Newcrest Annual Report
2022
About Newcrest
Newcrest is the largest gold producer
listed on the Australian Securities
Exchange (ASX, TSX, PNGX: NCM)
and is one of the world’s largest gold
mining companies.
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;
– operating and developing mines in line with
environmental, social and governance practices;
– developing a diverse workforce; and
– maintaining strong relationships with our
communities and governments.
We are building a diverse and inclusive environment
where everyone feels respected, valued and safe to
bring their whole unique self to work.
Our Purpose
To create a brighter future for people
through safe and responsible mining
Our Vision
To be the Miner of Choice
Valued by our people and communities
Our stories from the year
Read the stories that show who we are
Newcrest receives final approval for Pretium acquisition
Respected by our partners, customers, suppliers and peers
www.newcrest.com/our-assets/brucejack
Celebrated by our owners
Partnership with St John Ambulance Service
Our Edge
Collaboration,
innovation and
an owner’s mindset
St John Ambulance and Newcrest: Working together to provide access to
emergency medical services in Morobe Province
www.newcrest.com/about-newcrest/our-stories
1
2 FY22 Highlights
4 Chairman’s Report
6 Managing Director’s Review
8 Forging an Even Stronger Newcrest
10 Safety and Sustainability
12 People
14 Our Business at a Glance
16 Asset Overview
22 Growth Potential
24 The Board
39 Directors’ Report
Underlying profit
Progress on our Strategy
Advanced feasibility
studies on four growth
initiatives
$872m
p8
Successfully completed
the acquisition of Pretium
Our Business
at a Glance
p14 Brucejack
Copper
p21
Growth Potential
p22
2
FY22 Highlights
Financial1,2
Cumulative free cash flow
Underlying profit
Net debt
AISC margin5
Return on capital
employed
$1,020m
4
0
8
9
1
Y
F
1
0
6
8
1
Y
F
3
)
1
2
6
(
0
2
Y
F
4
0
1
1
,
1
2
Y
F
0
2
0
1
,
l
a
t
o
T
4
)
8
6
8
(
2
2
Y
F
Operations
Six Tier 1 orebodies
and growing presence
in Tier 1 regions7
Safety and Sustainability
Zero fatalities
for 7 consecutive
years
$872m
$1,325m
$732/oz
11.4%
Statutory profit ($m)
FY22
FY21
FY20
FY19
FY18
647
561
202
872
1,164
Earnings per
share
Dividends per
share6
103.4cps
27.5cps
Gold production for FY22
Copper production for FY22
1,956koz 121kt
Successful
acquisition of the
Brucejack mine
Major project progress in FY22:
– Red Chris Block Cave, Havieron Stage 1, Lihir Phase 14A
Feasibility Studies well progressed; and
– Cadia PC1-2 Feasibility Study nearing completion.
TRIFR for FY228
4.09
per million hours worked
Community Support Fund
contributed to
67 initiatives since
April 2020
Group Net Zero Emissions Roadmap identified key steps for
Newcrest to deliver its goal of net zero carbon emissions by 205010
1 All financial data presented in this Annual Report is quoted in US dollars unless otherwise stated.
2. See disclaimer on page 194 relating to Non-IFRS Financial Information.
3.
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.
4. Free cash flow for FY22 includes the cash consideration paid for the acquisition of Pretium Resources Inc. (Pretium) totalling $1,084 million (net of cash acquired of ~$208 million).
5. Newcrest's AISC margin has been determined by deducting the AISC attributable to Newcrest's operations from Newcrest's realised gold price.
6. Represents dividends determined in respect of FY22.
7.
Newcrest defines Tier 1 assets as those having potential for >300kozpa Au at 15 years (preferred) and significant resource or exploration upside likely.
Newcrest defines Tier 2 assets as those having potential for >200kozpa Au at 10 years (preferred) and moderate resource or exploration upside likely.
Classification of assets as Tier 1 or Tier 2 is not dispositive of, and does not necessarily imply, the materiality of such assets to Newcrest.
8. TRIFR is the total number of recordable injuries per million hours worked. It is a lagging indicator of safety performance.
9.
Subsequent to our release titled “ASX Appendix 4E and Annual Financial Report for the year ended 30 June 2022” dated 19 August 2022, which stated that Newcrest’s TRIFR was 3.9,
reclassifications have resulted in a change to 4.01 (rounded to 4.0).
10. Relating to Scope 1 and 2 emissions. Newcrest intends to work across its value chain to reduce its Scope 3 emissions.
Newcrest Annual Report 2022 3
Creating value for our stakeholders
Communities
We believe that a planned, transparent and constructive approach
to community engagement and development is critical to maintaining
our reputation and ensuring that the communities in which we operate
benefit from Newcrest’s operations.
Newcrest’s Support Funds
Newcrest’s Community Support Fund was established in April 2020 in
response to the COVID-19 pandemic. Since its inception 67 initiatives have
received funding, ranging from immediate health assistance to livelihood
restoration and economic recovery across Papua New Guinea, Australia,
Canada (British Columbia), Ecuador and Fiji.
A Newcrest Sustainability Fund has recently been established to drive
strategic social investments in support of the United Nations Sustainable
Development Goals, with a A$10 million commitment in FY23 which may
include multi-year projects. The budget will be reviewed on an annual basis.
Learn more about our Community Support Fund
www.newcrest.com/community-support-fund
Shareholders
Climate Change
To achieve the safe delivery of superior returns to our
shareholders, we strive to:
– safely realise the full potential of our operating assets;
– integrate sustainability into each phase of our business through the
discovery, development, production and closure processes;
– 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).
We support the Paris Agreement goals. The nature of our portfolio
of gold and copper commodities exposes us to a range of risks and
opportunities related to the transition to a low carbon future, for
example the use of copper in the energy transition. We are progressing
multiple carbon emissions reduction initiatives as part of our Net Zero
Emissions Roadmap.
Net Zero Carbon Emissions by 2050
Our Group Net Zero Emissions Roadmap has now been developed
to identify the key steps for Newcrest to deliver its goal of net zero
carbon emissions by 2050, which relates to our Scope 1 and Scope 2
emissions. We also intend to work across our value chain to reduce
our Scope 3 emissions.
In December 2020, we entered into a renewable energy Power
Purchase Agreement (PPA) for Cadia which is expected to help deliver
a ~20% reduction13 in our Scope 2 carbon emissions from calendar
year 2024.
55.0
FY22 Dividend11
US27.5cps
Government
FY22
FY21
FY20
FY19
FY18
27.5
25.0
22.0
18.5
We contribute to the local economies where we operate. This includes
through taxes and royalties paid to governments, creating employment
opportunities and investing in local communities.
Taxes Paid FY18 to FY22 12
Taxes Paid in FY22
FY22
FY21
FY20
FY19
FY18
616
563
561
$616m
420
316
Corporate tax
Mining royalties
Other taxes
Reducing Greenhouse Gas Intensity
We have committed to a
30%
reduction in greenhouse gas emissions
intensity per tonne of ore milled by 203014.
View our Sustainability Report
www.newcrest.com/sustainability
11. Represents dividends determined in respect of FY22.
12. Between FY18 and FY22, taxes and royalties paid or borne by the Group totalled $2.5bn 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. FY22 includes tax payments for Brucejack from the date of acquisition, 25 February 2022 to 30 June 2022.
13. The PPA, together with the forecast reduction in carbon emissions 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.
14. Kg CO2-e per tonne of ore milled and compared to a baseline of FY18 emissions.
4
Chairman’s Report
This year, Newcrest progressed the delivery of its five-year
plan for creating a brighter future for people through safe
and responsible mining.
Total dividends per share
with respect to FY22
US27.5¢
Returns to shareholders
with respect to FY22
$240m
We recorded a strong financial and operational performance in FY22
and made significant advances in our global organic growth portfolio.
This performance was achieved alongside a continued focus on the safety
and wellbeing of both our workforce and the communities in which we
operate. Issues around the world – supply chain interruptions, inflationary
cost pressures, and the ongoing COVID-19 pandemic – presented
challenges that required the resilience and commitment of our people to
produce this year’s solid achievements.
Consistent with our commitment to disciplined capital management,
and noting the results delivered by the company, the Board determined
a final dividend of US 20 cents per share, amounting to total dividends
of US 27.5 cents per share for FY22. This means Newcrest has returned
$240 million to shareholders over the past 12 months, and some $1 billion
since July 2019. The company continues to have a robust balance sheet
and the ability to invest in value-creating opportunities that support returns
for shareholders, even in the current environment that features global
inflationary pressures.
We remain comfortably within all of our key financial policy targets,
including our leverage and gearing ratios, whilst retaining our investment
grade credit ratings.
Safety is a core component of what we do and has again been a major
priority for Newcrest. We have not had a fatality for seven years, as a result
of our team’s relentless focus on ensuring every person returns home
safely after every shift. However, we will not be complacent with what has
already been achieved as we continue to deliver new initiatives to enable
our people to feel safe, valued and respected in their workplaces.
The work undertaken in recent times by the Australian Human Rights
Commission and a Western Australian parliamentary committee shines a
light on the critical need for the mining sector to step up in tackling sexual
assault and sexual harassment in our industry. We know this is a serious
issue in our society and sector, and we do not pretend to be immune.
In 2021, we established a Respect@Work program to strengthen our
approach and we remain determined to prevent any incidences of sexual
assault or harassment in our workplace.
We understand that our business thrives when the communities around
our operations thrive. Many of these communities are in remote locations
and were deeply impacted by the COVID-19 pandemic. Our dedicated
support fund was established to assist communities near our operations
with their preparations and response to the pandemic. This has resulted in
Newcrest contributing to local communities by funding 67 initiatives, from
upgrades to community health facilities in Papua New Guinea and medical
equipment for the first intensive care unit in Ecuador’s Zamora Chinchipe
province, through to food and household goods hampers in Canada –
where lockdowns impacted food security – and local business and student
support in Australia. We also provided support for vaccine rollouts in
multiple countries.
