.5
142.1
2021
US$m
2020
US¢
83.4
83.1
2020
US$m
1,164
647
2021
No. of shares
2020
No. of shares
816,719,267
2,425,239
776,049,586
2,406,282
819,144,506
778,455,868
Rights granted to employees as described in Note 36 have been included in the determination of diluted earnings per share to the extent they are dilutive.
Notes to the Consolidated Financial Statements 138
9. Dividends
(a) Dividends declared and paid
The following fully franked ordinary dividends were paid during the year:
Final dividend:
Paid 25 September 2020
Paid 26 September 2019
Interim dividend:
Paid 25 March 2021
Paid 27 March 2020
2021
US¢
per share
2021
US$m
2020
US¢
per share
2020
US$m
17.5
–
15.0
–
32.5
143
–
123
–
266
–
14.5
–
7.5
22.0
–
111
–
58
169
Participation in the dividend reinvestment plan reduced the cash amount paid during 2021 to US$240 million (2020: US$154 million).
(b) Dividend proposed and not recognised as a liability
Subsequent to year end, the Directors have determined to pay a final dividend for the year ended 30 June 2021 of US 40 cents per share, which will be fully
franked. The dividend will be paid on 30 September 2021. The total amount of the dividend is US$327 million.
(c) Dividend franking account balance
Franking credits at 30% as at 30 June 2021 available for subsequent financial years is US$419 million (2020: US$295 million).
10. Notes to the Consolidated Statement of Cash Flows
(a) Operating Cash Flows Arising from Changes in:
Trade and other receivables
Inventories
Trade and other payables
Provisions
Other assets and liabilities
Change in working capital
(b) Other Information
2021
US$m
2020
US$m
(58)
57
62
25
4
90
(96)
(11)
71
(8)
(2)
(46)
The repayment of other loans of US$3 million (2020: US$29 million), comprises of repayment of US$4 million (2020: US$42 million) less cash contribution
from the Red Chris joint venture participant of US$1 million (2020: US$13 million).
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 139
RESOURCE ASSETS AND LIABILITIES
This section provides information that is relevant in understanding the composition and management of the Group’s resource assets and liabilities.
11. Property, Plant and Equipment
Exploration
&
Evaluation
Expenditure
US$m
Deferred
Feasibility
Expenditure
US$m
Assets
Under
Con-
struction
US$m
Production
Stripping
US$m
Right-Of-Use
Assets
US$m
Mine
Develop-
ment (1)
US$m
Plant and
Equipment
US$m
Total
US$m
At 30 June 2021
Cost
Accumulated depreciation and impairment
Year ended 30 June 2021
Carrying amount at 1 July 2020
Additions during the year
Expenditure written-off
Depreciation
Disposal of assets
Foreign currency translation
Reclassifications/transfers (2)
Carrying amount at 30 June 2021
564
(80)
484
419
115
(69)
–
–
11
8
484
311
–
311
280
31
(4)
–
–
1
3
311
807
–
807
377
611
–
–
–
40
(221)
807
613
(276)
337
272
148
–
(94)
–
11
–
337
121
(61)
60
56
30
–
(33)
–
4
3
60
(1) Includes Mineral Rights at Lihir and Red Chris with a carrying value of US$1,543m.
(2) Total reclassifications of US$8 million relates to transfers to Other Intangible Assets (Note 17).
8,184
(4,022)
4,162
8,070
(4,443)
3,627
18,670
(8,882)
9,788
3,905
177
–
(176)
–
198
58
4,162
3,500
185
–
(339)
(8)
148
141
3,627
Exploration
&
Evaluation
Expenditure
US$m
Deferred
Feasibility
Expenditure
US$m
Assets
Under
Con-
struction
US$m
Production
Stripping
US$m
Right-Of-Use
Assets
US$m
Mine
Develop-
ment (1)
US$m
Plant and
Equipment
US$m
At 30 June 2020
Cost
Accumulated depreciation and impairment
Year ended 30 June 2020
Carrying amount at 1 July 2019
Adoption of AASB 16 (Note 22)
Additions during the year
Expenditure written-off
Depreciation
Disposal of assets
Business acquisition (Note 33)
Business divestment (Note 34)
Write-down of assets (Note 6)
Foreign currency translation
Reclassifications/transfers (2)
Carrying amount at 30 June 2020
499
(80)
419
351
–
113
(64)
–
–
35
–
–
–
(16)
419
280
–
280
272
–
11
(2)
–
–
–
–
–
(1)
–
280
377
–
377
292
–
255
–
–
–
9
–
–
(4)
(175)
377
450
(178)
272
201
–
147
–
(74)
–
–
–
–
(2)
–
272
82
(26)
56
–
53
24
–
(26)
–
7
–
–
(2)
–
56
(1) Includes Mineral Rights at Lihir and Red Chris with a carrying value of US$1,557m.
(2) Total reclassifications of US$2 million relates to transfers to Other Intangible Assets (Note 17).
7,561
(3,656)
3,905
3,394
–
217
–
(187)
–
460
(20)
(13)
(46)
100
7,413
(3,913)
3,500
3,306
–
147
–
(340)
(1)
344
(6)
(7)
(32)
89
3,905
3,500
8,809
8,809
1,297
(73)
(642)
(8)
413
(8)
9,788
Total
US$m
16,662
(7,853)
8,809
7,816
53
914
(66)
(627)
(1)
855
(26)
(20)
(87)
(2)
Notes to the Consolidated Financial Statements 140
11. Property, Plant and Equipment continued
Exploration, Evaluation and Deferred 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 exploration and evaluation costs incurred, together with an
appropriate portion of directly related overhead expenditure.
The carrying value of capitalised exploration and evaluation assets are
assessed for impairment when facts and circumstances suggest that the
carrying value may exceed its recoverable amount.
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 are capitalised as incurred.
At the commencement of construction, all past exploration, evaluation
and deferred feasibility expenditure in respect of an area of interest that
has been capitalised is transferred to assets under construction.
Accounting Judgement, Estimates and Assumptions –
Exploration, Evaluation and Deferred Feasibility Expenditure
Judgement is required to determine whether future economic benefits
are likely, from either exploitation or sale, or whether activities have
not reached a stage that permits a reasonable assessment of the
existence of reserves. In addition to these judgements, the Group has
to make certain estimates and assumptions. The determination of a
Joint Ore Reserves Committee (‘JORC’) resource is itself an estimation
process that involves varying degrees of uncertainty depending on
how the resources are classified (i.e. measured, indicated or inferred).
The estimates directly impact when the Group capitalises exploration
and evaluation expenditure. The capitalisation 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.
The recoverable amount of capitalised expenditure relating to
undeveloped mining projects (projects for which the decision to mine
has not yet been approved at the required authorisation level within
the Group) can be particularly sensitive to variations in key estimates
and assumptions. If a variation in key estimates or assumptions has a
negative impact on recoverable amount it could result in a requirement
for impairment or write-down.
Assets Under Construction
This expenditure includes net direct costs of construction, borrowing
costs capitalised during construction and an appropriate allocation of
attributable overheads. Expenditure is net of proceeds from the sale of
ore extracted during the construction phase to the extent that this ore
extracted is considered integral to the development of the mine.
After production commences, all aggregated costs of construction are
transferred to mine development or plant and equipment as appropriate.
Production Stripping Expenditure
Stripping (waste removal) costs are incurred both during the development
phase and production phase of operations. Stripping costs incurred during
the development phase are capitalised as part of mine development
costs. Stripping costs incurred during the production phase are generally
considered to create two benefits:
– the production of ore inventory in the period – accounted for as
a part of the cost of producing those ore inventories; or
– improved access to the ore to be mined in the future – recognised as
‘production stripping asset’, if the following criteria are met:
– Future economic benefits (being improved access to the ore body)
associated with the stripping activity are probable;
– The component of the ore body for which access has been
improved can be accurately identified; and
– The costs associated with the stripping activity associated with
that component can be reliably measured.
The amount of stripping 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 for each component of the mine. Stripping costs
incurred in the period are deferred to the extent that the actual current
period waste to contained gold ounce ratio exceeds the life of component
expected waste to contained gold ounce ratio (‘life of component’) ratio.
A component is defined as a specific volume of the ore body that is made
more accessible by the stripping activity and is determined based on mine
plans. An identified component of the ore body is typically a subset of
the total ore body of the mine. Each mine may have several components,
which are identified based on the mine plan.
The production stripping asset is initially measured at cost, which is the
accumulation of costs directly incurred to perform the stripping activity
that improves access to the ore within an identified component, plus an
allocation of directly attributable overhead costs.
The production stripping asset is depreciated over the expected useful life
of the identified component of the ore body that is made more accessible
by the activity, on a units of production basis. Economically recoverable
reserves are used to determine the expected useful life of the identified
component of the ore body.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021
141
Estimates of remaining useful lives, residual values and depreciation
methods are reviewed annually for all major items of plant and equipment
and mine development. Any changes are accounted for prospectively.
When an asset is surplus to requirements or no longer has an economic
value, the carrying amount of the asset is reviewed and is written down to
its recoverable amount or derecognised.
Accounting Estimates and Assumptions – Units of Production
Method of Depreciation/Amortisation
The Group uses the units of production basis when depreciating/
amortising 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, 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. Any change in these estimates and
assumptions are accounted for prospectively.
Accounting Estimates and Assumptions – Ore Reserves and
Mineral Resources
The Group estimates its mineral resources and ore reserves annually
at 31 December each year, and reports in the following February.
The Group’s Annual Mineral Resources and Ore Reserves Statement
conforms with the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves by the Australasian Joint
Ore Reserves Committee Code (the JORC code 2012) and National
Instrument 43-101 Standards of Disclosure for Mineral Projects
(NI 43-101) of the Canadian Securities Administrators.
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 (including exploration
and evaluation assets), the provision for rehabilitation obligations, the
recognition of deferred tax assets, as well as the amount of depreciation
charged to the Income Statement.
Accounting Judgement – Production Stripping
The life of component ratio is a function of the mine 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 component ratio even
if they do not affect the mine design. Changes to production stripping
resulting from a change in life of component ratios are accounted
for prospectively.
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 arrangement acquisition and are
recognised at fair value at date of acquisition. Mineral rights are attributable
to specific areas of interest and are amortised when commercial
production commences on a units of production basis over the estimated
economically recoverable reserves of the mine to which the rights relate.
Plant and Equipment and Mine Development
Cost
Plant and equipment and mine development is carried at cost less
accumulated depreciation and any accumulated impairment losses. The
initial cost of an asset comprises its purchase price or construction cost,
and any costs directly attributable to bringing the asset into operation, the
initial estimate of the rehabilitation obligation, and for qualifying assets
(where relevant), borrowing costs. The purchase price or construction cost
is the aggregate amount paid and the fair value of any other consideration
given to acquire the asset.
Construction cost for mine development includes expenditure in respect
of exploration, evaluation and feasibility, previously accumulated and
carried forward in relation to areas of interest in which development or
construction is underway.
Depreciation and Amortisation
Items of plant and equipment and mine development are depreciated over
their estimated useful lives.
The Group uses the units of production basis when depreciating
mine-specific assets which results in a depreciation 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 – 20 years, the duration of which reflects
the specific nature of the asset.
Notes to the Consolidated Financial Statements 142
12. Impairment of Non-Financial Assets
(a) Impairment Testing
Impairment tests are performed when there is an indicator of impairment
or impairment reversal and performed at least annually for cash generating
units (‘CGUs’) with goodwill recognised as an asset. Newcrest conducts
a review of the key drivers of the recoverable amount of CGUs annually,
which is used as a source of information to determine whether there is an
indicator of impairment or reversal of previously recognised impairments.
Other factors, such as changes in assumptions in future commodity prices,
exchange rates, production rates, input costs and impacts of carbon price
scenarios are also monitored to assess for indications of impairment
or reversal of previously recognised impairments. Where an indicator
of impairment or impairment reversal exists, a detailed estimate of the
recoverable amount is determined.
CGUs represent a grouping of assets 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. Generally, this results
in the Group evaluating its CGUs as individual mining operations, which is
consistent with the Group’s representation of operating segments.
During the year the Group revised upwards its future gold price estimates,
resulting in an impairment reversal indicator for the Lihir and Telfer CGUs.
There were also indicators of impairment at Lihir. Consequently, a detailed
estimate of the recoverable amounts of both CGUs was undertaken. A
range of valuation outcomes were assessed having regard to scenarios
and sensitivity analysis conducted on a number of assumptions. As a
result of this analysis, it was concluded that no impairment or impairment
reversal was required as at 30 June 2021 for either CGU.
Goodwill is recognised in the Red Chris CGU following its acquisition
in 2020. A detailed estimate was determined of the recoverable amount
of Red Chris as at 30 June 2021 and it was concluded no impairment
was required.
In relation to the impacts of the COVID-19 pandemic, Newcrest has
been able to continue operating at all CGUs during the year. Whilst there
have been disruptions to the movements of workers to some assets
and additional costs have been incurred in relation to risk management
protocols at all sites, the Group has concluded that the COVID-19 impacts
do not represent an indicator of impairment for any CGU.
(b) Basis of Impairment and Impairment
Reversal Calculations
An impairment loss is recognised when a CGU’s carrying amount
exceeds its recoverable amount. The recoverable amount of each CGU
has been estimated on the basis of fair value less costs of disposal (‘Fair
Value’). The costs of disposal have been estimated based on prevailing
market conditions.