Newcrest Annual Report 2022 5
Taxes, royalties contributed
in FY22
$616m
On the back of the success of the pandemic-specific program, a new
ongoing A$10 million Newcrest Sustainability Fund has been established.
This will ensure we are well placed to keep partnering with local
communities and contribute to driving strategic social investments in
support of the United Nations Sustainable Development Goals. In addition
to these programs, we have contributed $616 million in taxes, royalties and
other payments to governments where we operate in the 2022 financial
year, and around $2.5 billion over the past five years.
I would like to acknowledge the efforts and contributions of our former
Chairman, Peter Hay. Shareholders benefited significantly from the
reorientation and growth that took place under the eight years of Peter’s
leadership of the Board. Our workplace became far safer too, with
declining injury rates thanks to the emphasis placed on reforming our
safety culture. During this time, our market capitalisation grew nearly
three-fold, free cash flow and net debt improved, and returns to investors
through dividends increased appreciably.
Our shareholders, employees, governments and neighbours want to see us
take action on climate change. Our Group Net Zero Emissions Roadmap
lays out the key steps we intend to take towards our goal of net zero carbon
emissions by 2050.1 Preparations for scoping and planning key trials and
studies are underway.
Construction of the Rye Park Wind Farm in New South Wales, Australia,
commenced this year after reaching financial close. The farm is the
underlying asset for our 15-year renewable Power Purchase Agreement
(PPA), which will secure a significant portion of Cadia’s projected energy
requirements from 2024.
Welcoming Pretium Resources and its Tier 1 asset at Brucejack to our
portfolio has been a significant accomplishment this year. Combined
with our existing operations at Red Chris, Newcrest is now the largest
gold producer in Canada’s British Columbia province. The acquisition is
expected to ensure we retain a strong base case gold production profile
across the Group until at least 2030.
We also farewelled our outgoing Finance Director and Chief Financial
Officer, Gerard Bond. At the time of his departure, Gerard was the
longest-serving member of both the Board and the Executive Committee.
He played a key role in the turnaround of this company and ensured we
have a strong balance sheet that will continue to support our growth and
progress for years to come.
New members of the Board have commenced this past year too.
We welcomed Jane McAloon as an independent Non-Executive Director
in July 2022 and she is now a member of both the Human Resources
and Remuneration Committee and the Audit and Risk Committee.
Philip Bainbridge also joined as an independent Non-Executive Director
and member of the Safety and Sustainability Committee in April 2022.
Having served on the Board and across a number of committees since
2018, it has been my absolute pleasure to represent our shareholders as
Chairman since my appointment in November 2021. I thank you for your
support since that time.
During the year, the Board approved Pre-Feasibility Studies for Cadia’s
PC1-2, the Red Chris Block Cave, Lihir Phase 14A and Havieron Stage 1.
These are key milestones towards realising the full potential of our
operational assets. Feasibility studies are now well progressed for each,
and a range of early works projects have also commenced.
Newcrest holds a unique position in the market, with a portfolio of top
tier, low-cost, long-life assets backed by its strong technical capabilities
in exploration, mining techniques and processing. The Board is confident
the company and its management team remain well placed to execute our
Forging an Even Stronger Newcrest plan to deliver future success.
Peter Tomsett
Chairman
1. Relating to Scope 1 and Scope 2 emissions. Newcrest intends to work across its value chain to reduce its Scope 3 emissions.
6
Managing Director’s Review
Newcrest has been free of fatalities for seven years now. It is an outcome
that is only possible because of the tireless and enduring efforts of everyone
across our global workforce. Ensuring people get home from work and
to their families requires a relentless, persistent focus on both safety
and wellbeing. It is work that does not end and where there is no place for
complacency. That is why we remain steadfastly committed to continuing
to enhance safety across our company.
Gold produced
1.96moz
Copper produced
121kt
Across FY22, we saw 4.01 recordable injuries per million hours worked
throughout the year, largely driven by minor hand injuries and other low
severity incidents. In response, education and intervention programs are
being implemented across the company to maintain a strong focus on
workplace safety alongside our NewSafe program.
Considerable inroads have been made this past year into building a high
performing, inclusive and psychologically safe workplace, alongside our
resolute determination to prevent any form of sexual assault or sexual
harassment in the workplace. Disturbing and shocking stories have
emerged regarding sexual assault and harassment in the mining industry.
For us, there is only one acceptable number of such incidents – and that is
zero. We have mobilised a team to strengthen our systems and frameworks
across all operations so we are well-positioned to support our people
and ensure everyone knows there is no place for disrespectful or harmful
behaviour at Newcrest.
Ultimately, we know that having a safe, diverse and inclusive workplace
where every person can thrive and excel will help attract new talent and
retain the highly skilled workforce we have today. Beyond this, it positions
us to innovate from the ground up, be outstanding operators, and grow and
sustain our business.
Delivering value-accretive growth positions our company well for future
success. Earlier this year, we saw Newcrest complete the acquisition of
the Brucejack mine in British Columbia. The result is that we have now
gained exposure to our sixth Tier 1 orebody across the world. As one of
the highest-grade operating gold mines globally, it is an exciting addition
to an already unrivalled portfolio, rich with large-scale, long-life and
low-cost assets.
As well as adding to the Group’s production profile, Brucejack has also
contributed financially for shareholders. In just four months of ownership,
it has provided $109 million in EBITDA and $88 million of free cash flow.
Our three-phase transformation program of the asset has already made
solid progress and is expected to optimise operations, realise full uplift
potential, and deliver Mineral Resource and Ore Reserve growth to unlock
further long-term value.
The financial year saw Newcrest produce solid operational and financial
performance, with production of both gold and copper steadily increasing
over the last four quarters. In total, 1.96 million ounces of gold was produced
at an All-In Sustaining Cost (AISC) of $1,043 an ounce. Our disciplined
financial management has seen four consecutive quarters of lower group
costs, resulting in a statutory and underlying profit of $872 million.
These outcomes were achieved while we confronted the ongoing
impacts of COVID-19, border closures, floods, worldwide supply chain
and inflationary cost pressures, and major maintenance activities. We did
not experience any material pandemic-related disruptions to production
in FY22. This would not have been possible without the unwavering
commitment of all our people.
Newcrest Annual Report 2022 7
Cadia achieved its lowest-ever annual AISC of negative $124 per ounce,
with gold production of 561koz. This was achieved even while the mine’s
Semi-Autogenous (SAG) Mill Motor was replaced – the first time a gearless
mill motor and foundation of this size anywhere in the world has been
completely removed, replaced and updated. We received approval for
Cadia to increase its permitted processing capacity to 35 million tonnes
per annum2 and the first shipment of molybdenum concentrate was
delivered in June 2022 following the commissioning of our new plant.
Our two-stage Cadia plant expansion is also nearing completion.3
At Telfer, 408koz of gold was produced this past year and the West Dome
Stage 5 cutback works are well underway following Board approval in
August 2021. This project will help ensure operations can continue at the
site. Nearby at the Havieron project, key contracts have been awarded
for the Feasibility Study, which is expected to be completed during the
December 2022 quarter.3 High-grade extensions to the mineralisation
at Havieron’s Eastern Breccia, South East Crescent Zone and Northern
Breccia have also been identified, with seven drill rigs in operation as part
of the site’s extensive drilling program.
At Lihir, 687koz of gold was produced during the year, which also saw
the rebricking of one of our autoclaves at the asset. The Phase 14A
Pre-Feasibility Study was approved in October 2021, with early works
undertaken since then including the completion of ground support, upper
drainage and shotcrete works, in addition to the procurement of mobile
fleet and specialised civil engineering equipment. The Phase 14A Feasibility
Study is expected to be released in the December 2022 quarter.3 The
investments into Lihir underpin its significant potential in the years to come.
Efforts continued at Red Chris to transform on-site safety behaviours and
visible safety leadership. Newcrest’s 70% share in Red Chris delivered
42koz of gold this year. Its AISC also improved 40% year on year and the
eight rigs currently operating at the site continue our significant drilling
campaign. At East Ridge, drilling results have confirmed extensions of the
higher-grade mineralisation outside our initial Mineral Resource estimate.
Our block caving expertise is demonstrated in the Red Chris Block Cave
Pre-Feasibility Study, which was released in October 2021. Together with
our continuing exploration program, this asset is expected to become a
mainstay of Newcrest’s portfolio for decades to come.
For some time now I have said that a strong gold company should have
a meaningful exposure to copper, a critical metal of the future that will
allow us to participate in the potential opportunities presented by global
decarbonisation efforts. We produced some 121 thousand tonnes of copper
in the last financial year. Copper is anticipated to play an increasing role
in Newcrest’s future, with our plans to materially grow copper production
in the years to come. It is possible that a third of our business will one day
come from copper, noting that in the 2022 financial year it represented
25% of our total net revenue – up from 22% a year earlier.
Statutory and Underlying Profit
$872m
The outstanding contributions made by our outgoing and former company
leaders warrant acknowledgement. Peter Hay retired as Chairman last
November, having led our Board with conviction for eight years during
a significant period of transformation that led to improved shareholder
outcomes at the company. Likewise, Finance Director and Chief Financial
Officer Gerard Bond departed Newcrest, with his drive and energy having
played a pivotal role in reshaping and strengthening Newcrest and its
financial position during his 10-year tenure. Former Chief People and
Sustainability Officer Lisa Ali also made a considerable contribution in
her two years with us, from leading efforts relating to our goal of net zero
carbon emissions by 20504 to initiating programs to build an inclusive
workplace culture. I thank each of them for their contributions and wish
them all the best for the future.