For CGUs that have previously recognised an impairment loss, an
impairment reversal is recognised for non-current assets (other than
goodwill) when the Fair Value indicates that the previously recognised
impairment has been reversed. Such a reversal is limited to the lesser
of the amount that would not cause the carrying amount to exceed its
recoverable amount or the value that would have been determined (net
of depreciation) had no impairment loss been recognised.
Fair Value is estimated based on discounted cash flows using
market-based commodity price and exchange rate assumptions, estimated
quantities of recoverable minerals, production levels, operating costs
and capital requirements, based on the CGU’s latest life of mine (‘LOM’)
plans. For business planning, including new acquisitions and key capital
expenditures, carbon price scenarios are included in sensitivity analysis
at $25 per tonne of CO2-e, and at $50 a tonne of CO2-e for jurisdictions
where there is no regulated carbon price. In certain cases, where multiple
investment options and economic input ranges exist, Fair Value may be
determined from a combination of two or more scenarios that are weighted
to provide a single Fair Value that is determined to be the most indicative.
When plans and scenarios used to estimate Fair Value 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 estimation of Fair Value.
The Fair Value estimates are considered to be level 3 fair value
measurements (as defined by accounting standards, refer Note 25(a)) as
they are derived from valuation techniques that include inputs that are
not based on observable market data. The Group considers the inputs
and the 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 the Group’s
planning and budgeting process, including LOM plans, latest short-term
forecasts and CGU-specific studies.
(c) Key Judgements, Estimates and Assumptions
Accounting Estimates and Assumptions – Fair Value of CGUs
Significant judgements, estimates and assumptions are required
in determining estimates of Fair Value. This is particularly so in the
assessment of long life assets. It should be noted that the CGU Fair
Values are subject to variability in key assumptions including, but not
limited to, gold and copper prices, exchange rates, discount rates,
production profiles and operating and capital costs. A change in one
or more of the assumptions used to estimate Fair Value could result
in a change in a CGU’s Fair Value.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 143
The table below summarises the key assumptions used in the carrying value assessments as at 30 June 2021, and for comparison also provides the
equivalent assumptions used in 2020:
As at 30 June 2021
As at 30 June 2020
Assumptions for financial year
2022
2023
2024
2025
Long term
(2026+)
2021
2022
2023
2024
Long term
(2025+)
Gold
(US$ per ounce)
Copper
(US$ per pound)
AUD:USD
exchange rate
CAD:USD
exchange rate
USD:PGK
exchange rate
$1,750
$1,700
$1,550
$1,500
$1,500
$1,550
$1,500
$1,450
$1,400
$1,350
$3.75
$3.50
$3.30
$3.30
$3.30
$2.35
$2.60
$2.70
$2.80
$3.00
$0.78
$0.78
$0.77
$0.76
$0.75
$0.68
$0.70
$0.72
$0.72
$0.75
$0.80
$0.80
$0.80
$0.80
$0.80
$0.74
$0.76
$0.77
$0.79
$0.79
K3.51
K3.51
K3.51
K3.51
K3.51
K3.44
K3.44
K3.44
K3.44
K3.44
Commodity prices and exchange rates estimation approach
Commodity price and foreign exchange rates are estimated with reference to external market forecasts and reviewed at least annually. The rates applied
have regard to observable market data including spot and forward values, and to market analysis including equity analyst estimates.
Metal prices
Newcrest has increased its US dollar gold price estimates and its US dollar copper prices applied as at 30 June 2021. These changes were to align
with observable market data, taking into account spot prices during the 2021 financial year and Newcrest’s analysis of observable market forecasts for
future periods.
AUD:USD exchange rate
The AUD:USD exchange rate estimates for the 2022 to 2025 financial years have increased from 2020, reflecting spot prices during the 2021 financial year
and Newcrest’s analysis of observable market forecasts for future periods. Newcrest has maintained its long-term AUD:USD exchange rate estimates.
CAD:USD exchange rate
Newcrest has increased its CAD:USD exchange rate estimates for all future periods, reflecting spot prices during the 2021 financial year and Newcrest’s
analysis of observable market forecasts for future periods.
USD:PGK exchange rate
Newcrest has increased its USD:PGK exchange rate estimates for all future periods, reflecting spot prices during the 2021 financial year and Newcrest’s
analysis of observable market forecasts for future periods.
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 (‘WACC’) for each functional currency used in the Group, with an additional premium applied having regard to the geographic location of,
and specific risks associated with the CGU.
CGU
Cadia, Telfer
Lihir
Red Chris
Functional
Currency
AUD
USD
CAD
2021
4.50%
6.00%
4.50%
2020
4.50%
6.00%
4.50%
The Group uses a capital asset pricing model to determine its estimated real after tax WACC. There were no changes in the current period to inputs and
assumptions used in the capital asset pricing models.
Production activity and operating and capital costs
LOM production activity and operating and capital cost assumptions are based on the Group’s latest forecasts and longer-term LOM plans. These
projections can include expected operating performance improvements reflecting the Group’s objectives to maximise free cash flow, optimise and reduce
operational activity, apply technology and improve capital and labour productivity.
Notes to the Consolidated Financial Statements 144
12. Impairment of Non-Financial Assets continued
(d) Sensitivity Analysis
Impairments have previously been recognised for the Lihir CGU in 2013 and 2014. Following the review of Lihir’s recoverable amount as at 30 June
2021, and in recognising no requirement for asset impairment or impairment reversal, the Group has determined that the Lihir carrying amount as at
30 June 2021 is within a range that approximates its Fair Value.
Impairments have previously been recognised for the Telfer CGU in 2013, 2014 and 2018 and an impairment reversal was recognised for Telfer in 2015.
Following the review of Telfer’s recoverable amount as at 30 June 2021, and in recognising no requirement for asset impairment or impairment reversal,
the Group has determined that the Telfer carrying amount as at 30 June 2021 is within a range that approximates its Fair Value. Telfer remains a complex,
low-grade, mid-to-high cost operation with a relatively high annual gold production level. Telfer’s Fair Value has high sensitivity to the AUD gold price,
operating cost, capital cost and reserve and resource model conversion assumptions and changes in these assumptions can have material impacts
relative to Telfer’s Fair Value.
Any variation in the key assumptions used to determine the Fair Value of the Lihir and Telfer CGUs would result in a change of the estimated Fair Value.
If the variation in assumption had a negative impact on Fair Value, it could indicate a requirement for impairment of non-current assets. If the variation in
assumption had a positive impact on Fair Value, it could indicate a requirement for an impairment reversal of CGUs (where applicable).
Red Chris was acquired during the prior year at Fair Value. Any variation in the key assumptions used to determine the Fair Value of the Red Chris CGU
that had a negative impact on Fair Value could indicate a requirement for impairment of non-current assets.
It is estimated that the following reasonably possible changes in the key assumptions would have the following approximate impact (increase or decrease)
on the Fair Value of each of these CGUs in its functional currency as at 30 June 2021:
$ million in functional currency
US$100 per ounce change in gold price
US$0.10 per pound change in copper price
0.25% increase/decrease in discount rate
$0.05 increase/decrease in AUD:USD rate
$0.05 increase/decrease in CAD:USD rate
$0.10 increase/decrease in USD:PGK rate
5% increase/decrease in operating costs from that assumed
Lihir
US$
950
n/a
145
275
n/a
90
335
Telfer
A$
70
5
minor
65
n/a
n/a
55
Red Chris
C$
150
110
60
n/a
280
n/a
105
It must be noted that each of the sensitivities above assumes that the specific assumption moves in isolation, whilst all other assumptions are held
constant. In reality, a change in one of the aforementioned assumptions may accompany a change in another assumption which may have an offsetting
impact (for example, a decline in the US dollar gold price accompanied with a decline in the Australian dollar compared to the US dollar). Action is also
usually taken by Management to respond to adverse changes in economic assumptions that may mitigate the impact of any such change.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 13. Inventories
Current
Ore stockpiles
Gold in circuit
Bullion and concentrate
Materials and supplies
Total current inventories (1)
Non-Current
Ore stockpiles
Total non-current inventories (1)
145
2021
US$m
2020
US$m
145
25
52
340
562
943
943
133
40
60
316
549
1,024
1,024
(1) Total inventories include inventories held at net realisable value of US$18 million (2020: US$1 million).
Ore stockpiles, gold in circuit, bullion and concentrate are physically measured or estimated and valued at the lower of cost and net realisable value.
Cost represents the weighted average cost and includes direct costs and an appropriate portion of fixed and variable production overhead expenditure,
including depreciation and amortisation, incurred in converting materials into finished goods. Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Ore stockpiles which are not scheduled to be processed in the twelve months after the reporting date are classified as non-current inventory. The Group
believes the processing of these stockpiles will have a future economic benefit to the Group and accordingly values these stockpiles at the lower of cost
and net realisable value.
Materials and supplies are valued at the lower of cost and net realisable value. Any allowance for obsolescence is determined by reference to stock
items identified.
Accounting Judgement and Estimate – Net Realisable Value of Ore Stockpiles
The computation of net realisable value for ore stockpiles involves significant judgements and estimates in relation to timing and cost of processing,
commodity prices, foreign exchange rates, recoveries and the timing of sale of the bullion and concentrate produced. A change in any of these
assumptions will alter the estimated net realisable value and may therefore impact the carrying value of ore stockpiles.
14. Trade and Other Receivables
Current
Metal in concentrate receivables
GST receivable
Receivable from joint venture partners (1)
Other receivables
Total current receivables
Non-Current
Receivable from joint venture partners (1)
Other receivables
Total non-current receivables
2021
US$m
2020
US$m
128
54
22
11
215
46
28
74
194
30
19
11
254
23
28
51
(1) Represents right to reimbursement from the Red Chris joint venture partner for its share of Red Chris’ liabilities and a receivable from the Havieron joint venture partner.
Metal in concentrate receivables are initially and subsequently measured at fair value and are generally expected to settle within one to four months.
Fair value movements are recognised in the Income Statement and presented as part of ‘Other Income/Expenses’.
GST and other receivables are initially measured at fair value then subsequently at amortised cost, less an allowance for doubtful debts. GST and other
current receivables are expected to settle within one to twelve months.
Notes to the Consolidated Financial Statements 146
15. Other Assets
Current
Prepayments and other
Total current other assets
Non-Current
Prepayments and other
Non-current tax assets
Total non-current other assets
16. Goodwill
Opening balance
Business acquisition (1)
Foreign currency translation
Closing balance
2021
US$m
2020
US$m
51
51
5
12
17
52
52
3
10
13
2021
US$m
2020
US$m
17
–
2
19
–
17
–
17
(1) Goodwill recognised as part of the acquisition of Red Chris. Refer to Note 33.
Goodwill represents the excess of the fair value of consideration paid for the business acquisition over the fair value of the net identifiable assets acquired
and liabilities assumed. Goodwill is measured at cost and is not amortised. It is tested annually for impairment.
17. Other Intangible Assets
Information Systems Development
Cost
Accumulated amortisation and impairment
2021
US$m
235
(203)
32
2020
US$m
194
(170)
24
Costs incurred in developing information technology systems and acquiring software are capitalised as intangible assets. Amortisation is calculated on a
straight line basis over the useful life, ranging from three to seven years.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 147
18. Deferred Tax
(a) Movement in Deferred Taxes
2021
Deferred tax relates to the following:
– Revenue losses recognised
– Property, plant and equipment
– Provisions
– Other
Net deferred taxes
Reflected in the statement of financial position
as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred taxes
2020
Deferred tax relates to the following:
– Revenue losses recognised
– Property, plant and equipment
– Provisions
– Other
Net deferred taxes
Reflected in the statement of financial position
as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred taxes
Opening
Balance
at 1 July
US$m
Acquisitions
&
divestments
US$m
(Charged)/
credited
to income
US$m
(Charged)/
credited
to equity
US$m
Translation
US$m
Closing
Balance
at 30 June
US$m
56
(1,231)
41
85
(1,049)
60
(1,141)
44
153
(884)
–
–
–
–
–
–
(14)
3
(21)
(32)
(7)
(107)
9
(96)
(201)
(3)
(83)
(5)
(70)
(161)
–
–
–
(36)
(36)
–
–
–
30
30
5
(34)
4
1
(24)
(1)
7
(1)
(7)
(2)
54
(1,372)
54
(46)
(1,310)
54
(1,364)
(1,310)
56
(1,231)
41
85
(1,049)
65
(1,114)
(1,049)
(b) Unrecognised Deferred Tax Assets
Deferred tax assets have not been recognised in respect of:
– capital losses with a tax effect of US$145 million (2020: US$129 million); and
– revenue losses and temporary differences with a tax effect of US$80 million (2020: US$197 million)
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. This is partly due to restrictions that limit the extent to which the losses can be applied to future taxable income in future periods.
(c) Tax Consolidation
The Company and its wholly-owned Australian subsidiaries are part of a tax consolidated group. Newcrest Mining Limited is the head entity of the tax
consolidated group. The tax losses attributable to the Australian entities are available for offsetting against future profits of the tax consolidated group.
These tax losses are subject to restrictions that limit the extent to which the losses can be applied against future taxable income. Notwithstanding these
restrictions, these losses do not have an expiry date.
Notes to the Consolidated Financial Statements 148
18. Deferred Tax continued
(d) Significant Accounting Policies
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 tax is accounted for using the balance sheet liability method.
Temporary differences are differences between the tax base of an asset
or liability and its carrying amount in the statement of financial position.
The tax base of an asset or liability is the amount attributed to that asset
or liability for tax purposes.
Deferred tax liabilities are recognised for taxable temporary differences.
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.
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.
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 based on the expected
manner of recovery of the carrying value of an asset or liability. 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.
Accounting Judgements, Estimates and Assumptions –
Recovery of Deferred Tax Assets
Judgement is required to determine whether deferred tax assets
are recognised in the statement of financial position. Deferred tax
assets, including those arising from un-utilised tax losses, require
Management to assess the likelihood that the Group will generate
sufficient taxable earnings in future periods in order to recognise and
utilise those deferred tax assets. Judgement is also required in respect
of the expected manner of recovery of the value of an asset or liability
(which will then impact the quantum of the deferred tax assets or
deferred tax liabilities recognised) and the application of existing tax
laws in each jurisdiction.
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 and recover/utilise deferred tax assets in future periods.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 149
Note
2021
US$m
2020
US$m
(a)
(b)
(c)
(a)
(b)
149
8
15
172
10
553
563
108
6
15
129
12
482
494
19. Provisions
Current
Employee benefits
Mine rehabilitation
Other
Total current provisions
Non-Current
Employee benefits
Mine rehabilitation
Total non-current provisions
Provisions (other than those relating to employee benefits) 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.
(a) Employee Benefits
Liabilities for wages and salaries, annual leave and any other employee benefits are measured at the amounts expected to be paid when the liabilities
are settled.
Amounts expected to settle within twelve months are recognised in ‘Current Provisions’ (for annual leave and salary at risk) and ‘Trade and Other Payables’
(for all other employee benefits) 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.
The liability for long service leave and other long-term benefits is measured at the present value of the estimated future cash outflows resulting from
employees’ services provided up to the reporting date.
Long-term benefits not expected to be settled within twelve months are discounted using the rates attaching to high quality corporate bonds at the
reporting date, which most closely match the terms of maturity of the related liability.
(b) Mine Rehabilitation
The Group records the present value of the estimated cost of legal and constructive obligations to rehabilitate locations where activities have occurred
which have led to a future obligation to make good. The nature of rehabilitation activities includes dismantling and removing structures, rehabilitating mine
sites, dismantling operating facilities, closure of tailings 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 mining location. When the liability is initially
recorded, the present value of the estimated cost is capitalised as part of 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. 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.
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 assets 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.
Accounting Estimate – Mine Rehabilitation Provision
Significant estimates and assumptions are 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 changes in technology,
changes in regulations, price increases, changes in timing of cash flows which are based on life of mine plans 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.
Notes to the Consolidated Financial Statements 150
19. Provisions continued
(b) Mine Rehabilitation continued
Movements in Mine Rehabilitation provision
Opening balance
Business acquisition (Note 33)
Business divestment (Note 34)
Movements in economic assumptions and timing of cash flows
Change in cost estimates (1)
Paid/utilised during the year
Unwinding of discount
Foreign currency translation
Closing balance
Split between:
Current
Non-current
2021
US$m
2020
US$m
488
–
–
3
39
(6)
6
31
561
8
553
561
361
73
(32)
10
83
(6)
7
(8)
488
6
482
488
(1) The change for 2021 primarily relates to an increase in estimated closure costs at Telfer, following an update to Telfer’s mine closure plan. The change for 2020 primarily
relates to an increase in estimated closure costs at Lihir, following an update to Lihir’s mine closure plan.
(c) Other Provisions
Other provisions comprise of community obligations and other miscellaneous items.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 151
CAPITAL STRUCTURE AND FINANCIAL RISK MANAGEMENT
This section outlines the Group’s capital and financial management policies and significant capital and financial risk management activities that have
been implemented during the year. This includes the Group’s exposure to various risks and how these could affect the Group’s financial position and
performance, as well as how the Group is managing those risks.
20. Capital Management and Financial Objectives
Newcrest’s capital structure consists of cash and cash equivalents, equity and debt (borrowings and lease liabilities).
Newcrest’s financial objectives are to meet all financial obligations, maintain a strong balance sheet to withstand cash flow volatility, be able to invest
capital in value-creating opportunities, and to provide returns to shareholders. Newcrest looks to maintain a conservative level of balance sheet leverage.
From a financial policy perspective, Newcrest looks to:
– Target an investment grade credit rating throughout the cycle;
– Maintain a leverage ratio (Net Debt to EBITDA) of less than 2.0 times;
– Maintain a gearing ratio of below 25%; and
– Maintain cash and committed undrawn bank facilities of at least US$1.5 billion, with approximately one-third of that amount in the form of cash.
At 30 June, the Group’s position in relation to these metrics were:
Metric
Credit rating (S&P/Moody’s)
Leverage ratio (Net debt to EBITDA)
Gearing ratio
Cash and committed undrawn facilities (US$)
Policy ‘looks to’ be
Investment grade
Less than 2.0 times
Below 25%
At least $1.5bn, of which
~ 1/3 is in the form of cash
Detail of the calculation of the capital management performance ratios is provided below:
Leverage Ratio
(Net cash) or net debt (Note 21)
EBITDA (Note 4)
Leverage ratio
2021
2020
BBB/Baa2
(0.1)
(1.8%)
$3.87bn
($1,873m cash)
BBB/Baa2
0.3
6.8%
$3.45bn
($1,451m cash)
2021
US$m
(176)
2,443
(0.1) times
2020
US$m
624
1,835
0.3 times
Leverage Ratio is calculated as net cash or net debt at the end of the reporting period divided by the rolling 12 month EBITDA. Refer to Note 4, Segment
Information, for the definition of EBITDA.
Gearing Ratio
(Net cash) or net debt (Note 21)
Equity
Total capital (Net (cash)/debt and equity)
Gearing ratio
2021
US$m
(176)
10,124
9,948
(1.8%)
2020
US$m
624
8,613
9,237
6.8%
Gearing ratio is calculated as net cash or net debt at the end of the reporting period divided by net cash or net debt plus equity.
Notes to the Consolidated Financial Statements 152
21. Net Cash/Debt
Newcrest obtains access to funds from financial institutions and debt investors in the form of committed revolving facilities and corporate bonds. As at
30 June 2021, all of Newcrest’s borrowings were unsecured.
Borrowings are initially recognised at fair value and subsequently at amortised cost. Borrowings are net of transaction costs incurred. Borrowings are
classified as non-current liabilities where Newcrest has an unconditional right to defer settlement or is not due to be settled for at least 12 months from
the year end.
Cash and cash equivalents comprise cash at bank and short-term deposits.
Net Cash/Debt
Other loans
Total current borrowings
Corporate bonds
Less: capitalised transaction costs on facilities
Total non-current borrowings
Total Borrowings
Lease liabilities (current)
Lease liabilities (non-current)
Total lease liabilities
Total Debt
Cash and cash equivalents
Net (cash)/debt
(a) Other Loans
Note
(a)
(b)
2021
US$m
–
–
1,650
(15)
1,635
1,635
27
35
62
2020
US$m
4
4
2,030
(17)
2,013
2,017
26
32
58
(e)
1,697
2,075
(1,873)
(176)
(1,451)
624
Other loans represent interest-bearing liabilities acquired as part of the Red Chris acquisition. This facility was fully repaid in November 2020.
(b) Corporate Bonds (‘Notes’)
In each of November 2011 and October 2012, Newcrest issued US$1,000 million in US dollar corporate bonds (Notes). In May 2020, Newcrest issued
a further US$1,150 million in US dollar Notes. All of the Notes were issued in accordance with Rule 144A and Regulation S of the Securities Act of
the United States.
In May 2020 and June 2020, Newcrest repurchased all of the US$750 million of the November 2011 Notes due in November 2021 and US$370 million of
the US$750 million Notes due in October 2022. In April 2021, Newcrest repurchased the remaining US$380 million of the Notes due in October 2022.
The Notes consist of:
Maturity
October 2022
May 2030
November 2041
May 2050
(c) Bilateral Bank Debt
Coupon Rate
4.20%
3.25%
5.75%
4.20%
2021
US$m
–
650
500
500
2020
US$m
380
650
500
500
1,650
2,030
As at 30 June 2021, the Group had bilateral bank debt facilities of US$2,000 million (2020: US$2,000 million) with 13 banks (2020: 13 banks). These are
committed unsecured revolving facilities, individually negotiated and documented with each bank but with similar terms and conditions.
The facilities are on normal terms and conditions and include certain financial covenants. Interest is based on LIBOR plus a margin, which varies amongst
the lenders. In March 2021, the Group renegotiated the facilities and extended the maturity profiles. As at 30 June 2021 and 30 June 2020 these facilities
were undrawn.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 153
The maturity date profile of these facilities is shown in the table below:
Facility Maturity (financial year ending)
June 2022
June 2024
June 2026
(d) Financing Facilities
The Group has access to the following unsecured financing facilities at the end of the financial year.
2021
US$m
–
1,077
923
2,000
2020
US$m
1,076
924
–
2,000
Facility
Utilised
US$m
Facility
Unutilised
US$m
Facility
Limit
US$m
2021
Corporate bonds (1)
Bilateral bank debt facilities
2020
Corporate bonds (1)
Bilateral bank debt facilities
Other loans (2)
1,650
–
1,650
2,030
–
4
2,034
(1) The corporate bonds are at fixed interest rates.
(2) Other loans represented interest-bearing liabilities acquired as part of the Red Chris acquisition. This facility was fully repaid in November 2020.
(e) Movement in Debt
Movement in total debt during the year was as follows:
Debt
Opening balance
Adjustment: Lease liabilities recognised as a result of adopting AASB 16 Leases on 1 July 2019
Adjusted opening balance
Movements:
Drawdown of bilateral bank debt facilities
Repayment of bilateral bank debt facilities
Issuance of corporate bonds
Repurchase of corporate bonds
Business acquisition – Lease liabilities (Note 33)
Business acquisition – Other loans (Note 33)
Payment of lease principal
Repayment of other loans
Non-cash movements (1)
Net movement
Closing balance
–
2,000
2,000
–
2,000
–
2,000
2021
US$m
2,075
–
2,075
–
–
–
(380)
–
–
(32)
(4)
38
(378)
1,697
1,650
2,000
3,650
2,030
2,000
4
4,034
2020
US$m
1,995
53
2,048
600
(600)
1,134
(1,120)
10
46
(27)
(42)
26
27
2,075
(1) Represents non-cash movements in lease liabilities (including additions, modifications and terminations), amortisation of transaction costs and foreign exchange
movements during the period.
Notes to the Consolidated Financial Statements 154
22. Leases
The Group has lease contracts for various items of property, plant and equipment used within its operations and office premises. Leases for property
includes the Group’s office premises and have lease terms ranging from 1 to 10 years. Leases for operations include equipment hire and contractor
provided equipment. These assets have lease terms ranging between 1 to 5 years.
(a) Right-of-use Assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.
The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of
the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.
Right-of-use assets are presented in property, plant and equipment and are subject to impairment assessment.
Refer to Note 11 for the quantum of the Group’s right-of-use assets.
(b) Lease Liabilities
Below is a summary of the movement in the Group’s lease liabilities.
Lease Liabilities
Opening balance
Adjustment: Lease liabilities recognised as a result of adopting AASB 16 Leases on 1 July 2019
Adjusted opening balance
Movements:
Additions during the year
Lease modifications
Business acquisition (Note 33)
Lease payments
Interest accretion
Foreign currency translation
Net movement
Closing balance
Split between:
Current
Non-current
2021
US$m
2020
US$m
58
–
58
32
1
–
(34)
2
3
4
62
27
35
62
–
53
53
14
9
10
(29)
2
(1)
5
58
26
32
58
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease
term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price
of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group
exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which
the event or condition that triggers the payment occurs.
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it
is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate
implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest
and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the
lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset. Lease components are
separately identified to non-lease components of contracts where applicable.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 155
(c) Short-term Leases and Leases of Low-value Assets
The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from
the commencement date and do not contain a purchase option). It also applies the low-value asset recognition exemption to leases that are considered of
low value. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.
During the year, the Group incurred short-term lease expenses of US$42 million (2020: US$33 million). The value of leases of low-value assets was not
material. Furthermore, the Group’s commitment for short-term leases not provided for in the financial statements at the reporting date was not material.
(d) Other
The Group is party to certain service contracts that contain contractor provided equipment leases. These leases include mix of payments arrangements,
including both fixed and productivity-based payments based on performance. During the year, the Group incurred US$10 million (2020: US$14 million) of
productivity-based lease payments that were not required to be included in the measurement of the lease liability. The Group’s commitment for future cash
outflows relating to such payments was not material.
Accounting Judgement and Estimate – Leases
Judgement is required when assessing whether a contract is or contains a lease. In exercising this judgement, the Group refers to the rights conferred
to it in the contract, such as whether it conveys the right to control, or the right to direct the use of an identified asset.
Judgement is also required in determining the lease term, in particular for service contracts that contain contractor provided equipment leases.
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease
if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
23. Other Financial Assets and Liabilities
Other Financial Assets/(Liabilities)
Fuel forward contracts (1)
FdN finance facilities
Total other financial assets – current
FdN finance facilities
Contingent consideration asset (2)
Power purchase agreement
Other financial assets (3)
Total other financial assets – non-current
Gold AUD forward contracts (4)
Fuel forward contracts (1)
Total other financial liabilities – current
Gold AUD forward contracts (4)
Total other financial liabilities – non-current
(1) Net fair value gain of US$19 million (2020: US$8 million loss). Refer Note 24 (a)(ii).
(2) Relates to the fair value of contingent consideration recognised on the sale of Bonikro in 2018.
(3) Instrument is designated as fair value through other comprehensive income (‘FVOCI’) and is not in a hedging relationship.