We are privileged to have had Sherry Duhe commence at Newcrest as our
new Chief Financial Officer, joining us with extensive finance and executive
leadership experience. Our new Chief Sustainability Officer, Beth White,
has recently commenced and comes with excellent credentials. I look
forward to shortly welcoming Megan Collins as our new Chief People and
Culture Officer. I am also grateful to those who have acted in executive
positions at Newcrest during the last year and contributed to our
accomplishments: interim Chief Financial Officer Kim Kerr; Paul Stratford
leading our People and Culture team; and Bob Thiele for overseeing our
Sustainability function.
Lastly, I would like to thank the thousands of people that make up the
truly dedicated and first-class team at Newcrest. Their commitment and
fortitude in overcoming the challenges of these past 12 months has been
nothing short of outstanding. It has not been an easy road, but they lived
up to our values and brought collaboration, innovation and an owner’s
mindset to their work. Their efforts give us our edge and they have my
most sincere appreciation.
Newcrest has a bright future ahead. Our organic growth pipeline, strong
financial fundamentals and prudent approach to costs, and commitment to
operating in a safe and sustainable way position us to draw the most out
of our collective technical expertise and deliver strong outcomes ahead
for shareholders. We remain committed to achieving our vision to be the
miner of choice – valued by our people and communities, respected by our
partners, customers, suppliers and peers, and celebrated by our owners.
Sandeep Biswas
Managing Director and Chief Executive Officer
1
2.
3.
4.
Subsequent to our release titled “ASX Appendix 4E and Annual Financial Report for the year ended 30 June 2022” dated 19 August 2022, which stated that Newcrest’s TRIFR was 3.9,
reclassifications have resulted in a change to 4.01 (rounded to 4.0).
The modification approved in December 2021 to increase the permitted processing capacity from 32Mtpa to 35Mtpa is subject to conditions including Newcrest commissioning an independent audit
report to the satisfaction of the NSW Department of Planning & Environment Secretary in relation to Newcrest’s approach to managing and minimising the off-site air quality impacts of the project.
Subject to market and operating conditions and approvals and potential delays due to COVID-19 impacts.
Relating to Scope 1 and 2 emissions. Newcrest intends to work across its value chain to reduce its Scope 3 emissions.
8
Forging an Even Stronger Newcrest
Newcrest is the largest gold producer listed
on the ASX 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.
1.
2.
3.
4.
As at 12 September 2022 and reflects progress made since Newcrest FY21 Annual Report.
Newcrest announced its Forging an even stronger Newcrest plan in February 2021.
Newcrest intends to work across its value chain to reduce its Scope 3 emissions.
Subject to market and operating conditions and approvals and potential delays due to
COVID-19 impacts.
The modification approved in December 2021 to increase the permitted processing capacity
from 32Mtpa to 35Mtpa is subject to conditions including Newcrest commissioning an
independent audit report to the satisfaction of the New South Wales Department of Planning
& Environment Secretary in relation to Newcrest’s approach to managing and minimising
the off-site air quality impacts of the project.
Our
Aspirations
We are a safe
and sustainable
business
Progress1
Seven years free
of fatalities
The Community Support Fund has
supported 67 initiatives across
Papua New Guinea, Australia,
Canada, Ecuador and Fiji
The Group Net Zero Emissions
Roadmap has identified key steps
for Newcrest to deliver its goal
of net zero Scope 1 and Scope 2
carbon emissions by 20502
Newcrest Annual Report 2022 9
We have the
best people
We are
outstanding
operators
We are a leader
in innovation
and creativity
We grow
profitably
Cadia achieved a
record low AISC of
negative $124/oz
for FY22
Advanced a
suite of robotic
options to reduce
underground and
open pit hazard
exposures
Successfully
completed the
acquisition of
Pretium,
adding the Brucejack mine
to Newcrest’s diverse
asset portfolio
Commenced
career framework
project to empower
employees to own
and drive their
career development
Approximately 600
Leaders
have completed Inclusive
Leadership Training
Increased our female
representation globally
FY22
FY21
FY20
FY19
EDGE program continues to
target cash flow improvements,
including targeted opportunities
at Brucejack
Selective mine-to-mill processing
technologies commissioned at Red
Chris to prevent mis-identification
and to redirect ore and waste
Exploration success continues with
strong drilling results at Brucejack,
Red Chris and Havieron expanding
the high-grade footprints
16.5%
15.6%
FY18
Highest-ever female representation
in our Australian Graduate Program
Cadia SAG mill motor successfully
replaced and upgraded
Nine areas (function/sites) saw
an increase in their Inclusion
Index scores
Lihir achieved record total material
movements in the June 2022 quarter
Respect@Work program
continues with a dedicated team
focused on actions aiming to
prevent disrespectful behaviours
in the workplace
Further deferral of Lihir Seepage
Barrier to FY26, with ongoing
assessment of alternative
solutions to enable a reduction
in capital intensity
Cadia PC1-2 Feasibility Study
nearing completion and early
works advancing3
Brucejack mine debottlenecking
and grade engineering studies
initiated and advanced
Red Chris Block Cave, Havieron
Stage 1 and Lihir Phase 14A
Pre-Feasibility Study findings
released with Feasibility Studies
and early works advancing
on all projects
Cadia two-stage plant expansion
on track for completion early in
Q2 FY23 with approval received
to increase permitted processing
capacity to 35Mtpa3,4
10
Safety and Sustainability
At Newcrest, safety and sustainability are 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.
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. 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 our NewSafe Leadership
behavioural program, 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 critical 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.
Delivering a health-focused educational program to
372 elementary schools through the Kokoda Track
Foundation across New Ireland.
www.newcrest.com/ktf-project-airborne
Our overarching aim remains the elimination of fatalities from our business.
We have made excellent progress across our safety objectives during
the year and are now seven years free of fatalities. We have responded
to a rise in our Total Recordable Injury Frequency Rate (TRIFR) in FY22
by implementing programs to counter this increase in injuries and
reenergising our NewSafe program to empower our people to make the
right choices.
Newcrest engaged with KPMG in 2021 to deliver independent research
into our workplace across the globe and support the development of a
leading practice framework for the prevention of and response to sexual
assault and sexual harassment, and this has informed the roadmap
we are implementing. Newcrest mobilised a dedicated team, reporting
directly to the Executive Committee to implement the 11 recommendations
identified by KPMG.
We continue to roll out our Inclusive Leadership program and have
accelerated the creation of a psychological safety program. This program
will adopt a similar process to NewSafe, with the aim that our entire
workforce, including embedded contractors, will be directly involved not
only in preventing sexual assault and sexual harassment, but creating
a safer workplace where people can bring their whole unique selves to
the workplace and Newcrest can flourish with an enriched, diverse and
inclusive environment.
Our focus during the COVID-19 pandemic was to protect people’s safety
by taking measures to minimise the spread of the virus and respond
in co-operation with the communities in which we operate. Newcrest
continues to monitor the situation around the globe, seeking health advice
and medical expertise and reviewing and updating programs in response
to local conditions.
The health and wellbeing of our people continue to be challenged by not
only the global pandemic but a range of stressors that impact people
through managing life outside of work. Through our WellnessMatters
program Newcrest continues to offer tools, education and support for our
people to look after their mental and physical wellbeing. The program in
FY22 included monthly webinars on a variety of topics including women’s
health, men’s health, lung and heart health, nutrition and wellbeing which
were well received by attendees and directed at building a better Newcrest
through education, engagement and advice.
Newcrest Annual Report 2022 11
Our Purpose
Creating a brighter future for people
through safe and responsible mining
Sustainability
Our sustainability approach is aligned to the
United Nations Sustainable Development goals.
We conduct an annual sustainability materiality assessment which guides
the topics for substantive disclosure from the view of the stakeholders
representing what stakeholders believe to be the most significant impact of
the business on the environment, economy and people. Detailed responses
to the materiality topics from this assessment will be made available in our
FY22 Sustainability Report.
Climate Change
Newcrest has a goal of net zero carbon emissions by 2050. This goal
relates to its Scope 1 and Scope 2 emissions. This year we have developed
a pathway to this goal, by transitioning our energy consumption and
production portfolio. We will also strive to work across our value chain to
reduce Scope 3 emissions.
Newcrest also continued to develop the work plan to assess and validate
physical climate change risks as reported in the FY21 Sustainability Report
and which included disclosures aligned to Task Force on Climate-related
Financial Disclosures (TCFD). This involved the validation, review and
categorisation of all identified physical risks. Risk mitigation and adaptation
measures will be developed and incorporated into our Life of Province
Planning (LoPP) process.
Newcrest’s FY21 TCFD disclosure and response to climate change can
be found on pages 47 to 60 of the 2021 Sustainability Report.
Social Performance and Human Rights
This year Newcrest undertook a salient human rights issues assessment
which considered human rights risks of the most severe impact through
our activities. We have developed a three-year human rights action plan
to align our practices with the United Nations Guiding Principles on
Business and Human Rights.
Our approach to sustainability also includes community agreements,
partnerships and investments to foster socio-economic advancement.
We are involved in targeted local community programs, ranging from
indigenous employment and training, education, health and awareness
programs to agribusiness and social housing initiatives.
Cultural Heritage
In FY22 Newcrest‘s strengthened cultural heritage risk management
measures were endorsed by the Executive Committee and Directors.
These measures include the development of a stand-alone Cultural
Heritage Standard and controls on land disturbance activity, the global
rollout of enhanced cultural heritage and cultural sensitivity training,
and the inclusion of strengthened cultural heritage review provisions in
approvals and permitting documentation.