(4) Net fair value loss of US$110 million (2020: US$266 million loss). Refer Note 24 (a)(i).
(b)
(b)
(c)
2021
US$m
2020
US$m
19
112
131
397
25
2
86
510
(68)
–
(68)
(42)
(42)
–
65
65
396
9
–
76
481
(108)
(8)
(116)
(158)
(158)
Notes to the Consolidated Financial Statements 156
23. Other Financial Assets and Liabilities continued
(a) Significant Accounting Policies
(i) Non-derivative financial assets
Initial recognition and measurement
The Group holds financial assets in the form of facilities agreements and
offtake arrangements. These assets have been classified as fair value
through profit and loss (‘FVTPL’) as the cash flows arising are subject to
variability due to commodity pricing and production volumes and do not
meet the criteria for amortised cost or FVOCI income classification.
Financial assets at FVTPL are initially recognised at fair value. The initial
fair value of acquired financial assets is their purchase price. Directly
attributable transaction costs are expensed as incurred in the statement
of profit or loss.
Subsequent measurement
Financial assets at FVTPL are measured at fair value as at each reporting
date through profit and loss. The Group’s policy on financial assets at
FVTPL is to separately present:
– Interest income calculated on a contractual rate basis; and
– All other changes in fair value.
(ii) Fair value measurement
The Group measures financial assets and financial liabilities at fair value at
each balance sheet date. Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
The Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair
value, maximising the use of relevant observable inputs and minimising the
use of unobservable inputs.
All financial assets and financial liabilities for which fair value is measured
or disclosed in the financial statements are categorised within the fair value
hierarchy described in Note 25(a).
(iii) Derivative financial instruments and hedging
The Group uses derivative financial instruments to manage certain
market risks. 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.
For instruments in hedging transactions, the Group formally designates
and documents the relationship between hedging instruments and hedged
items at the inception of the transaction, as well as its risk management
objective and strategy for undertaking various hedge transactions.
The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges are recognised in Other
Comprehensive Income (‘OCI’) and accumulated in the Hedge Reserve
in equity. Any gain or loss relating to an ineffective portion is recognised
immediately in the Income Statement. Amounts accumulated in the Hedge
Reserve 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, if it no longer qualifies for hedge
accounting or if the Group changes its risk management objective for the
hedging relationship. At that point in time, any cumulative gain or loss
on the hedging instrument recognised via OCI remains deferred in the
Hedge Reserve 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 the Hedge Reserve 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 arose 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 arose on the hedge prior to its redesignation are recognised in
the Income Statement at the date of the redesignation.
(b) Fruta del Norte Finance Facilities
In April 2020, Newcrest acquired the gold prepay and stream facilities and
an offtake agreement in respect of Lundin Gold Inc.’s (‘Lundin Gold’) Fruta
del Norte (‘FdN’) mine in Ecuador for US$460 million.
The Group has determined that the agreements represent financial assets,
to be measured at fair value with changes in the fair value being recorded
in profit or loss. Further detail on the fair value measurement process is
provided in Note 25(b). Details of the agreements are as follows:
Gold Prepay Credit Agreement (‘GPCA’)
The GPCA is a non-revolving credit facility with a face value of
US$150 million to be repaid in cash based on the value of 218,500 oz of
gold (as adjusted for the risk collar described below). Key terms of the
agreement are:
– Repayment through 19 quarterly cash payments equivalent to 11,500 oz
of gold (with the volume adjusted for the risk collar) at the price of gold
starting from December 2020 and concluding in June 2025.
– The risk collar is based on an average gold price for three months
leading to any quarterly payment. Should this average gold price be
>US$1,436 per ounce or < US$1,062 per ounce, the amount of the next
quarterly payment is reduced or increased, respectively by 15%.
Stream Credit Facility Agreement (‘SCFA’)
The SCFA is a non-revolving credit facility with a face value of
US$150 million to be repaid in cash based on the FdN mine gold and
silver production. The amount of each monthly payment is the sum of
the following:
– 7.75% of refined gold processed in the prior month, multiplied by
the excess of the gold price over US$400 per ounce (subject to an
inflationary adjustment), until 350,000 ounces is reached; and
– 100% of refined silver processed in the prior month, multiplied by
the excess of the silver price over US$4 per ounce (subject to an
inflationary adjustment), until 6 million ounces is reached.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 157
Lundin Gold also has the option to repay (i) 50% of the remaining
Stream Credit Facility on June 30, 2024 for $150 million and/or (ii) the
other 50% of the remaining Stream Credit Facility on June 30, 2026
for $225 million.
Both the GPCA and SCFA have a stated interest rate of 7.5%.
Repayments in excess of the principal and stated interest rate amount
is classified as finance income.
Offtake Agreement
The offtake agreement allows Newcrest to acquire 50% of refined gold
production from FdN, up to a maximum of 2.5 million ounces at a price
determined based on delivery dates and a defined quotational period.
Purchases of gold under the Offtake agreement and the subsequent
sale are recognised in Other Income/Expense.
(c) Power Purchase Agreement
During the year, the Group entered into a 15-year renewable Power
Purchase Agreement (‘PPA’) in relation to Cadia. The PPA will act as
a partial hedge against future electricity price increases and will provide
Newcrest with access to large scale generation certificates which
the Group intends to surrender to achieve a reduction in its greenhouse
gas emissions.
The Group has determined that the PPA represents a derivative financial
instrument and has designated this as a cash flow hedging instrument.
It has been accounted for in accordance with the accounting policy
outlined in Note 23(b)(iii).
Potential sources of hedge ineffectiveness that may affect the hedging
relationship during the term are variations to generation volume
assumptions, credit risk and counterparty/construction risk.
Detail on the fair value measurement process is provided in Note 25(c).
24. Financial Risk Management
Newcrest is exposed to a number of financial risks, by virtue of the industry
and geographies in which it operates and the nature of the financial
instruments it holds. The key risks that could adversely affect Newcrest’s
financial assets, liabilities or future cash flows are:
a) Commodity and other price risks
b) Foreign currency risk
c) Liquidity risk
d) Interest rate risk
e) Credit risk
Further detail of each of these risks is provided below, including
Management’s strategies to manage each risk. These strategies are
executed subject to Board approved policies and procedures and
administered by Group Treasury.
(a) Commodity and Other Price Risks
(i) Gold and copper price
All of Newcrest’s gold and copper production is sold into global markets.
The market prices of gold and copper are key drivers of Newcrest’s
capacity to generate cash flow. Newcrest is predominantly an unhedged
producer and provides its shareholders with exposure to changes in the
market price of gold and copper.
The fair valuation of the FdN finance facilities, which is accounted for at
fair value through profit or loss, is impacted by fluctuations in gold prices.
Newcrest does undertake selected financial risk management activities
to mitigate specific gold and copper price risks, as follows:
Provisionally priced concentrate sales and gold and copper
forward sales contracts
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 or ‘QP’). The QP exposure
is typically between one and four months. Revenue of provisionally
priced sales is recognised based on the estimated fair value of the total
consideration receivable. Subsequent changes in fair value are recognised
in the Income Statement each period until final settlement and presented
as part of ‘Other Income/Expenses’. Refer to Note 5(d).
As at 30 June 2021, 220,000 gold ounces and 46,000 copper tonnes
were subject to QP adjustment (2020: 233,000 gold ounces and
41,000 copper tonnes).
In order to minimise the short-term revenue volatility impact of QP
adjustments, particularly across reporting periods, the Group historically
took out gold and copper forward contracts at the time of concentrate
shipments to lock in the price. These forward contracts were not
designated into hedge relationships with the fair value adjustments at
reporting date recognised in the Income Statement as part of ‘Other
Income/Expenses’. During the prior year, Newcrest ceased entering into
such forward contracts.
Partial hedging of Telfer future gold sales
Newcrest has put in place hedges for a portion of the Telfer mine’s future
planned gold production. Telfer is a large scale, low grade mine and its
profitability and cash flow are both particularly sensitive to the realised
Australian dollar gold price. Having regard to the favourable spot and
forward prices at the time, hedging instruments in the form of Australian
dollar gold forward contracts were put in place in 2016 to 2018 to secure
margins on a portion of future planned production to June 2023, to support
investment in cutbacks and mine development.
The Telfer AUD gold forward contracts have been designated as cash flow
hedging instruments with a hedge ratio of 1:1 to the underlying price risk on
gold sales. Potential sources of hedge ineffectiveness that may affect the
hedging relationship during the term are variations to forecast production
timing and volume assumptions and credit risk.
Notes to the Consolidated Financial Statements 158
24. Financial Risk Management continued
(a) Commodity and Other Price Risks continued
(i) Gold and copper price continued
As of 30 June 2021, the Group is holding AUD gold forward contracts with the following maturity:
Gold AUD forward contracts maturing:
Less than 12 months
Between 1–2 years
Between 2–3 years
Total
2021
Weighted
Average
Price
A$
1,902
1,942
–
1,918
Quantity
(ounces)
(‘000s)
204
138
–
342
Fair Value
US$m
Quantity
(ounces)
(‘000s)
(68)
(42)
–
(110)
217
204
138
559
2020
Weighted
Average
Price
A$
1,864
1,902
1,942
1,897
Fair Value
US$m
(108)
(97)
(61)
(266)
These forward contracts are measured at fair value with the effective portion of fair value movements being recognised in OCI and accumulated in the
‘Cash flow hedge reserve’ in equity. There was no hedge ineffectiveness recognised in the Income Statement during the year.
(ii) Fuel and Electricity price
The Group’s input costs are exposed to price fluctuations, in particular to diesel and heavy fuel oil prices. To mitigate this risk, the Group has entered into
short-term fuel forward contracts to fix certain diesel and heavy fuel oil costs in line with budget expectations.
These fuel forward contracts have been designated as cash flow hedging instruments with a hedge ratio of 1:1 to the underlying price risk on fuel
purchases. Potential sources of hedge ineffectiveness that may affect the hedging relationship during the term include differences in the pricing structure
of the physical (hedged) item and the hedging instrument, the volume of physical delivery becoming misaligned with the volumes hedged, and credit risk.
Forward contracts maturing in:
Less than 12 months
Diesel (barrels)
Heavy fuel oil (tonnes)
Total fair value
2021
Weighted
Average
Price
US$
Quantity
(‘000s)
402
142
62
327
Fair Value
US$m
Quantity
(‘000s)
2020
Weighted
Average
Price
US$
7
12
19
350
115
65
267
Fair Value
US$m
(6)
(2)
(8)
These fuel forward contracts are measured at fair value with the effective portion of fair value movements being recognised in OCI and accumulated in the
‘Cash flow hedge reserve’ in equity. The hedge ineffectiveness recognised in the Income Statement during the year was immaterial.
The Group’s input costs are exposed to price fluctuation in electricity prices. During the year, the Group entered into a power purchase agreement with
respect to the Cadia mine. Refer to Note 23(c) for further details.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 159
Gain/(loss) reclassified from
OCI to Income Statement
2021
US$m
2020
US$m
(99)
(3)
6
(96)
(82)
(6)
(11)
(99)
(iii) Financial impacts of hedges
The impact of hedged items designated in hedging relationships on the Income Statement and OCI, is as follows:
Cash flow hedges
Telfer gold sales
Diesel
Heavy fuel oil
Total
(iv) Sensitivity analysis
Line item in the Income Statement
Revenue – Total gold revenue
Cost of sales – Site production costs
Cost of sales – Site production costs
The following table summarises the sensitivity of financial assets and financial liabilities held at the reporting date to movement in the gold price with all
other variables held constant. The movements for gold and copper are based on reasonably possible changes, over a financial year, using an observed
range of actual historical rates for the preceding five year period.
Post-tax gain/(loss)
Gold
Gold +15% (2020: +15%)
Gold -15% (2020: -15%)
Copper
Copper +15% (2020: +15%)
Copper -15% (2020: -15%)
Impact on Profit (1)
Higher/(Lower)
Impact on Equity (2)
Higher/(Lower)
2021
US$m
2020
US$m
2021
US$m
2020
US$m
41
(41)
45
(45)
43
(43)
26
(26)
(63)
63
–
–
(104)
104
–
–
(1) Represents the impact of the movement in commodity prices on the balance of the financial assets and financial liabilities at year end.
(2) For derivatives which are in an effective hedging relationship, all fair value movements are recognised in Other Comprehensive Income.
The sensitivity of the exposure of diesel and heavy fuel oil prices on financial assets and financial liabilities at year end has been analysed and determined
to be not material to the Group.
The sensitivity of the exposure of gold prices on the FdN finance facilities has been disclosed as part of Note 25(b). The sensitivity of the exposure of
electricity prices on the Cadia PPA has been disclosed as part of Note 25(c).
Notes to the Consolidated Financial Statements 160
24. Financial Risk Management continued
(b) Foreign Currency Risk
The Group undertakes transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The Group’s revenue is
primarily denominated in US dollars whereas a material proportion of costs (including capital expenditure) are collectively in Australian dollars, PNG Kina
and Canadian dollars. The Group has entities that have AUD, CAD and USD functional currencies.
The Group’s Statement of Financial Position can also be affected materially by movements in the AUD:USD and the CAD:USD exchange rate. Measuring
the exposure to foreign exchange risk is achieved by regularly monitoring and performing sensitivity analysis on the Group’s financial position.
The carrying amounts of the Group’s US dollar denominated financial assets and liabilities in entities which do not have a US dollar functional currency
at the reporting date are as follows:
US Dollar Denominated Balances
Financial Assets
Cash and cash equivalents
Trade and other receivables
Related party receivables
Derivatives
Other financial assets
Financial Liabilities
Payables
Borrowings
Lease liabilities
Derivatives
Gross Exposure
Net investment in US dollar functional currency entities
Net Exposure (inclusive of net investment in foreign operations)
Net investment hedges
2021
US$m
2020
US$m
344
174
53
19
25
615
18
1,635
9
–
1,662
(1,047)
1,635
588
1,213
222
47
–
–
1,482
28
2,030
8
8
2,074
(592)
1,142
550
The Group seeks to mitigate the effect of its foreign currency exposure by borrowing in US dollars. The entity which undertakes the majority of the Group’s
borrowing activities has an AUD functional currency. Where considered appropriate the US dollar denominated debt (net of cash) is designated as a net
investment in foreign operations.
Exchange gains or losses upon subsequent revaluation of US dollar denominated borrowings and cash from the historical draw down rate to the period
end spot exchange rate are recognised through Other Comprehensive Income and deferred in equity in the Foreign Currency Translation Reserve and will
be released to the Income Statement if the foreign operation is sold.
As at 30 June 2021, US dollar borrowings of US$1,635 million were designated as a net investment in foreign operations (2020: US dollar borrowings (net of
cash) of US$1,142 million).
Sensitivity analysis
The following table details the Group’s sensitivity arising in respect of translation of financial assets and financial liabilities to a 5% movement (2020: 5%)
in the Australian dollar against the US dollar at the reporting date, with all other variables held constant. The impact of the movement in other currencies
against the US dollar is immaterial. The percentage sensitivity is based on reasonably possible changes, over a financial year, using the observed range of
actual historical rates for the preceding five-year period.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 161
Post-tax gain/(loss)
AUD/USD +5% (2020: +5%)
AUD/USD -5% (2020: -5%)
Impact on Profit After Tax
Higher/(Lower)
Impact on Equity
Higher/(Lower)
2021
US$m
(19)
19
2020
US$m
(17)
17
2021
US$m
(81)
81
2020
US$m
(40)
40
Significant assumptions used in the foreign currency exposure sensitivity analysis above include:
– Reasonably possible movements in foreign exchange rates;
The reasonably possible movement of 5% (2020: 5%) was calculated by taking the AUD spot rate as at the reporting date, moving this spot rate by 5%
(2020: 5%) and then re-converting the AUD into USD with the “new spot-rate”. This methodology reflects the translation methodology undertaken by
the Group.
– The translation of the net assets in subsidiaries has not been included in the sensitivity analysis as part of the equity movement.
(c) Liquidity Risk
Newcrest is exposed to liquidity risk, being the possibility that it may not be able to access or raise funds when required.
Liquidity risk is managed centrally to ensure sufficient liquid funds are available to meet the Group’s financial commitments, such as through the following
management actions:
– Targeting to maintain cash and committed undrawn bank facilities of at least US$1,500 million, with approximately one-third of that amount in the
form of cash.
– Targeting to maintain an investment grade credit rating.
– Forecasting cash flows relating to operational, investing and financing activities, including sensitivity analysis to test multiple scenarios.
– Managing repayment maturities to avoid excessive refinancing in any period.
– Maintaining funding flexibility with committed available credit lines with a variety of counterparties.
– Managing credit risk related to financial assets.
The Group maintains a balance between continuity of funding and flexibility through the use of cash, loans and committed available credit facilities, and
equity market raisings. Included in Note 21 is a list of committed undrawn credit facilities that the Group has at its disposal to manage liquidity risk.
The following table reflects all contractually fixed repayments and interest resulting from recognised financial liabilities at the reporting date, including
derivative financial instruments and leases. For derivative financial instruments the market value is presented, whereas for the other obligations the
respective undiscounted cash flows for the respective upcoming financial years are presented.
2021
Payables
Borrowings
Derivatives
Lease liabilities
2020
Payables
Borrowings
Derivatives
Lease liabilities
Less than
6 months
US$m
Between
6–12 months
US$m
Between
1–2 years
US$m
Between
2–5 years
US$m
Greater than
5 years
US$m
577
26
25
15
643
520
30
60
15
625
–
35
24
15
74
–
43
56
14
113
–
71
42
20
133
–
87
97
13
197
–
213
–
14
227
–
600
61
15
676
–
2,684
–
4
2,688
–
2,755
–
6
2,761
Total
US$m
577
3,029
91
68
3,765
520
3,515
274
63
4,372
Notes to the Consolidated Financial Statements 162
24. Financial Risk Management continued
(d) Interest Rate Risk
The Group’s exposure to the risk of changes in market interest rates primarily relates to the Group’s cash and debt obligations that have floating interest
rates. The Group is also subject to interest rate risk with respect to the fair value of the FdN finance facilities, which are accounted for at fair value through
profit or loss (refer Note 25(b)). The Group’s interest rate exposure together with the effective interest rate for each class of financial assets and financial
liabilities at the reporting date is summarised as follows:
Consolidated
Financial Assets
Cash and cash equivalents
FdN finance facilities (1)
Other receivables
Financial Liabilities
Corporate bonds
Lease liabilities
Other loans
Net exposure
2021
2020
Floating
Interest
US$m
Fixed
Interest
US$m
Effective
Interest Rate
%
Floating
Interest
US$m
Fixed
Interest
US$m
Effective
Interest Rate
%
1,873
–
17
1,890
–
–
–
–
–
266
–
266
1,650
62
–
1,712
1,890
(1,446)
0.2
7.5
8.1
4.3
4.4
–
1,451
–
–
1,451
–
–
4
4
1,447
–
299
–
299
2,030
58
–
2,088
(1,789)
0.6
7.5
–
4.3
4.3
3.6
(1) The principal component of the GPCA and SCFA are subject to interest at the contractual rate.
The other financial assets and financial liabilities of the Group not included in the above table are non-interest bearing and not subject to interest rate risk.
The sensitivity of this exposure has been analysed and determined to be not material to the Group.
(e) Credit Risk
The Group’s exposure to credit risk arises from the potential default of the counterparty to the Group’s financial assets, which comprise cash and cash
equivalents, trade and other receivables, the FdN finance facilities and derivative financial instruments.
The Group limits its counterparty credit risk on investment funds by dealing only with banks or financial institutions with credit ratings of at least A- (S&P)
equivalent and rated at least BBB (S&P) equivalent for derivative financial instruments. Credit risk is further limited by ensuring diversification with maximum
investment limits based on credit ratings. Counterparty credit risk on investment funds and derivative exposures is monitored on a continual basis.
All concentrate customers who wish to trade on credit terms are subject to a credit risk analysis at least annually. The Group obtains sufficient collateral
(such as a letter of credit) from customers where determined appropriate, as a means of mitigating the risk of financial loss from defaults. At the reporting
date the value of collateral held was US$32 million (2020: US$41 million).
Receivables balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. There were no material
impairments of receivables as at 30 June 2021 or 30 June 2020.
The majority of the Group’s receivables at the reporting date are due from concentrate customers in Japan. There have been no credit defaults with these
customers in recent history. At the reporting date there were no other significant concentrations of credit risk with concentrate customers.
The FdN finance facilities, which were acquired in April 2020 are due from Lundin Gold, which operates the FdN gold mine in Ecuador. The Group limited
its credit risk on the facilities by acquiring a customary lender security covenant package, which includes a requirement for Lundin Gold to seek approvals
from the senior lenders and Newcrest as subordinated lender under the Facilities for any material amendments to the mine plan, financial model and
operating budget of the FdN mine. Newcrest also ranks ahead of ordinary equity holders with regard to preference of cash flows from the FdN mine.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 163
(f) Financial Assets and Financial Liabilities
The following tables disclose the carrying amounts of each class of financial assets and financial liabilities at year end, classified between amortised cost,
fair value through profit or loss and fair value through other comprehensive income (‘OCI’).
2021
Financial Assets
Cash and cash equivalents
Trade and other receivables – current
Trade and other receivables – non-current
FdN finance facilities – current
FdN finance facilities – non-current
Other financial assets – current
Other financial assets – non-current
Financial Liabilities
Trade and other payables
Borrowings – non-current
Lease liabilities – current
Lease liabilities – non-current
Other financial liabilities – current
Other financial liabilities – non-current
2020
Financial Assets
Cash and cash equivalents
Trade and other receivables – current
Trade and other receivables – non-current
FdN finance facilities – current
FdN finance facilities – non-current
Other financial assets – non-current
Financial Liabilities
Trade and other payables
Borrowings – current
Borrowings – non-current
Lease liabilities – current
Lease liabilities – non-current
Other financial liabilities – current
Other financial liabilities – non-current
(1) The Trade and other receivables in this classification relates to concentrate receivables.
(2) Relates to Telfer AUD gold hedges, fuel hedges and other equity investments.
Amortised
cost
US$m
Fair Value
through
profit or
loss (1)
US$m
Fair Value
through
OCI (2)
US$m
1,873
87
74
–
–
–
–
2,034
577
1,635
27
35
–
–
2,274
–
128
–
112
397
–
25
662
–
–
–
–
–
–
–
–
–
–
–
–
19
88
107
–
–
–
–
68
42
110
Amortised
cost
US$m
Fair Value
through
profit or
loss (1)
US$m
Fair Value
through
OCI (2)
US$m
1,451
60
51
–
–
–
1,562
520
4
2,013
26
32
–
–
2,595
–
194
–
65
396
9
664
–
–
–
–
–
–
–
–
–
–
–
–
–
76
76
–
–
–
–
–
116
158
274
Total
US$m
1,873
215
74
112
397
19
113
2,803
577
1,635
27
35
68
42
2,384
Total
US$m
1,451
254
51
65
396
85
2,302
520
4
2,013
26
32
116
158
2,869
Notes to the Consolidated Financial Statements 164
25. Fair Value Measurement
(a) Fair Value Measurements Recognised in the Statement of Financial Position
For financial assets and liabilities carried at fair value, the Group uses the following to categorise the fair value method used, as defined by IFRS 13 Fair
Value Measurement.
– Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
– Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices). Valuation inputs include forward curves, discount curves and underlying spot and
futures prices.
– Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The Group’s financial assets and liabilities which are measured at fair value on a recurring basis, are categorised as follows:
Financial assets and liabilities measured at fair value
Level 1
US$m
Level 2
US$m
Level 3
US$m
Total
US$m
2021
Concentrate receivables
FdN finance facilities (Note 25(b))
Power purchase agreement (Note 25(c))
Other financial assets
Telfer AUD gold hedges
2020
Concentrate receivables
FdN finance facilities (Note 25(b))
Other financial assets
Telfer AUD gold hedges
Other financial liabilities
There were no transfers between levels during the year.
(b) Fair Value of FdN Finance Facilities
–
–
–
86
–
86
–
–
76
–
–
76
128
–
–
19
(110)
37
194
–
–
(266)
(8)
(80)
–
509
2
25
–
536
–
461
9
–
–
470
128
509
2
130
(110)
659
194
461
85
(266)
(8)
466
In April 2020, Newcrest acquired the GPCA, SCFA and Offtake Agreement in relation to Lundin Gold Inc’s Fruta del Norte (‘FdN’) mine (refer Note 23(b)).
Each of these financial instruments are classified as Level 3 as their valuation includes significant unobservable inputs. The following table summarises the
fair value of these financial assets on an aggregated basis.
Movements in Fair Value
Opening balance
Acquisition value
Net receipts during the period
Accrued interest
Fair value adjustments
Closing balance
Split between:
Current
Non-current
2021
US$m
2020
US$m
461
–
(92)
22
118
509
112
397
509
–
460
(2)
2
1
461
65
396
461
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 165
Valuation measurement and key assumptions
The GPCA and SCFA are valued based on a discounted cash flow model, whilst the Offtake Agreement valuation is based on Monte Carlo simulation
to determine the margin achieved on sales associated with this agreement (which is then incorporated into a discounted cash flow model). The valuation
requires Management to make certain assumptions about the model inputs, including gold prices, discount rates and FdN production profiles.
The probabilities of the various estimates within the range can be reasonably assessed and are used in Management’s estimate of fair value for these
financial assets.
The following table summarises the quantitative information about the significant unobservable inputs used in Level 3 fair value measurements.
Unobservable inputs
Inputs
Relationship of unobservable inputs to fair value
Gold price
The Group’s carrying value
assessment gold price assumption
(refer Note 12(c))
An increase or decrease in gold prices of 10% applied to the gold price assumptions
for the term of the agreements would change the fair value of the asset by
+US$50 million/-US$51 million
Discount rate
8.5%
FdN production profile
FdN mine plan
(30 June 2020: +US$49 million/-US$19 million)
An increase or decrease in the discount rate of 1% would change the fair value of the
asset by -US$18 million/+US$19 million
(30 June 2020: -US$19 million/+US$20 million)
An increase or decrease in the production profile of 10% would change the fair value
of the asset by +US$14 million/-US$21 million
(30 June 2020: +US$18 million/-US$26 million)
The sensitivity of the exposure of silver prices on the FdN finance facilities has been analysed and determined to be not material to the Group.
Accounting Estimates and Assumptions – Fair Value of FdN finance facilities
Significant judgements, estimates and assumptions are required in determining estimates of Fair Value for the FdN finance facilities. It should be noted
that the Fair Value is subject to variability in key assumptions including, but not limited to, gold prices, discount rates and FdN production profiles.
A change in one or more of the assumptions used could result in a material change in the estimated Fair Value of the FdN finance facilities.