Tailings and Water Management
The Global Industry Standard on Tailings Management (GISTM) was
released in August 2020 following endorsement by all three co-conveners
of the Global Tailings Review, comprising the United Nations Environment
Program (UNEP), the Principles for Responsible Investment (PRI) and
the International Council of Mining and Metals (ICMM). Newcrest,
as a member of the ICMM, intends to continue to participate in the
implementation program of the GISTM. Newcrest’s revised Tailings
Governance Policy was released in February 2021.
COVID and the Community
Newcrest’s Community Support Fund, launched in April 2020, has
collaboratively delivered targeted support to the communities around our
operations, to assist them with their preparedness and response to the
COVID-19 pandemic. The vision for the fund was to actively contribute
to the management and mitigation of, and recovery from, the impact of
COVID-19, considering the evolving needs of our operating jurisdictions
as government restrictions relaxed and economies reopened.
Early in FY22 vaccine rollouts were underway globally, and the strategic
focus for the Community Support Fund shifted to support vaccine
delivery in our host jurisdictions.
Since its inception the Community Support Fund has supported
67 initiatives, ranging from immediate health assistance to livelihood
restoration and economic recovery across Papua New Guinea, Australia,
Canada (British Columbia), Ecuador and Fiji.
One of the major initiatives during the year was, support for the Kokoda
Track Foundation (KTF) to deliver Project Airborne across New Ireland
Province, which delivered resources and programs to 372 elementary
schools during COVID-19. Training and education on the risks associated
with the virus and vaccine awareness were provided for teachers to deliver
to students and communities.
In Ecuador, a shortage of syringes was hampering the administration of
the vaccine. Through the Community Support Fund, in partnership with
Chamber of Mines Ecuador, four million syringes were procured to support
the timely rollout of the vaccine.
In Canada, the Community Support Fund team worked closely with the
Tahltan Nation and the three local communities surrounding Newcrest’s Red
Chris operation throughout the course of the pandemic. Food security and
shortages were identified as an issue during lockdowns. In response, food
hampers were delivered to impacted households, which alleviated the need
for travel, thereby mitigating the risk of the virus entering the communities.
During FY22, Newcrest has also focused on planning activities for a new
Newcrest Sustainability Fund to drive strategic social investments in
support of the United Nations Sustainable Development Goals, with a
A$10 million commitment in FY23 which may include multi-year projects.
The budget will be reviewed on an annual basis.
12
People
People
Newcrest Annual Report 2022
We are underway with our multi-year plan
to build a high-performing, inclusive culture
where everyone can thrive, excel and grow
their career.
Inclusion and Diversity
We recognise that our different backgrounds
and perspectives help us find better ways
to solve problems, attract and retain the
best people, explore, develop and produce
gold safely and profitably, and help make
Newcrest a better place to work.
Global female representation1,2
16.5%
0.9% on FY21
~600
People have completed
Inclusive Leadership training
Expected female representation in our
2023 Australian Graduate program
37%
Out of 41 currently
filled positions
Inclusive Leadership
Our Inclusive Leadership program is one way we are evolving our
corporate culture by establishing a baseline of knowledge and
understanding of inclusion across Newcrest. Building on the progress
made in FY21, in FY22 we continued to invest in the development of our
most senior leaders (Executive Committee and Leadership teams) through
quarterly Inclusion Communities of Practice. A Leader Feedback App
and curated LinkedIn Learning content were also released to support this
cohort taking charge of their ongoing development.
During FY22, we also commenced the cascading of our Inclusive
Leadership program across our sites and corporate offices.
Approximately 600 people, from executives and site general managers
to superintendents, supervisors and senior specialists, have completed
the program to date across our teams. Plans are in place to continue
this training for our leaders throughout FY23. We are also planning to
roll-out our new Psychological Safety program to foster acts of inclusion
and help to create an environment where people feel included, engaged,
and psychologically safe and empowered to speak up.
Building a Diverse Workforce
The external landscape has seen unprecedented global issues such as
COVID-19 impact on talent supply (internally and externally) and mobility,
and add to a growing sentiment of volatility in the market.
Newcrest remains committed to attracting a greater diversity of talent.
Over the course of FY22, we increased our overall global female
representation from 15.6% to 16.5%1,2. Standout areas for the growth
in female representation include Technology and Projects, Business
Development and Exploration, at our Lihir Operations and across our
manager population at Red Chris. In part, this is a result of executing
localised action plans which focus on broader applicant sourcing and
talent retention.
We have expanded our engagement activities in the early careers space to
promote career opportunities and attract diverse talent to Newcrest and
the mining industry. Our 2023 Australian Graduate program received our
highest number of female applications, and this has resulted in the highest
number of females joining the program. We expect to have 37% female
representation for this cohort out of 41 currently filled positions.
1.
2.
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.
Australian, PNG and Red Chris operations only (excludes Brucejack).
Newcrest Annual Report 2022 13
Respect@Work and Reporting
We continue to promote and enhance
the visibility of sexual assault
and sexual harassment reporting
channels relating to incidents arising
across our workplace.
In FY22, there were 50 sexual assault and/or sexual
harassment cases reported through various channels
across Newcrest globally, including four reports of actual
or attempted sexual assault. While some of these cases
are still under investigation, 24 have been substantiated.
Appropriate response action has been taken in each case,
including the issuing of 15 warnings or other disciplinary actions,
and 10 individuals being removed from our workforce or sites.
As we continue to promote and enhance our reporting
channels, we expect that case numbers may increase in the
year ahead, as people feel safe and supported in stepping
forward. There is only one acceptable number of incidents of
inappropriate workplace behaviour, and that is zero.
Sites continued to embed their Inclusive Leadership charters and
progress their Diversity and Inclusion Action Plans. Some examples
include participation in the Women in Mining Network Mentoring
Program (Cadia), Indigenous Buddy Program (Cadia), Inclusion
Working Group (Telfer), Diversity and Inclusion Standard (Lihir)
and Respect@Work working groups.
Growth and Development of our People
Identifying and developing our internal capability and talent pipelines
remain critical to the effective delivery of Newcrest’s operational plans
and growth strategy.
A global career framework has been introduced which seeks
to empower individual employees in their career planning and
development, and provide the transparency of career pathways
available and the skills needed to get them there. This enables the
development of capabilities, so that employees can be effective
in their current roles as well as supporting growth in pursuit of
longer-term career goals such as internal lateral moves or promotions
across Newcrest globally. The framework includes a job architecture
analysis which mapped 747 roles and associated competencies to
internal career pathways, with a focus on both technical specialist
and management functions. In addition, a governance framework
with supporting processes was agreed to support the evolution of
the Career Framework.
The implementation of the framework in FY23 aims to support the
visibility of career pathways for our employees and allow further
development pathways that lead to our critical job roles to help us
guarantee the retention of current employees and attract future talent.
14
Our Business at a Glance
Employees/Contractors1
Employees
Contractors
~12,050
~6,150
~5,900
Canada
(incl. the GJ property)
Red Chris JV 2
British Columbia
70% Newcrest Ownership
42koz 21kt
Brucejack
British Columbia
100% Newcrest Ownership
114koz3
Ecuador
Fruta del Norte
Zamora-Chinchipe Province
32% Newcrest Ownership4
144koz
Lundin Gold (JV)
SolGold (EI)
Porphyry Targets (100%)
1
Mexico
Azucar Minerals (EI)
3
1
Chile
MP Properties (O)
Asset type
Mining method
Exploration projects
FY22 Production
Producing Assets
Open pit mining
FI Farm-In
EI Equity Investment
Gold
Advanced Projects
Underground mining
JV Joint Venture
100% 100% Newcrest Tenement
Copper
Exploration Projects
O Option
Newcrest Annual Report 2022
15
Our commodities in FY22
Gold
% of Net Revenue
Produced5
Realised Price6
75%
1,956koz
US$1,797/oz
Copper
% of Net Revenue
Produced
Realised Price6
25%
121kt
US$4.36/lb
Fruta del Norte
Zamora-Chinchipe Province
32% Newcrest Ownership4
144koz
Lundin Gold (JV)
SolGold (EI)
Porphyry Targets (100%)
Fiji
Namosi JV – Waisoi Project
Namosi Province
72.88% Newcrest Ownership
Papua New Guinea
Lihir
New Ireland Province
100% Newcrest Ownership
687koz
Wafi-Golpu JV
Morobe Province
50% Newcrest Ownership
Australia
Telfer
Western Australia
100% Newcrest Ownership
408koz 14kt
Havieron JV & FI
Pilbara, Western Australia
70% Newcrest Ownership7
Cadia
Orange, New South Wales
100% Newcrest Ownership
561koz 85kt
Juri (JV & FI)
Wilki (JV & FI)
Antipa (FI)
Second Junction Reefs Project (JV)
Tennant East (100%)
5
Head office, Melbourne
1.
2.
3.
4.
5.
6.
7.
At 30 June 2022. Employees are Newcrest directly employed headcount. Contractor headcount include labour hire and project contractors, replacement labour and other contractors. Data
represents Exploration and Australian, PNG and Canadian operations.
Production and financial outcomes represent Newcrest’s 70% share.
Newcrest completed the Pretium transaction on 9 March 2022. In accordance with accounting standards, the acquisition date has been determined to be 25 February 2022. All Brucejack figures
relating to FY22 represent the period since Newcrest’s acquisition.
The production outcome shown represents Newcrest’s 32% attributable share, through its 32% equity interest in Lundin Gold Inc.
Group gold production includes 143,723 ounces relating to Newcrest’s 32% attributable share of Fruta del Norte through its 32% equity interest in Lundin Gold Inc. The outcomes for Fruta del Norte
have been sourced from Lundin Gold’s news releases and have been aggregated to reflect the twelve-month period ended 30 June 2022.