(c) Fair Value of Power Purchase Agreement
Movements in Fair Value
Opening balance
Acquisition value
Fair value adjustments
Closing balance
Split between:
Current
Non-current
2021
US$m
2020
US$m
–
–
2
2
–
2
2
–
–
–
–
–
–
–
Valuation measurement and key assumptions
The PPA is valued based on a discounted cash flow model. The valuation requires Management to make certain assumptions about the model inputs,
including future electricity prices, discount rates and expected generation volumes associated with the contracts. The probabilities of the various estimates
within the range can be reasonably assessed and are used in Management’s estimate of fair value for these financial assets.
The following table summarises the quantitative information about the significant unobservable inputs used in Level 3 fair value measurements.
Unobservable inputs
Inputs
Relationship of unobservable inputs to fair value
Electricity prices
Forward electricity price
assumptions
An increase or decrease in electricity prices of 10% applied to the electricity
price assumptions for the term of the agreements would change the fair value by
+US$7 million/-US$7 million
Notes to the Consolidated Financial Statements 166
25. Fair Value Measurement continued
(c) Fair Value of Power Purchase Agreement continued
The sensitivity of the exposure to future generation volumes and the rate used to discount future cash flows has been analysed and determined to be not
material to the Group.
Accounting Estimates and Assumptions – Fair Value of Power Purchase Agreement
The valuation of PPAs required a number of significant assumptions, including assumptions about forward electricity prices, future generation volumes,
credit and liquidity adjustments and the rate used to discount future cash flows. A change in one or more of the assumptions used could result in a
material change in the estimated Fair Value of the Power Purchase Agreement.
(d) Fair value of financial instruments carried at amortised cost
The carrying amounts of financial assets and financial liabilities recognised at amortised cost in the financial statements approximate their fair value,
except as detailed in the following table:
Financial Liabilities
Borrowings:
Fixed rate debt – Corporate Bonds
Carrying amount
Fair value (1)
2021
US$m
2020
US$m
2021
US$m
2020
US$m
1,635
2,013
1,940
2,330
(1) The fair value is a level 2 valuation. Fair values of the Group’s fixed rate borrowings are determined by using discounted cash flow models that use discount rates that reflect
the issuer’s borrowing rate as at the end of the reporting period.
26. Issued Capital
(a) Movements in Issued Capital
Opening balance
Shares issued – equity raising (1)
Share issue costs
Tax effect of issue costs
Equity raising net of issue costs
Shares issued – dividend reinvestment plan
Shares repurchased and held in treasury (2)
Total issued capital
2021
US$m
12,403
–
–
–
–
26
(10)
2020
US$m
11,641
784
(13)
1
772
15
(25)
12,419
12,403
(1) In May and June 2020, Newcrest raised a total of A$1,200 million (US$784 million) from an equity raising comprising an institutional placement of A$1,000 million
(US$646 million) and a share purchase plan of A$200 million (US$138 million). A total of 46,874,992 fully paid ordinary shares were issued at a price of A$25.60 (US$16.73)
per share.
(2) During the year, the Newcrest Employee Share Plan Trust (‘Trust’) purchased a total of 500,000 (2020: 1,193,157) fully paid ordinary Newcrest shares at an average price
of A$24.41 (US$18.92) per share (2020: average price of A$31.40 (US$22.22) per share). The shares were purchased on-market to be held by the Trustee on behalf of
the Trust to satisfy the future entitlements of the holders of performance rights (and any other rights to acquire shares) under Newcrest’s current and future employee
incentive schemes.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 (b) Number of Issued Ordinary Shares
Comprises:
– Shares held by the public
– Treasury shares
Total issued shares
Movement in issued ordinary shares for the year
Opening number of shares
Shares issued under:
– Shares issued – equity raising (1)
– Shares repurchased and held in treasury (2)
– Share plans (3)
– Dividend reinvestment plan
Closing number of shares
Movement in treasury shares for the year
Opening number of shares
– Purchases
– Allocated pursuant to share plans
Closing number of shares
167
2021
No.
2020
No.
814,745,123
2,544,569
813,819,599
2,252,295
817,289,692
816,071,894
813,819,599
766,613,683
–
(500,000)
207,726
1,217,798
46,874,992
(1,193,157)
802,570
721,511
814,745,123
813,819,599
2,252,295
500,000
(207,726)
1,861,708
1,193,157
(802,570)
2,544,569
2,252,295
(1) In May and June 2020, Newcrest raised a total of A$1,200 million (US$784 million) from an equity raising comprising an institutional placement of A$1,000 million
(US$646 million) and a share purchase plan of A$200 million (US$138 million). A total of 46,874,992 fully paid ordinary shares were issued at a price of A$25.60 (US$16.73)
per share.
(2) During the year, the Newcrest Employee Share Plan Trust (‘Trust’) purchased a total of 500,000 (2020: 1,193,157) fully paid ordinary Newcrest shares at an average price
of A$24.41 (US$18.92) per share (2020: average price of A$31.40 (US$22.22) per share). The shares were purchased on-market to be held by the Trustee on behalf of
the Trust to satisfy the future entitlements of the holders of performance rights (and any other rights to acquire shares) under Newcrest’s current and future employee
incentive schemes.
(3) Represents rights exercised under the Company’s share-based payments plans and executive service agreements. Refer to Note 36 for share-based payments.
Issued ordinary share capital is classified as equity and is recognised at the fair value of the consideration received by the Group. Any transaction costs
arising on the issue of ordinary shares and the associated tax are recognised directly in equity as a reduction of the share proceeds received.
(c) Significant Accounting Policies
Treasury Shares
The Group’s own equity instruments, which are purchased on-market for later use in employee share-based payment arrangements (Treasury shares),
are deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
Notes to the Consolidated Financial Statements 168
27. Reserves
Equity settlements reserve
Foreign currency translation reserve
Hedge reserve
Other reserves
Total reserves
(a) Equity Settlements Reserve
Note
(a)
(b)
(c)
(d)
2021
US$m
137
(128)
(63)
31
(23)
2020
US$m
123
(575)
(192)
24
(620)
This reserve is used to recognise the fair value of rights and options issued to employees in relation to equity-settled share-based payments.
(b) Foreign Currency Translation Reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of subsidiaries
which do not have a functional currency of USD. The reserve is also used to record exchange gains and losses on hedges of the net investment in foreign
operations. Refer Note 24(b).
(c) Hedge Reserve
The hedge reserve is used to record the effective portion of changes in the fair value of cash flow hedges (refer Note 24). The components of the hedge
reserve at year end were as follows:
Component
Gold forward contracts – Telfer
Fuel forward contracts
Power purchase agreement
Tax effect
Total Hedge Reserve
(d) Other Reserves
Note
24(a)
24(a)
25(c)
2021
US$m
2020
US$m
(110)
19
2
(89)
26
(63)
(266)
(8)
–
(274)
82
(192)
Other Reserves are used to record Newcrest’s share of other comprehensive income/(loss) of associates (refer Note 32) and changes in the fair value of
equity instruments held at fair value.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 169
GROUP STRUCTURE
This section provides information relevant to understanding the structure of the Group.
28. Controlled Entities
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. The Group comprises the following significant entities:
Entity
Parent Entity
Newcrest Mining Limited
Subsidiaries
Cadia Holdings Pty Limited
Contango Agricultural Company Pty Ltd
Newcrest Finance Pty Limited
Newcrest International Pty Ltd
Newcrest Operations Limited
Newcrest West Africa Holdings Pty Ltd
Newgen Pty Ltd
Niugini Mining (Australia) Pty Ltd
Newcrest Insurance Pte Ltd
Gryphus Pte Ltd
Orion Co-V Pte Ltd
PT Nusantara Bintang Management
Newcrest (Fiji) Pte Limited
Newcrest Exploration (Fiji) Pte Limited
Lihir Gold Limited
Newcrest PNG 2 Limited
Newcrest PNG 3 Limited
Newcrest PNG Exploration Limited
Newcrest Resources, Inc.
Newroyal Resources, Inc.
Newcrest USA Finance LLC
Newcrest Canada Inc.
Newcrest Canada Holdings Inc.
Newcrest Canada Services Inc.
Newcrest Red Chris Mining Limited
Newcrest Chile SpA
Newcrest Ecuador S.A.
Notes
Country of Incorporation
Percentage Holding
2021
%
2020
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Singapore
Singapore
Indonesia
Fiji
Fiji
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
USA
USA
USA
Canada
Canada
Canada
Canada
Chile
Ecuador
(a)
(a)
(a)
(a)
(a)
(a)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(c)
(b)
(b)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
Notes:
(a) These controlled entities are a party to a Deed of Cross Guarantee. Refer Note 30 for further information.
(b) Audited by affiliates of the Parent entity auditors.
(c) These entities were incorporated during the year.
Notes to the Consolidated Financial Statements 170
29. Parent Entity Information
The summarised Income Statement and Statement of Financial Position in respect to the parent entity (‘Company’) is set out below.
(a) Income Statement
Profit/(loss) after income tax
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
(b) Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Equity settlements reserve
Foreign currency translation reserve
Accumulated losses
Total equity
(c) Commitments
Capital expenditure commitments
Company
2021
US$m
2020
US$m
496
610
1,106
99
8,024
8,123
277
559
836
7,287
12,419
137
(56)
(5,213)
7,287
478
(87)
391
85
6,991
7,076
170
489
659
6,417
12,403
123
(666)
(5,443)
6,417
9
9
(d) Guarantees and Contingent Liabilities
The Company and certain Australian controlled entities have entered into a Deed of Cross Guarantee. The effect of the Deed is that the Company
guarantees to each creditor payment in full of any debt in the event of winding up of any of the controlled entities under certain provisions of the
Corporations Act 2001. Further details are included in Note 30. At the reporting date, no amounts have been recognised in the financial information
of the Company in respect of this Deed on the basis that the possibility of default is remote.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 171
30. Deed of Cross Guarantee
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 dated 17 December 2016, the wholly-owned controlled entities detailed
in Note 28 are relieved from the Corporations Act 2001 requirements for preparation, audit, and lodgement of financial reports, and Directors’ Report.
It is a condition of the Class Order that the Company and each of its eligible controlled entities enter into a Deed of Cross Guarantee (‘Deed’).
The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt in the event of winding up of any of the controlled
entities under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act, the Company will only be liable
in the event that after six months any creditor has not been paid in full. The controlled entities have also given similar guarantees in the event that the
Company is wound up.
In May 2016, the Company and its eligible controlled entities entered into a new Deed.
A consolidated Income Statement and consolidated Statement of Financial Position, comprising the Company and controlled entities which are a party
to the Deed, after eliminating all transactions between parties to the Deed is set out below.
Income Statement
Revenue
Cost of sales
Gross profit
Exploration costs
Corporate administration costs
Dividend income from subsidiaries
Other income/(expenses)
Share of profit/(loss) of associate
Impairment reversal/(loss)
Profit before interest and income tax
Finance income
Finance costs
Profit/(loss) before income tax
Income tax expense
Profit/(loss) after income tax
Consolidated
2021
US$m
2,905
(1,453)
1,452
(36)
(135)
–
125
(4)
(11)
1,391
6
(125)
1,272
(348)
924
2020
US$m
2,381
(1,222)
1,159
(31)
(111)
55
67
(2)
48
1,185
12
(185)
1,012
(286)
726
Notes to the Consolidated Financial Statements 172
30. Deed of Cross Guarantee continued
Statement of Financial Position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other assets
Total current assets
Non-current assets
Other receivables
Investment in subsidiaries
Property, plant and equipment
Other intangible assets
Deferred tax assets
Other financial assets
Other assets
Investment in associates
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Current tax liability
Lease liabilities
Other financial liabilities
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred tax liabilities
Lease liabilities
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Total equity
Consolidated
2021
US$m
2020
US$m
374
144
205
19
15
757
123
7,276
4,107
26
54
113
5
91
11,795
12,552
621
112
93
18
69
913
1,634
297
341
21
42
2,335
3,248
9,304
12,419
(2,842)
(273)
9,304
1,298
197
174
–
20
1,689
99
6,234
3,346
21
56
85
3
75
9,919
11,608
993
79
22
20
116
1,230
2,013
238
194
21
158
2,624
3,854
7,754
12,403
(3,500)
(1,149)
7,754
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 173
31. Interest in Joint Operations
The Group has interests in the following significant unincorporated joint arrangements, which are accounted for as joint operations under
accounting standards.
Name
Wafi-Golpu JV
Namosi JV
Country
Principal Activity
Papua New Guinea
Fiji
Mineral exploration
Mineral exploration
Ownership Interest
Note
(a)
(b)
2021
50.0%
72.74%
2020
50.0%
72.49%
Interest in Joint Operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the
liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions
about the relevant activities require unanimous consent of the parties sharing control.
When a Group entity undertakes its activities under joint operations, the Group as a joint operator recognises in relation to its interest in a joint operation,
its share of assets, liabilities, revenue and expenses from those operations and revenue from the sale of its share of the output from the joint operation or
from the sale of the output by the joint operation.
The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the standards applicable
to the particular assets, liabilities, revenues and expenses.
(a) Wafi-Golpu Joint Venture
The Wafi-Golpu JV is owned 50% by the Group and 50% by Wafi Mining Limited, whose ultimate holding company is Harmony Gold Mining Company
Limited. Pursuant to the JV agreement, key operational decisions of the JV require a minimum 70% (effectively unanimous) vote and therefore the Group
has joint control. For segment reporting, Wafi-Golpu is included within the ‘Exploration and Projects’ segment.