Realised metal prices are the US$ 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. Newcrest has a 70% interest in the Havieron Project (Greatland Gold 30%).
16
Asset Overview
Cadia
Long-life world-class
Gold production
561koz
FY22
FY21
FY20
765
843
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 18Moz gold
and 3.7Mt copper, and Measured and Indicated Mineral
Resources of 33Moz gold and 7.3Mt copper3,4.
Free cash flow1
AISC
Copper production
$613m
FY22
FY21
FY20
($124oz)
1,232
991
FY22
FY21
FY20
(109)
160
85kt
FY22
FY21
FY20
106
96
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
Gold Reserve Life2
Gold Probable Ore Reserves3,4
Gold M&I Mineral Resources3,4,5
Copper Probable Ore Reserves3,4
Copper M&I Mineral Resources3,4,5
FY23 Production Guidance6
+30 years
18Moz Au
33Moz Au
3.7Mt Cu
7.3Mt Cu
560–620koz Au, 95–115kt Cu
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
Cadia PC1-2 Feasibility Study is nearing completion and early works have
commenced. In FY22 the Molybdenum Plant commenced operation.
FY22 Performance
Cadia’s operating and financial performance in FY22 was impacted by reduced
throughput rates during the planned replacement and upgrade of the SAG mill motor
which commenced in early July 2021 and was successfully completed in November
2021, together with the expected decline in grade.
AISC of negative $124 per ounce was 14% lower than FY21 and is Cadia’s lowest
reported AISC for a twelve-month period. Cadia’s AISC remains around the bottom
of the first quartile in the gold industry 7.
Free cash flow of $613 million was 50% lower than FY21. This reflects lower EBITDA,
unfavourable working capital movements and increased capital expenditure, partially
offset by the receipt of an insurance settlement of $75 million relating to the Northern
Tailings Storage Facility (NTSF) embankment slump.
1. Free cash flow is before interest, tax and intercompany transactions.
2.
3.
Reserve life is indicative and calculated as Proved and Probable Gold Reserves (contained metal) as at 30 June 2022 divided by forecast average production rate as per the Life of Province Plan or
stated in a Pre-Feasibility Study. Estimated reserve life does not necessarily equate to operating mine life.
Ore Reserve and Mineral Resource estimates are as at 30 June 2022 based on the release titled “Annual Mineral Resources and Ore Reserves Statement – as at 30 June 2022” dated 19 August
2022 which is available to view at www.asx.com.au under the code “NCM” and on Newcrest’s SEDAR profile. Data is reported to two significant figures to reflect appropriate precision in the
estimate and this may cause some apparent discrepancies in totals.
4. For tonnes and grade breakdown by confidence category refer to Table 5 for Mineral Resources on page 32 and Table 11 for Ore Reserves on page 36.
5.
Gold and Copper M&I Mineral Resources represent Measured and Indicated Mineral Resources. The M&I Mineral Resources are reported inclusive of those Mineral Resources modified to
produce the Ore Reserves.
6. The achievement of guidance is subject to market and operating conditions.
7.
AISC per ounce is first quartile when compared to the Metals Focus Ltd “Q1 2022 Gold Mine Cost Service” report dated 29 June 2022.
Newcrest Annual Report 2022 17
Cadia Expansion Project
PC1-2 Feasibility Study
Cadia is currently undergoing an expansion project which is
expected to help it retain its industry-leading position as one
of the largest, lowest-cost and longest-life gold/copper mines
in the world.
The Cadia Expansion Project consists of:
– development of the next panel cave, Panel Cave 2-3 (PC2-3);
increasing the plant processing capacity from 32Mtpa to 35Mtpa8;
–
– delivering life-of-mine gold and copper recovery improvements; and
–
reducing unit costs.
First ore from PC2-3 is expected during the first half of FY239 with the upgraded
plant facilities operational by the December 2022 quarter. Mill throughput rates are
expected to start ramping up towards 35Mtpa in the December 2022 quarter9.
Key Project Milestones:
– August 2018: Newcrest Board approved Cadia Expansion Pre-Feasibility Study
to Feasibility Stage
– October 2019: Newcrest Board approved Stage 1 of the Expansion Project
– October 2020: Newcrest Board approved Stage 2 of the Expansion Project
– December 2021: NSW Department of Planning, Industry & Environment
approved a modification to increase Cadia’s permitted processing capacity
from 32Mtpa to 35Mtpa
– December 2022 quarter: Upgraded plant facilities operational and ramp-up
to 35Mtpa processing rate expected to commence8,9
– H1 FY23: First ore expected from PC2-39
The Cadia PC1-2 Project relates to the next panel cave
after PC2-3 and updates and defines a significant portion
of Cadia’s future mine plan.
In August 2021, the Newcrest Board approved the Cadia PC 1-2 Pre-Feasibility
Study (PFS), enabling the commencement of the Feasibility Stage and early
works program. The PFS updated and defined 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 allowed critical infrastructure to be established in parallel with the
Feasibility Study before the commencement of the Main Works Program.
Early works have been progressing with development activities, raise boring
and preliminary earthworks for construction of the primary ventilation fans
commencing during FY22.
Key Project Milestones:
– August 2021: Newcrest Board approved Cadia PC1-2 Pre-Feasibility Study
to Feasibility Stage and early works program commenced
– FY23 September Quarterly Report: Cadia PC1-2 Feasibility Study expected
to be released9
– FY26: Cadia PC1-2 Project first production expected from PC1-29
– FY28: Cadia PC1-2 Project completion9
Molybdenum Plant
Newcrest commissioned the Cadia Molybdenum Plant during FY22 with the
first molybdenum concentrate achieved in Q3 FY22 and first shipment delivered
in June 2022. The Molybdenum Plant provides an additional revenue stream for
Cadia which was recognised as a by-product credit in the calculation of Cadia’s
already low All-In Sustaining Cost per ounce.
8.
The modification approved in December 2021 to increase the permitted processing capacity from 32Mtpa to 35Mtpa is subject to conditions including Newcrest commissioning an independent
audit report to the satisfaction of the New South Wales Department of Planning & Environment Secretary in relation to Newcrest’s approach to managing and minimising the off-site air quality
impacts of the project.
9. Subject to market and operating conditions and potential delays due to COVID-19 impacts.
18
Asset Overview continued
Lihir
Significant
long-life asset
Free cash flow1
AISC
Gold production
$87m
FY22
FY21
FY20
321
233
$1,622oz
687koz
FY22
FY21
FY20
1,391
1,206
FY22
FY21
FY20
737
776
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 gold and Measured and Indicated Mineral
Resources of 42Moz gold3,4.
FY22 Performance
Lihir’s lower operating and financial performance in FY22 reflects the impacts
of major maintenance activity, lower autoclave availabilities and unplanned
downtime. In FY22, Newcrest commenced its mining improvement program at
Lihir which improved mining rates and culminated in a record for total material
movements in the June 2022 quarter. The higher mining rates are expected to
continue in FY23 in line with this improvement program7.
AISC of $1,622 per ounce was 17% higher than FY21 primarily reflecting lower
gold sales volumes, increased sustaining capital expenditure, higher operating
costs (including costs relating to unplanned downtime) and higher production
stripping expenditure.
Site process
Mining
Open pit drill, blast, load and haul mining, currently in
Phases 14, 15 & 16 in Lienitz. Substantial stockpiles
Free cash flow of $87 million was 73% lower than FY21. This reflects lower
EBITDA together with increased capital expenditure.
Processing
Crushing, grinding, flotation, pressure oxidation, NCA circuit
Output
Gold doré
Key statistics
Gold Reserve Life2
Gold Proved and Probable Ore Reserves3,4
Gold M&I Mineral Resources3,4,5
FY23 Production Guidance6
+20 years
22Moz Au
42Moz Au
720 – 840koz Au
Phase 14A Pre-Feasibility Study
In October 2021, the Newcrest Board approved the Lihir Phase 14A
Pre-Feasibility Study enabling the commencement of the Feasibility Study
and early works program. Phase 14A is aimed at bringing forward higher
grades to improve gold production and operational flexibility by establishing an
additional independent ore source at Lihir.
Newcrest continued to progress the Phase 14A Feasibility Study during FY22
with ground support, drainage works and shotcrete works completed, and the
procurement of mobile fleet equipment, specialised civil engineering equipment
and materials. First medium grade ore was delivered to the mill during the
FY22 period.
The findings of the Feasibility Study are expected to be released in the
December 2022 quarter.7
1. Free cash flow is before interest, tax and intercompany transactions.
2.
3.
Reserve life is indicative and calculated as Proved and Probable Gold Reserves (contained metal) as at 30 June 2022 divided by forecast average production rate as per the Life of Province Plan or
stated in a Pre-Feasibility Study. Estimated reserve life does not necessarily equate to operating mine life.
Ore Reserve and Mineral Resource estimates are as at 30 June 2022 based on the release titled “Annual Mineral Resources and Ore Reserves Statement – as at 30 June 2022” dated
19 August 2022 which is available to view at www.asx.com.au under the code “NCM” and on Newcrest’s SEDAR profile. Data is reported to two significant figures to reflect appropriate
precision in the estimate and this may cause some apparent discrepancies in totals.
4. For tonnes and grade breakdown by confidence category refer to Table 5 for Mineral Resources on page 32 and Table 11 for Ore Reserves on page 36.
5.
Gold and Copper M&I Mineral Resources represent Measured and Indicated Mineral Resources. The M&I Mineral Resources are reported inclusive of those Mineral Resources modified to
produce the Ore Reserves.
6. The achievement of guidance is subject to market and operating conditions.
7.
Subject to market and operating conditions and potential delays due to COVID-19 impacts.
Newcrest Annual Report 2022 19
Telfer is located 45km west of the Havieron Project which
is operated by Newcrest under a Joint Venture Agreement
with Greatland Gold plc.
Newcrest holds a 70% interest in the Havieron Project. Telfer’s strategic
positioning in the highly prospective Paterson Province, with its
existing infrastructure and 22Mtpa processing capacity, provides
potential opportunities for Newcrest moving forward.
FY22 Performance
In FY22 Telfer produced 408koz of gold which was largely in line with FY21 and the
Newcrest Board approved expenditure of $182 million8 for the West Dome Stage 5
(WDS5) cutback which supports the continuity of operations at Telfer.
AISC of $1,388 per ounce was 6% lower than FY21 due to a higher realised copper
price, higher copper sales volumes, lower sustaining capital expenditure and a
weaker Australian dollar positively impacting Australian denominated costs, partially
offset by an increase in production stripping from WDS5.
Free cash flow of $103 million was 26% higher than FY21. This reflects higher EBITDA
and lower sustaining capital expenditure. This was partially offset by unfavourable net
working capital movements, the commencement of production stripping activity in
WDS5 and lower gold sales volumes. Excluding the hedge losses of $91 million in FY22,
Telfer’s free cash flow would have been $194 million.
Havieron
The joint venture agreement 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.
The findings of the Havieron PFS Stage 1 were released in October 2021 and the
Newcrest Board approved the progression of the Study to the Feasibility Stage.
The Feasibility Study is expected to be completed in the December 2022 quarter and
will consider delays experienced to date in the development of the decline as well as
the impact of inflationary pressure on operating and capital costs.9
Newcrest continued to progress its extensive drilling program at Havieron during
FY22 with up to seven drill rigs in operation. The growth drilling continues to identify
and expand high-grade mineralisation extensions to the mineralisation in the South
East Crescent Zone, Eastern Breccia and Northern Breccia.
The development of the exploration decline also continued during FY22 with
489 metres complete as at 13 July 2022. Advance rates were significantly impacted
by unfavourable geotechnical and hydrogeological conditions requiring extensive
local and surface dewatering, pre-excavation ground treatment and substantial
ground support installation. Ground conditions have recently improved in line with
the geotechnical modelling forecast, and a steady improvement in development rates
is expected in FY23. Changes in the design of the decline have been implemented in
order to transition into better ground conditions earlier.
Telfer
Strategically positioned
in the Paterson Province
Gold production
408koz
FY22
FY21
FY20
416
393
Free cash flow1
AISC
Copper Production
$103m
FY22
FY21
FY20
82
51
$1,388oz
FY22
FY21
FY20
1,473
1,281
14kt
FY22
FY21
FY20
13
16
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 Project Milestones:
Key statistics2
Gold Reserve Life3
Gold Probable Ore Reserves4,5
Gold M&I Mineral Resources4,5,6
Copper Probable Ore Reserves4,5
Copper M&I Mineral Resources4,5,6
FY23 Production Guidance7
~2 years Telfer
~9 years Havieron
2.3Moz Au
6.7Moz Au
0.11Mt Cu
0.57Mt Cu
355 – 405koz Au, ~20kt Cu
– March 2019: Newcrest entered into a farm-in agreement with Greatland Gold plc
– April 2020: Newcrest earned 40% interest in Havieron Project
– November 2020: Newcrest formalised its relationship with Greatland Gold and
signed Havieron Joint Venture Agreement
– December 2020: Initial Inferred Mineral Resource estimate announced
–
January 2021: Regulatory and Board approvals obtained to commence construction
of the box cut, exploration decline and associated surface infrastructure
– May 2021: Exploration decline commenced following completion of the box cut
and portal
– October 2021: Havieron Pre-Feasibility Study released including an initial Ore
Reserve estimate for Havieron
– December 2022 quarter: Havieron Feasibility Study expected to be completed9
1. Free cash flow is before interest, tax and intercompany transactions.
2.
3.
Telfer Province includes the Mineral Resources and Ore Reserves for the Havieron Project at 100%. Newcrest attributable share 70%. All data is reported on a 100% asset basis.
Reserve life is indicative and calculated as Proved and Probable Gold Reserves (contained metal) as at 30 June 2022 divided by forecast average production rate as per the Life of Province Plan or
stated in a Pre-Feasibility Study. Estimated reserve life does not necessarily equate to operating mine life.
Ore Reserve and Mineral Resource estimates are as at 30 June 2022 based on the release titled “Annual Mineral Resources and Ore Reserves Statement – as at 30 June 2022” dated 19 August 2022
which is available to view at www.asx.com.au under the code “NCM” and on Newcrest’s SEDAR profile. Data is reported to two significant figures to reflect appropriate precision in the estimate
and this may cause some apparent discrepancies in totals.
4.
5. For tonnes and grade breakdown by confidence category refer to Table 5 for Mineral Resources on page 32 and Table 11 for Ore Reserves on page 36.
6.
Gold and Copper M&I Mineral Resources represent Measured and Indicated Mineral Resources. The M&I Mineral Resources are reported inclusive of those Mineral Resources modified to
produce the Ore Reserves.
7. The achievement of guidance is subject to market and operating conditions.
8.
9. Subject to market and operating conditions and potential delays due to COVID-19 impacts.
A$246 million has been converted to US dollars using the spot AUD:USD exchange rate on 12 August 2021 of 0.74.
20
Asset Overview continued
Red Chris
Potential Tier 1
orebody1
Newcrest has a 70% interest in and operatorship of the
Red Chris mine and surrounding tenements in British
Columbia, Canada, in a joint venture with Imperial Metals
Corporation (30%).
Red Chris has Ore Reserves of 8.0Moz gold and 2.1Mt copper, and Measured
and Indicated Mineral Resources of 12Moz gold and 3.6Mt copper6,7.
FY22 Performance
In FY22 Red Chris produced 42koz of gold which was largely in line with FY21.
AISC of $1,349 per ounce was 40% lower than FY21, primarily due to higher
by-product revenue and the completion of the Phase 5 stripping campaign
(which was classified as sustaining), partially offset by lower gold sales volumes
and higher site costs and concentrate freight costs.
Free cash flow of negative $120 million was $83 million lower than FY21, primarily
driven by increased capital expenditure and unfavourable working capital
movements, partially offset by higher EBITDA. The higher capital expenditure in
FY22 is primarily driven by an increase in non-sustaining capital expenditure relating
to Block Cave projects together with increased production stripping expenditure in
Phase 7.
Gold production2
42koz
FY22
FY21
FY20
46
39
Red Chris Block Cave
In October 2021, the Newcrest Board endorsed the Red Chris Block Cave PFS and
approved its progression to the Feasibility Stage. The Study confirms Newcrest’s
original investment thesis of unlocking the underground portion of this Tier 1
deposit by leveraging Newcrest’s industry-leading block caving expertise and with
the intention that the asset would become a significant component of Newcrest’s
portfolio for the medium to long term.
Free cash flow2,3
AISC2
Copper production2
The Feasibility Study is expected to be completed in the second half of FY231.
($120m)
$1,349oz
FY22
FY21
FY20
(37)
(18)
FY22
FY21
FY20
2,248
1,703
21kt
FY22
FY21
FY20
23
25
Site process
Mining
Open pit mining, with block cave potential
Processing
Crushing, grinding, flotation
Output
Gold, copper and silver concentrate
Key statistics4
Gold Reserve Life5 (Open pit)
(Underground)
Gold Probable Ore Reserves6,7
Gold M&I Mineral Resources6,7,8
Copper Probable Ore Reserves6,7
Copper M&I Mineral Resources6,7,8
FY23 Production Guidance9
~6 years
~31 years
8.0Moz Au
12Moz Au
2.1Mt Cu
3.6Mt Cu
~30koz Au, ~20kt Cu
Newcrest continued its significant drilling campaign at Red Chris during FY22, with
up to eight rigs operational. Drilling activities at East Ridge continue to expand the
footprint and confirm continuity and extensions of the higher grade mineralisation.
An Exploration Target for East Ridge was also defined during FY22. East Ridge is
outside of Newcrest’s initial Mineral Resource estimate and strike extents of this
prospect remain open to the east.
The development of the exploration decline and support infrastructure also advanced
during FY22 with the decline having progressed to 1,703 metres as at 13 July 2022.
Key Project Milestones
– August 2019: Newcrest acquired a 70% interest in, and operatorship of Red Chris
– February 2021: Regulatory approval received to commence construction of
the box cut
– March 2021: Newcrest announced its initial Mineral Resource estimate for Red Chris
– April 2021: Regulatory approval received to commence construction of the
–
exploration decline
June 2021: Exploration decline commenced following completion of the box
cut and portal
– October 2021: Red Chris Block Cave Pre-Feasibility Study findings released,
including Newcrest’s initial Ore Reserve estimate for Red Chris
– H2 FY23: Red Chris Block Cave Feasibility Study expected to be released1
– H2 FY26: Red Chris Block Cave first ore expected1
– FY27: Red Chris first production of Block Cave gold and copper expected1
1.
2.
3.
4.
5.
6.
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.
Free cash flow is before interest, tax and intercompany transactions.
Newcrest attributable share is 70%. All data is report on a 100% asset basis.
Reserve life is indicative and calculated as Proved and Probable Gold Reserves (contained metal) as at 30 June 2022 divided by forecast average production rate as per the Life of Province Plan or
stated in a Pre-Feasibility Study. Estimated reserve life does not necessarily equate to operating mine life.
Ore Reserve and Mineral Resource estimates are as at 30 June 2022 based on the release titled “Annual Mineral Resources and Ore Reserves Statement – as at 30 June 2022” dated 19 August 2022
which is available to view at www.asx.com.au under the code “NCM” and on Newcrest’s SEDAR profile. Data is reported to two significant figures to reflect appropriate precision in the estimate
and this may cause some apparent discrepancies in totals.