Under the conditions of the Wafi-Golpu exploration tenements, the PNG Government (‘the State’) has reserved the right to take up (prior to the
commencement of mining) an equity interest of up to 30% of any mineral discovery within the Wafi-Golpu tenements. The right is exercisable by the State
once at any time prior to the commencement of mining. If the State exercises this right, the exercise price is a pro rata share of the accumulated exploration
expenditure. Once the right is exercised, the State is responsible for its proportionate share of ongoing exploration and project development costs. During
February 2012, the State indicated its intention to exercise its option. As at 30 June 2021, this option has not been exercised. In the event the option is
exercised in full, Newcrest’s interest in the Wafi-Golpu JV would be reduced to 35%.
The carrying value of the Group’s interest in the Wafi-Golpu JV as at 30 June 2021 is US$452 million (2020: US$477 million).
(b) Namosi Joint Venture
The Namosi JV was established between the Group and two other parties under the Namosi Joint Venture agreement in November 2007. Pursuant to
this JV agreement, key operational decisions of the JV require a unanimous vote and therefore the Group has joint control. For segment reporting, the
Namosi JV is included within the ‘Exploration and Projects’ segment.
The carrying value of the Group’s interest in the Namosi JV as at 30 June 2021 is US$25 million (2020: US$25 million).
Notes to the Consolidated Financial Statements 174
32. Investment in Associates
Movements in investment in associates
Opening balance
Acquisition – Lundin Gold Inc
Acquisition – SolGold plc
Acquisition – Antipa Minerals Ltd
Total acquisitions
Share of profit/(loss)
Share of other comprehensive income/(loss)
Foreign currency translation
Closing balance
2021
US$m
2020
US$m
386
8
10
3
21
26
3
6
442
333
79
–
3
82
(37)
10
(2)
386
An associate is an entity that is neither a subsidiary nor joint arrangement, over which the Group has significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The Group’s
investment in associates is accounted for using the equity method.
After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on its investment in its
associate. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is
the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and
recognises the amount in the Income Statement.
(a) Details of Associates
Associate
Lundin Gold Inc
SolGold plc
Azucar Minerals Ltd
Antipa Minerals Ltd
Country of Incorporation
Canada
United Kingdom
Canada
Australia
Interest
Carrying Amount
2021
%
32.0%
13.5%
19.9%
9.9%
2020
%
32.0%
13.6%
19.9%
9.9%
2021
US$m
2020
US$m
349
86
2
5
442
309
72
2
3
386
Lundin Gold Inc’s (‘Lundin Gold’) Fruta del Norte (‘FdN’) mine commenced commercial production in the prior year. The remaining associates are in the
exploration and/or mine development phase and do not currently generate revenue. Further details are as follows:
(b) Investment in Lundin Gold Inc
Lundin Gold is a Canadian based mine development and operating company, operating the FdN gold mine in Ecuador. Lundin Gold is listed on the Toronto
Stock Exchange (‘TSX’) and the Nasdaq Stockholm.
On 26 March 2018, Newcrest acquired a 27.1% equity interest in Lundin Gold for US$251 million (inclusive of transaction costs of US$1 million), following
a share subscription agreement entered into on 24 February 2018. The Group’s current interest is 32.0%. The Group has appointed two directors to the
Board of Lundin Gold.
In April 2020, Newcrest acquired the FdN finance facilities. This did not have an impact on the Group’s equity interest in Lundin Gold. Refer to Note 23(b).
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 The following table discloses summarised financial information of the Group’s investment in Lundin Gold Inc.
Lundin Gold’s Statement of Financial Position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Proportion of Newcrest’s ownership
Carrying value calculated per ownership percentage
Fair value adjustment
Carrying amount
175
2021
US$m
405
1,186
(296)
(563)
732
32.0%
234
115
349
2020
US$m
176
1,231
(183)
(657)
567
32.0%
181
128
309
The FdN mine commenced commercial production in February 2020. Lundin Gold had revenue during the year of US$664 million (100% basis)
(2020: US$50 million).
As at 30 June 2021, the Group held 74,350,738 shares (2020: 73,504,145) with a market value of US$624 million (2020: US$685 million) based on the
closing share price on the TSX.
(c) Investment in Other Associates
SolGold Plc (‘SolGold’) is an Australian based, copper gold exploration and future development company with assets in Ecuador, the Solomon Islands and
Australia. SolGold is listed on the London Stock Exchange (‘LSE’) and the TSX. As at 30 June 2021, the Group held 309,309,996 shares (2020: 281,216,471
shares) with a market value of US$122 million (2020: US$73 million) based on the closing share price on the LSE.
Azucar Minerals Ltd (‘Azucar’) is a mineral exploration company listed on the TSX. The associates’ assets include the El Cobre copper/gold porphyry
project near Veracruz, Mexico. As at 30 June 2021, the Group held 14,674,056 shares (2020: 14,674,056 shares) with a market value of US$1 million
(2020: US$2 million) based on the closing share price on the TSX.
Antipa Minerals Ltd (‘Antipa’) is an Australia mineral exploration company listed on the ASX, with exploration assets in the Paterson Province of Western
Australia. As at 30 June 2021, the Group held 310,010,163 shares (2020: 228,472,719 shares) with a market value of US$10 million (2020: US$4 million)
based on the closing share price on the ASX.
The Group has a right (but not an obligation) to appoint a Director to the Board of each of these associates.
33. Acquisition of Red Chris
On 15 August 2019, the Group completed the acquisition of a 70% interest in Red Chris with TSX-listed Imperial Metals Corporation (‘Imperial’), following
the signing of an Asset Purchase Agreement (‘APA’) on 10 March 2019 and the Red Chris Joint Venture Agreement (‘Red Chris JVA’) on 15 August 2019.
The Red Chris mine is a copper-gold porphyry with an operating open-pit. The acquired property comprises 23,142 hectares of land with 77 mineral
tenures in British Columbia, Canada. The acquisition aligns with Newcrest’s stated strategic goal of building a global portfolio of Tier 1 orebodies.
The acquisition was structured via an unincorporated arrangement. The Group has operatorship of Red Chris pursuant to the Red Chris JVA. Under the
Red Chris JVA, the Group has rights to its share of the assets and obligations for its share of the liabilities of the arrangement rather than a right to a net
return. In addition, as the operator (manager) of Red Chris, the Group has a direct legal liability for the entire balance of certain liabilities and a right to
reimbursement by Imperial for its share of that liability.
This arrangement is not within the scope of AASB 11 Joint Arrangements. The Group has recognised its interest in assets and liabilities, revenue from
the sale of its share of the output by the unincorporated arrangement, and associated expenses in accordance with the applicable accounting standard.
All such amounts have been measured in accordance with the terms of the JVA, which is generally in proportion to the Group’s 70% interest in the
arrangement with the exception of the liabilities for which the Group has a direct legal liability. These liabilities are recognised at 100% along with a
receivable due from Imperial for its 30% share of the liability.
These amounts have been recorded in the Group’s financial statements on the appropriate lines.
Notes to the Consolidated Financial Statements 176
33. Acquisition of Red Chris continued
(a) Consideration
The final consideration paid was US$769 million as shown in the table below:
Consideration paid in respect to:
Property, plant and equipment (1)
Less: Debt and working capital balances (2)
Cash consideration paid
30 Jun 2020
US$m
804
(35)
769
(1) Inclusive of rehabilitation provision.
(2) The debt (assumed equipment loans and other interest-bearing liabilities) and working capital balances were subject to adjustment under the APA which was finalised
in 2020.
(b) Fair Values
Details of the fair values at the date of acquisition (15 August 2019) are set out below:
Assets and Liabilities Acquired
Receivables
Inventories
Property, plant and equipment
Deferred tax assets
Total assets
Trade and other payables
Debt – Lease liabilities
Debt – Other interest-bearing liabilities
Provisions
Deferred tax liabilities
Total liabilities
Fair value of identifiable net assets
Goodwill on acquisition
Fair value of net assets
Final
Fair Value
US$m
50
30
855
10
945
(37)
(10)
(46)
(73)
(27)
(193)
752
17
769
The goodwill reflects the requirement to record deferred tax balances for the difference between the assigned values and the tax bases of assets acquired
and liabilities assumed in the business combination. Goodwill is not deductible for tax purposes.
(c) Other Information
Refer to Note 4 Segment Information for details of the segment result of Red Chris.
Business acquisition and integration costs of US$5 million were incurred in the prior year. These have been expensed in the Income Statement within
‘Transaction and integration costs’. Refer Note 6.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 177
34. Business Divestment
Divestment of Gosowong
On 31 January 2020, Newcrest signed an agreement to sell 100% of Newcrest Singapore Holdings Pte Limited (‘NSH’) which owns a 75% interest in
PT Nusa Halmahera Minerals (‘PT NHM’), which operates the Gosowong mine (Gosowong) in Indonesia, and 100% of PT Puncakbaru Jayatama (‘PT PJ’),
which employs exploration personnel in Indonesia, to PT Indotan Halmahera Bangkit (‘Indotan’) for consideration comprising:
– US$5 million cash deposit paid on execution of the sale and purchase agreement
– US$55 million cash payable on transaction completion
– US$30 million deferred cash payable 18 months after completion
The sale of NSH followed a strategic review of the asset by Newcrest and to comply with the amended Gosowong Contract of Work which required
Newcrest to sell down to at least 49% of PT NHM by 30 June 2020.
As a result of the sale agreement, the assets and liabilities of Gosowong and PT PJ were classified as ‘held for sale’ with effect from 31 December 2019. The
carrying value of Gosowong was compared to its fair value less costs to sell and this resulted in a write-down of non-current assets of US$57 million after
taking into account the sales proceeds less transaction costs. The write-down attributable to Newcrest for its 75% interest in Gosowong is US$44 million.
The sale was completed on 4 March 2020 and Gosowong and PT PJ were deconsolidated from that date. The sale agreement had an economic effective
date of 31 December 2019 and as a result, the cash generated during the period 31 December 2019 to 4 March 2020 was to the benefit of the acquirer. This
amounted to US$10 million.
(a) Impact on Income Statement
The impact of the divestment on the Income Statement was as follows:
Consideration
Less: Transaction costs
Net proceeds
Written down value of net assets sold
Less: Written down value of net assets attributable to non-controlling interests
Written down value of net assets sold (75%)
Total gain/(loss) on business divestment
Note
2021
US$m
2020
US$m
34(b)
–
–
–
–
–
–
–
90
(5)
85
114
(29)
85
–
Refer to Note 4 Segment Information for details of the segment result of Gosowong for the period 1 July 2019 to 4 March 2020.
Notes to the Consolidated Financial Statements 178
34. Business Divestment continued
(b) Net Assets Disposed
The carrying value of the net assets of Gosowong disposed of in 2020 is as follows:
Book Value on Divestment
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Property, plant and equipment
Current and non-current tax assets
Other assets
Total Assets (1)
Liabilities
Trade and other payables
Provisions
Total Liabilities
Net assets divested
Attributable to:
Non-controlling interest (25%)
Owners of the parent (75%)
2021
US$m
2020
US$m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
35
20
37
26
59
20
197
23
60
83
114
29
85
114
(1) Total assets is inclusive of a US$57 million write-down to property, plant and equipment and tax assets as per Note 6. Of this amount, US$13 million is attributable to
non-controlling interest.
(c) Impact on Statement of Cash Flows
The cash inflow on divestment of Gosowong in 2020, net of cash held by the subsidiaries was as follows:
Cash consideration received
Less: Transaction costs paid
Less: Cash and cash equivalents divested
Total
2021
US$m
2020
US$m
–
–
–
–
60
(5)
(35)
20
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 179
OTHER
This section includes additional financial information and other disclosures that are required by the accounting standards and the Corporations Act 2001.
35. Contingencies
(a) Bank Guarantees
The Group has negotiated a number of bank guarantees in favour of various government authorities and service providers. The total nominal amount
of these guarantees at the reporting date is US$157 million (30 June 2020: US$144 million).
(b) Other Matters
The companies in the Group are recipients of, or defendants in, certain claims, proceedings and/or complaints made, commenced or threatened. In the
opinion of the Directors, all such matters are of such a kind, or involve such amounts, that they are not anticipated to have a material effect on the financial
position of the Group if disposed of unfavourably or are at a stage which does not support a reasonable evaluation of the likely outcome of the matter.
36. 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). The Group operates a number of share-based payment plans, including:
– Executive Performance Share Plan (‘LTI Plan’)
– Employee Share Acquisition Plan (‘ESAP’)
– Share Match Plan
– Sign-On Share Plan
– Short Term Incentive Deferral Plan (‘STI Deferral Plan’)
(a) 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 General Managers (including Key Management Personnel), General Managers and Managers
participate in this plan.
The vesting conditions for the Performance Rights granted in the 2021 financial year for Executive General Manager comprised a service condition and
three equally weighted performance measures, being:
– Comparative Cost Position;
– Return on Capital Employed (ROCE); and
– Relative Total Shareholder Return (‘TSR’).
These measures are consistent with the prior year. Each LTI measure was chosen by the Board as it is a key driver of group performance. Performance
against each of these measures over the three year vesting period determines the grant made to participants. There is no ability to re-test performance
under the Plan after the performance period.
The vesting conditions for the General Managers comprise a service condition and 50% of the rights have performance measures as noted above.
The vesting conditions for Managers comprise service conditions only.
Notes to the Consolidated Financial Statements 180
36. Share-Based Payments continued
(a) Executive Performance Share Plan (LTI Plan) continued
The assessed fair value at grant date of the Performance Rights granted under the LTI plan is independently determined using an option pricing model.