7. For tonnes and grade breakdown by confidence category refer to Table 5 for Mineral Resources on page 32 and Table 11 for Ore Reserves on page 36.
8.
Gold and Copper M&I Mineral Resources represent Measured and Indicated Mineral Resources. The M&I Mineral Resources are reported inclusive of those Mineral Resources modified to
produce the Ore Reserves.
The achievement of guidance is subject to market and operating conditions.
9.
Newcrest Annual Report 2022
21
Brucejack
High-grade gold mine
in Tier 1 jurisdiction
Free cash flow1
AISC1
Gold production1
$88m
$1,125oz
114koz
Site process
Mining
Underground
Processing
Crushing, grinding, gravity concentration, sulphide flotation
Output
Gold-silver doré and flotation concentrate
Key statistics2
FY23 Production Guidance3
320 – 370koz Au
The Brucejack mine is located in the highly prospective Golden
Triangle region of British Columbia, Canada, approximately
140km away from Newcrest’s majority-owned and operated
Red Chris mine.
On 25 February 2022, Newcrest received the final regulatory approval for
the acquisition of Pretium which owned the Brucejack mine. In accordance
with accounting standards, Newcrest acquired control over Pretium
effective from the date of this last regulatory approval. On 9 March 2022,
Newcrest announced that it had completed the acquisition of Pretium.
Brucejack began commercial production in July 2017 and is one of
the highest-grade operating gold mines in the world.
Brucejack delivered immediate operational and financial contribution,
including an additional 114,421 ounces of gold production, EBITDA
of $109 million and free cash flow of $88 million for the four-month
ownership period.
A three-phase transformation program commenced following acquisition
of Pretium, with a range of initiatives to maximise the long-term potential
and value of the Brucejack mine and associated district. Newcrest
expects to deliver synergy benefits of approximately C$20–30 million
(~US$16–24 million) through supplier negotiations and other value levers.
Our EDGE program has also commenced to pursue additional cash flow
opportunities with an initial focus on stope turnaround time and more
efficient mine operations. Newcrest is also focused on realising the full
uplift potential of Brucejack by increasing mill throughput capacity
and improving mining performance. The intensive exploration drilling
program continues at Brucejack with drilling results expanding the
footprint of higher grade mineralisation and confirming the potential
for resource growth.
1.
2.
3.
Newcrest completed the Pretium transaction on 9 March 2022. In accordance with accounting standards, the acquisition date has been determined to be 25 February 2022. All Brucejack figures
relating to FY22 represent the period since Newcrest’s acquisition.
Scientific and technical studies are in progress to assess and estimate Mineral Resources and Ore Reserves for the Brucejack asset to enable future reporting in accordance with the JORC Code.
The achievement of guidance is subject to market and operating conditions.
22
Growth Potential
Newcrest has made significant progress against its
Forging an Even Stronger Newcrest plan in FY22.
Advancing Newcrest’s global organic growth portfolio1
Cadia
Australia
– Regulatory approval received to increase processing capacity
to 35Mtpa2
– Two-stage plant expansion expected to be completed early in Q2 FY23
– PC1-2 Feasibility Study nearing completion
– SAG mill motor replaced and upgraded
– First molybdenum concentrate shipped
Red Chris
Canada
– Block Cave Feasibility Study on track for completion in H2 FY23 with
early works program progressing well
– East Ridge Exploration Target identified as drilling continues to expand
mineralisation footprint which remains open to the east
Lihir
Papua New Guinea
– Phase 14A Feasibility Study on track for completion in Q2 FY23
with early works advancing
– Front End Recovery Project nearing completion
– Mining improvement program advancing with two new shovels
commissioned and truck re-build program complete
Telfer & Havieron
Australia
– West Dome Stage 5 cutback underway, supporting continued
Telfer operations
– Open pit and underground extensional opportunities being assessed
– Havieron growth drilling continues to identify and expand high grade
extensions across key target areas
– Option for additional 5% Havieron joint venture interest not exercised
1.
2.
Subject to further studies, all necessary approvals, permits, internal and regulatory requirements and further works and potential delays due to COVID-19 impacts.
The modification approved in December 2021 to increase the permitted processing capacity from 32Mtpa to 35Mtpa is subject to conditions including Newcrest commissioning an independent
audit report to the satisfaction of the New South Wales Department of Planning & Environment Secretary in relation to Newcrest’s approach to managing and minimising the off-site air quality
impacts of the project.
Newcrest Annual Report 2022 23
Copper Exposure
Newcrest has a substantial and increasing
exposure to copper, a critical metal of the future
with a positive long-term outlook that will allow
us to participate in the potential opportunities
presented by a global shift to decarbonisation.
Copper Resource & Reserve Base of Newcrest’s provinces1,2,3
Copper Production (tonnes) and FY23 guidance4
3,500
3,000
2,500
2,000
1,500
1,000
)
n
o
i
l
l
i
m
(
s
e
n
n
o
T
y
r
D
Cadia
Namosi
Red Chris
Wafi-Golpu
77,975
77,975
137,623
137,623
142,724
142,724
135,000–155,000
135,000–155,000
120,650
120,650
105,867
105,867
500
Telfer
0
0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Copper grade (%)
Area of bubble represents proportionate size of in situ copper (million tonnes)
Full circles represent Measured and Indicated Resources, empty circles represent Ore Reserves
FY18
FY18
FY19
FY19
FY20
FY20
Guidance
Guidance
Tonnes
Tonnes
FY21
FY21
FY22
FY22
FY23
FY23
Delivering our growth targets5
Key FY22 milestones achieved
Telfer WD5 cutback
Cadia PC1-2 PFS
Red Chris Block Cave PFS
Havieron Stage 1 PFS
Lihir Phase 14A PFS
Brucejack acquisition
Cadia 35Mtpa processing approval6
Cadia Moly Plant commissioning
Lihir Phase 14A first ore
Expected
milestones
Dec 22
quarter
FY27
Brucejack: Process plant capacity concept study
Cadia: Two-stage plant expansion
Lihir: Phase 14A Feasibility Study
Havieron: Feasibility Study
Red Chris: Block Cave
First Production of
gold/copper
Cadia: PC1-2 Feasibility Study
Red Chris: Block
Cave Feasibility Study
Red Chris: Block
Cave First Ore
Oct 22
H2
FY23
H2
FY26
1. Resources represent Measured & Indicated Mineral Resources and Reserves represent Proved and Probable Ore Reserves.
2. For confidence classification breakdown refer Table 5 for Mineral Resources on page 32 and Table 11 for Ore Reserves on page 36.
3.
Ore Reserve and Mineral Resource estimates are as at 30 June 2022 based on the release titled “Annual Mineral Resources and Ore Reserves Statement – as at 30 June 2022”
dated 19 August 2022 which is available to view at www.asx.com.au under the code “NCM” and on Newcrest’s SEDAR profile. Figures represent Newcrest’s interest.
4. The achievement of guidance is subject to market and operating conditions.
5. Subject to further studies, all necessary approvals, permits, internal and regulatory requirements and further works and potential delays due to COVID-19 impacts.
6.
The modification approved in December 2021 to increase the permitted processing capacity from 32Mtpa to 35Mtpa is subject to conditions including Newcrest commissioning an independent
audit report to the satisfaction of the New South Wales Department of Planning & Environment Secretary in relation to Newcrest’s approach to managing and minimising the off-site air quality
impacts of the project.
24
The Board
Peter Tomsett
Sandeep Biswas
Philip Aiken AM
BEng (Mining) (Hons), MSc (Mineral
Production Management), GAICD, 64
Independent Chairman
BEng (Chem) (Hons), FAusIMM, 60
Managing Director and
Chief Executive Officer
BEng (Chemical), Advanced Management
Program (HBS), 73
Independent Non-Executive Director
Mr Tomsett was appointed as Chairman of
the Board effective from the end of the Annual
General Meeting on 10 November 2021, after
being appointed as a Non-Executive Director of
the Board in September 2018. Mr Tomsett is also
the Chairman of the Nominations Committee.
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 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.
Mr Tomsett has been Chairman and Managing
Director of Kidston Gold Mines Ltd and
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,
the Minerals Council of Australia, and the
International Council for Mining and Metals.
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.
Other Current Directorships/Appointments
– Director of the Minerals Council of
Australia (from 2014)
– Vice Chairman of the World Gold Council
(Vice Chairman from 2020, Director
from 2017)
– Member of ICMM Council (from 2017)
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
– Director of New Energy One Acquisition
Corporation Plc (from 2022)
– 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)
Newcrest Annual Report 2022 25
Roger Higgins
BE (Civil Engineering) (Hons), MSc
(Hydraulics), PhD (Water Resources), Stanford
Executive Program, FIEAust, FAusIMM, 71
Independent Non-Executive Director
Vickki McFadden
BComm, LLB, 63
Independent Non-Executive Director
Sally-Anne Layman
BEng (Mining) (Hons), BComm,
CPA Australia, MAICD, 48
Independent Non-Executive Director
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
and the Nominations 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 Directorships/Appointments
– 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)
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
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)
Former Listed Directorships (last 3 years)
– Director of Perseus Mining Limited
(2017–2020)
– Director of Gascoyne Resources Limited
(Director 2017–2019, Chair 2018–2019)
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.