The model inputs included:
Fair value – Executive General Managers
Fair value – General Managers
Fair value – Managers
Grant date
Share price at grant date
Expected life of right
Exercise price
Risk-free interest rate
Annualised volatility
Expected dividend yield
2021
2020
A$21.98
A$23.89
A$25.80
18 Nov 2020
A$28.95
3 years
Nil
0.1%
30.0%
1.2%
A$26.85
A$28.62
A$30.38
19 Nov 2019
A$31.30
3 years
Nil
0.7%
30.0%
1.0%
The rights have been valued using a combination of the Monte Carlo simulation and Black-Scholes models. The fair value of the rights granted is adjusted
to reflect market vesting conditions. Non-market conditions are included in the assumptions about the number of rights that are expected to become
exercisable and are updated at each reporting date. The impact of the revision to original estimates is recognised in the Income Statement with a
corresponding adjustment to equity.
Upon the exercise of rights, the balance of the equity settlements reserve relating to those rights remains in the Equity Settlements Reserve.
Accounting Estimates and Assumptions – 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 above.
(b) Movements in the Number of Rights issued under the LTI Plan
Detailed information about Performance Rights is set out below:
Grant date
2021
18 Nov 2020
19 Nov 2019
21 Nov 2018
21 Nov 2017
Total
2020
19 Nov 2019
21 Nov 2018
21 Nov 2017
15 Nov 2016
Total
Exercise date
18 Nov 2023
19 Nov 2022
21 Nov 2021
15 Nov 2020
19 Nov 2022
21 Nov 2021
15 Nov 2020
15 Nov 2019
Beginning
of year
–
673,484
851,769
680,356
2,205,609
–
991,914
752,278
656,216
2,400,408
Movement in Number of Rights During the Year
Granted
Exercised
Forfeited
End of year
796,941
–
–
–
796,941
745,324
–
–
–
745,324
–
–
–
(363,089)
(22,012)
(49,892)
(55,373)
(317,267)
774,929
623,592
796,396
–
(363,089)
(444,544)
2,194,917
–
–
–
(533,634)
(71,840)
(140,145)
(71,922)
(122,582)
673,484
851,769
680,356
–
(533,634)
(406,489)
2,205,609
All Performance Rights have a nil exercise price. The number of performance rights exercisable at year end is nil (2020: nil).
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 181
(c) ESAP, Share Match Plan and Sign-On Share Plan
Under the ESAP, eligible employees are granted shares in 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, and are not eligible for the LTI Plan, are able to participate in the ESAP.
Under the Share Match Plan, eligible employees may contribute up to A$4,950 to acquire shares in the plan year. At the time of acquisition of shares, the
Company grants a matching Right to an ordinary share for each share acquired. The Rights vest three years after grant subject to satisfaction of certain
conditions including continuous employment.
To support Newcrest’s ability to attract and/or retain suitable executives and senior managers, it is sometimes necessary to offer sign-on incentives.
Such incentives are consistent with market practice in the industry. Rights awarded under the Sign-on Share Plan vest over periods up to three years
and are subject to continued employment and/or performance.
The number of shares and rights granted under these plans during the year was not material to the Group. The number of rights outstanding at year
end was 230,322 (2020: 200,673).
(d) STI Deferral Plan
This plan applies to certain employees including Key Management Personnel. Under the STI Deferral Plan, for eligible employees, 50% of the payment
is provided in cash with the remaining 50% deferred into shares. The number of shares calculated is based on the Company’s volume weighted average
share price during the five trading days immediately preceding the date of payment of the cash portion. Half the shares are released after 12 months and
the remainder after 2 years.
During the year, 73,488 shares were granted in respect of this plan (2020: 120,208 shares).
37. Key Management Personnel
(a) Remuneration of Key Management Personnel and Directors
Short-term
Long-term
Post-employment
Termination benefit
Share-based payments expense
Total
(b) Loans and Other Transactions with Key Management Personnel
There are no loans made to Key Management Personnel, or their related entities, by the Group.
2021
US$’000
2020
US$’000
11,099
186
176
–
10,009
21,470
8,819
77
172
335
6,456
15,859
Notes to the Consolidated Financial Statements 182
38. Auditors’ Remuneration
The auditor of the Group is Ernst & Young Australia.
(a) Fees to Ernst & Young Australia
Fees for auditing the statutory financial report of the parent covering the group and
auditing the statutory financial reports of any controlled entities (1)
Fees for assurance services required by legislation to be provided by the auditor
Fees for other assurance and agreed-upon-procedures services:
– Transaction accounting services
– Sustainability assurance services
– Audit-related assurance services
Fees for other services:
– Sustainability services
– Tax and other due diligence services
Total
(b) Fees to Other Member Firms of Ernst & Young Australia
Fees for auditing the financial report of any controlled entities
Fees for other assurance and agreed-upon-procedures services
Total
Total fees to Ernst & Young
(c) Fees to Other Auditors
Audit or review of financial reports of subsidiaries
2021
US$’000
2020
US$’000
2,748
–
56
142
8
206
31
4
35
1,568
–
342
162
266
770
13
74
87
2,989
2,425
302
–
302
3,291
308
13
321
2,746
24
22
(1) During the course of 2021, the Company requested that the external auditor adopt an enhanced control approach to the audit which resulted in an increase in audit fees.
The Company does not anticipate that this will be a recurring cost but may periodically enhance the audit scope above the required level of auditing standards to test the
rigour of the control environment by the external auditor.
Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2021Newcrest Annual Report 2021 183
39. New Accounting Standards and Interpretations
New accounting standards and interpretations issued but not yet effective and 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 2021, but have not been applied in preparing
this financial report.
Reference & Title
Amendment to Accounting Standard AASB 116: Property, Plant and Equipment
(a) Amendment to Accounting Standard AASB 116: Property, Plant and Equipment
Application
date for the
Group
Impact
on Group
1 July 2022
(a)
Under AASB 116 Property, Plant and Equipment, net proceeds from selling items produced while constructing an item of property, plant and equipment
are deducted from the cost of the asset. AASB 116 was amended to prohibit an entity from deducting from the cost of an item of property, plant and
equipment, the proceeds from selling items produced before that asset is available for use. An entity is also required to measure production costs of
the sold items by applying AASB 112 Inventories. Proceeds from selling any such items, and the cost of those items, are recognised in profit or loss in
accordance with applicable standards.
The Group expects to adopt this amendment from 1 July 2021. These amendments are applied retrospectively, but only to items of property, plant and
equipment that are ‘ready to use’ on or after the beginning of the earliest period presented in the financial statements in which the entity first applies
the amendments – ‘ready to use’ meaning the asset is in the location and condition necessary to be capable of operating in the manner intended
by Management.
The impact of early adoption of this amendment is not considered material to the Group.
40. Commitments
Capital Expenditure Commitments
Capital expenditure commitments
This represents contracted capital expenditure.
41. Events Subsequent to Reporting Date
2021
US$m
429
2020
US$m
183
Subsequent to year end, the Directors have determined to pay a final dividend for the year ended 30 June 2021 of US 40 cents per share, which will be fully
franked. The dividend will be paid on 30 September 2021. The total amount of the dividend is US$327 million. This dividend has not been provided for in
the 30 June 2021 financial statements.
There have been no other matters or events that have occurred subsequent to 30 June 2021 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.
Notes to the Consolidated Financial Statements 184
Directors’ Declaration
In accordance with a resolution of the Directors of Newcrest Mining Limited, we state that:
1.
In the opinion of the Directors:
(a) The financial statements, notes and additional disclosures included in the Directors’ Report designated as audited, of the Group are in accordance
with the Corporations Act 2001, including:
(i)
(ii) Complying with Australian Accounting Standards and Corporations Regulations 2001.
Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its performance for the year ended on that date; and
(b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
(c) The financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International
Accounting Standards Board as disclosed in Note 2(a).
2. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the
Corporations Act 2001 for the financial year ended 30 June 2021.
3. In the opinion of the Directors, as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed
Group identified in Note 28 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the Deed
of Cross Guarantee.
On behalf of the Board
Peter Hay
Chairman
19 August 2021
Melbourne
Sandeep Biswas
Managing Director and Chief Executive Officer
Newcrest Annual Report 2021
Independent Auditor’s Report
Independent Auditor’s Report
185
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Independent Auditor's Report to the Members of Newcrest Mining
Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Newcrest Mining Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30
June 2021, the consolidated income statement, the consolidated statement of comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash flows
for the year then ended, the notes to the financial statements, including a summary of significant
accounting policies, and the Directors’ Declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2021 and of its consolidated financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
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Independent Auditor’s Report continued
1. Assessment of the carrying value of non-current assets
Why significant
How our audit addressed the key audit matter
At 30 June 2021 the Group’s consolidated
statement of financial position includes property,
plant and equipment of $9,788 million, goodwill
of $19 million and other intangible assets of $32
million. Group policy is to assess for indicators of
impairment and impairment reversal annually or
more frequently if indicators of impairment exist,
for each cash generating unit (CGU), excluding
those containing goodwill, which are tested for
impairment at least annually.
As at 30 June 2021:
a. An assessment of indicators of impairment
or impairment reversal was required to be
undertaken by the Group and impairment
testing was performed for the Lihir, Telfer
and Red Chris CGUs, as set out in Note 12.
b. The fair value of the Lihir, Telfer and Red
Chris CGUs determined by the Group was
supported by sensitivity analysis taking into
consideration the forecast gold and copper
prices, discount rates, foreign exchange
rates, the historical performance and future
mine plans including capital expenditure
requirements. No impairment charge was
required following this assessment.
c. The Group also considered if previous
impairment of the Telfer and Lihir CGU
assets, other than goodwill, should be
reversed, concluding that an impairment
reversal was not required.
Determination as to whether or not an
impairment charge or reversal relating to an
asset or CGU involves significant judgement
about the future results and plans for each asset
and CGU.
Further disclosures relating to the assessment of
impairment can be found at Note 12 of the
financial report.
We evaluated the Group’s assessment of indicators of
impairment or impairment reversal and the Group’s
calculations of the recoverable amount of each CGU
within their impairment testing.
With the involvement of our valuation specialists, we
assessed the reasonableness of the board approved
cash flow projections, the value ascribed to unmined
resources, exploration potential and key macro-
economic assumptions used in the impairment
models.
The Group used internal and external experts to
provide geological, metallurgical, mine planning and
technological information to support key
assumptions in the impairment models. We have
examined the information provided by the Group’s
experts, including assessment of the competence,
qualifications and the objectivity of the internal and
external experts, the methodology applied, and we
have also substantiated the information supporting
the inputs used in the impairment models.
We also assessed the reasonableness of the forecast
cashflows against the past performance of the CGU’s.
We assessed key assumptions such as gold and
copper prices, discount rates, foreign exchange
rates, mine operating costs and capital expenditures
and performed sensitivity analysis around the key
drivers of the cash flow projections. Having
determined the change in assumptions (individually
or collectively) that would be required for the CGU’s
to record an impairment charge or reversal, we
considered the likelihood of such a movement in
those key assumptions arising.
In addition, we assessed the adequacy of the
disclosures included at Note 12.
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Newcrest Annual Report 2021
Independent Auditor’s Report
187
2. Mine rehabilitation provisions
Why significant
How our audit addressed the key audit matter
The Group has rehabilitation obligations to
restore and rehabilitate land and environmental
disturbances created by mine operations,
including exploration and development activities.
These obligations are determined through
regulatory and legislative requirements across
multiple jurisdictions in addition to policies and
processes set by the Group.
At 30 June 2021, the Group has recorded $561
million as mine rehabilitation provisions. The
estimation of mine rehabilitation provisions is
highly complex and judgemental with respect to
the timing of the activities, the associated
economic assumptions and estimated cost of the
future activities.
Disclosure in relation to mine rehabilitation
provisions can be found at Note 19 of the
financial report.
We evaluated the Group’s determination of the mine
rehabilitation provision for each mine.
The Group has used internal and external experts to
support the estimation of the mine rehabilitation
provisions.
With the support of our environmental specialists we
assessed the competence, qualifications and
objectivity of the internal and external experts and
assessed the reasonableness of the assumptions in
the closure plans and cost estimates used by the
Group’s internal and external experts, and that the
information provided by the Group’s internal and
external experts has been appropriately reflected in
the calculation of the mine rehabilitation provisions.
We assessed the reasonableness of economic
assumptions, such as the discount and inflation rates
that were applied in the calculations.
We assessed the adequacy of the disclosures
included at Note 19.
Information Other than the Financial Report and Auditor’s Report
The directors are responsible for the other information. The other information comprises the
information included in the Group’s 2021 Annual Report other than the financial report and our
auditor’s report thereon. We obtained the Directors’ Report that is to be included in the Annual
Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the
Annual Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
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188
Independent Auditor’s Report continued
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
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Newcrest Annual Report 2021
Independent Auditor’s Report
189
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the Directors' Report for the year ended 30
June 2021.
In our opinion, the Remuneration Report of Newcrest Mining Limited for the year ended 30 June
2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Trent van Veen
Partner
Melbourne
19 August 2021
Matthew Honey
Partner
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190
Shareholder Information
Issued Capital (on 1 September 2021)
Title of Class
Ordinary
Twenty Largest Shareholders as at 1 September 2021
Name
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
3 CITICORP NOMINEES PTY LIMITED
4 NATIONAL NOMINEES LIMITED
5 BNP PARIBAS NOMS PTY LTD
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