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 Demetallica Limited (from 2022)
Other Current Directorships/Appointments
– Chairman and Director of Ok Tedi Mining
Limited (Chairman from December 2021,
Director from November 2014)
– Chair of the Advisory Board, PAX Republic
(from 2019)
– 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)
– Chairman of Minotaur Exploration Limited
(Director 2016–2022, Chairman 2017–2022)
– Director of Metminco Limited (2013–2019)
26
The Board continued
Jane McAloon
Philip Bainbridge
BEc (Hons), LLB, GDip CorpGov, FAICD, 58
Independent Non-Executive Director
BSc (Mechanical Engineering) (Hons),
MAICD, 63
Independent Non-Executive Director
Mr Bainbridge was appointed to the Board
as a Non-Executive Director with effect from
1 April 2022. He is a member of the Safety and
Sustainability Committee.
Skills, experience and expertise
Mr Bainbridge has extensive senior executive
experience, primarily in the oil and gas sector
across exploration, development and production.
He has worked in a variety of jurisdictions,
including Papua New Guinea. His most recent
executive role was as Executive General
Manager LNG for Oil Search Limited. Prior to
that, he had senior executive roles at Pacific
National and BP Group.
Current Listed Directorships
– Director of Beach Energy Limited (from 2016)
– Director of Sims Limited (from 2022)
Other Current Directorships/Appointments
– Chairman of Global Carbon Capture
and Storage Institute (from 2019)
– Chairman of Sino Gas and Energy
(from 2014)
Ms McAloon was appointed to the Board
as a Non-Executive Director in July 2021.
She is a member of the Human Resources
and Remuneration Committee and the
Audit and Risk Committee.
Skills, experience and expertise
Ms McAloon has extensive experience in
the resources, energy, infrastructure and
utilities industries. She spent nine years as
Group Company Secretary at BHP, including
two 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
– Chairman and Director of Energy Australia
(Director from 2012, Chairman from 2022)
– Director of Allianz Australia Limited
(from 2020)
– Independent Member of the Advisory Board
for Allens Linklaters (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 Viva Energy Group Limited
(2018–2021)
– Director of Healthscope (2016–2019)
– Director of Cogstate (2017–2019)
Newcrest Annual Report 2022 Mineral Resources and Ore Reserves
27
Newcrest released its Annual Mineral Resource and Ore Reserve
Statement for the period ending 30 June 2022 on 19 August 2022 (the
Statement). It 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.
For the purposes of the Statement, Newcrest completed a detailed
review of all production sources. The review considered mining depletion,
drilling results, studies, long-term metal prices, foreign exchange rates
and cost assumptions, as well as mining and metallurgy performance to
inform cut-off grades and physical mining parameters since the previous
estimate for the period ending 31 December 2021, which was published
on 17 February 2022.
Group Ore Reserves
As at 30 June 2022, Group Ore Reserves 1 were estimated to contain
approximately 61 million ounces of gold, 11 million tonnes of copper,
29 million ounces of silver and 0.099 million tonnes of molybdenum.
This represents decreases, predominantly as a result of mining depletion,
of approximately 2 million ounces of gold (~3%), 0.3 million tonnes of
copper (~3%), 1 million ounces of silver (~6%) and 0.011 million tonnes of
molybdenum (~6%) compared with the estimate as at 31 December 2021.
The Group Ore Reserve estimates as at 30 June 2022 are set out in
Tables 11 and 12 on a 100 per cent basis 1. Tonnes are reported as dry
metric tonnes. All Group Ore Reserves are classified as Probable Reserves
except for 58 million tonnes of Lihir Stockpiles that are Proved Reserves.
All tabulated tonnes, grade and metal information have been rounded to
two significant figures to reflect appropriate precision in the estimate, and
this may cause some apparent discrepancies in totals.
A work program is in progress to assess and estimate Ore Reserves for
the Brucejack asset to enable future reporting in accordance with the
Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves, December 2012 (the JORC Code).
Feasibility Studies are progressing for Lihir Phase 14A, Havieron,
Cadia PC 1-2 and Red Chris Block Cave. Outcomes of these studies
will inform future Ore Reserves.
Group Mineral Resources
As at 30 June 2022, Group Measured and Indicated Mineral Resources 2
were estimated to contain approximately 120 million ounces of
gold, 25 million tonnes of copper, 100 million ounces of silver and
0.17 million tonnes of molybdenum. This represents no appreciable
change compared to the estimate as at 31 December 2021.
The Group Measured and Indicated Mineral Resources and Inferred
Mineral Resources as at 30 June 2022 are set out in Tables 5 to 10 on
a 100 per cent basis 2,3.
The Measured and Indicated Mineral Resources are inclusive of those
Mineral Resources modified to produce the Ore Reserves. Tonnes are
reported as dry metric tonnes. All tabulated tonnes, grade and metal have
been rounded to two significant figures to reflect appropriate precision in
the estimates. This may cause some apparent discrepancies in totals.
A work program is in progress to assess and estimate Mineral Resources
for the Brucejack asset to enable future reporting in accordance with the
JORC Code.
The Group Measured and Indicated Mineral Resources as at 30 June 2022
included the following changes as compared to 31 December 2021:
– Estimated mining depletion of approximately 1.3 million ounces of
gold, 0.1 million tonnes of copper, 0.5 million ounces of silver and
minor molybdenum.
– Havieron updated estimate added 1.0 million ounces of gold and
0.04 million tonnes of copper.
As at 30 June 2022, Group Inferred Mineral Resources 3 were estimated
to contain approximately 21 million ounces of gold, 4.8 million tonnes of
copper, 18 million ounces of silver and 0.012 million tonnes of molybdenum.
This represents an increase of 1 million ounces of gold and no appreciable
change for copper, silver or molybdenum compared with the estimate as at
31 December 2021.
The Group Inferred Mineral Resources as at 30 June 2022 included the
following changes as compared to 31 December 2021:
– Havieron updated estimate added 0.9 million ounces of gold and
The Group Ore Reserves as at 30 June 2022 included the following
changes as compared to 31 December 2021:
0.015 million tonnes of copper.
– Minor adjustments at Telfer due to model updates.
– Estimated mining depletion of approximately 1.3 million ounces of
gold, 0.1 million tonnes of copper, 0.5 million ounces of silver and
minor molybdenum.
– Minor updates to price, cost and some technical input assumptions
at Cadia and Telfer that delivered a slight decrease in Ore Reserves.
100 per cent basis. Note 31 December 2021 and prior Group Ore Reserves Statements were reported on an attributable share basis.
1.
2. 100 per cent basis. Note 31 December 2021 and prior Group Measured and Indicated Mineral Resources Statements were reported on an attributable share basis.
3. 100 per cent basis. Note 31 December 2021 and prior Group Inferred Mineral Resources Statements were reported on an attributable share basis.
28
Mineral Resources and Ore Reserves continued
Governance
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. 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,
ASX Listing Rules, National Instrument 43-101 – Standards of
Disclosure for Mineral Projects (NI 43-101));
3. External review of process conformance and compliance;
4. Internal assessment of processes around all input assumptions; and
5. Annual reconciliation performance metrics to validate Mineral
Resources and Ore Reserves estimates for operating mines.
Updates to the Mineral Resource and Ore Reserve estimates at
30 June 2022 were completed in accordance with the RRSC governance
and review process. This included reporting in compliance with the JORC
Code, 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
Reserves Statement by the RRSC prior to release to the market.
Mineral Resources and Ore Reserves Assumptions
Mining, metallurgical and long-term cost assumptions were developed
with reference to performance data. The revised 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.
Long-term metal prices and foreign exchange assumptions for Mineral
Resources and Ore Reserves are presented in Table 1. For long reserve
life assets, all metal prices, AUD:USD exchange rate and USD:PNG kina
exchange rate applied are unchanged for both Mineral Resources and
Ore Reserves compared to December 2021 prices used for reporting.
For short reserve life assets, gold and copper prices and USD:PNG
kina exchange rate have increased for both Mineral Resources and Ore
Reserves compared to December 2021 prices used for reporting.
In consideration of the comparatively short reserve life of Telfer and the
Red Chris Open Pit, the gold price assumption is US$200/oz higher, and
the copper price assumption is US$0.70/Ib higher than prices applied for
Ore Reserves reporting of long reserve life assets. The USD:PGK exchange
rate is also 0.30 higher, in each case compared to prices used for reporting
of 31 December 2021 information.
Note that long term metal prices and exchange rate assumptions are
applied to Havieron Mineral Resources and Ore Reserves and Red Chris
underground Mineral Resources and Ore Reserves. Where appropriate,
Mineral Resources are also spatially constrained within notional mining
volumes based on metal prices of US$1,400/oz for gold and US$4.00/lb for
copper. This approach is adopted to eliminate mineralisation that does not
have reasonable prospects of eventual economic extraction from Mineral
Resource estimates.
Mineral Resource and Ore Reserve cut-off criteria are described in Table 2
Ore Reserve metallurgical recovery assumptions are described in Table 3.
A discussion of the known legal, political, environmental, or other risks
that could materially affect the potential development of the Ore Reserves
and Mineral Resources for each of the material properties Cadia, Lihir,
Wafi-Golpu and Red Chris can be found in the Technical Report for each
project (referred to below).
Some legacy Mineral Resources and Ore Reserves estimates have applied
older, conservative price and cost assumptions than stated in Table 1.
These have been tested for economic viability.
Table 1 – Metal Price Assumptions
Mineral Resource Estimates
Gold – US$/oz
Copper – US$/lb
Silver – US$/oz
Molybdenum – US$/Ib
Ore Reserve Estimates
Gold – US$/oz
Copper – US$/lb
Silver – US$/oz
Molybdenum – US$/Ib
Exchange Rate AUD: USD
Long Life
Assets
1,400.00
3.40
21.00
10.00
1,300.00
3.00
18.00
8.00
0.75
Short Life Assets
(Telfer and
Red Chris Open Pit)
1,625.00
3.60
21.00
1,600.00
3.50
18.00
0.75
Newcrest Annual Report 2022 29
Table 2 – Cut-Off Assumptions
Deposit
Mineral Resource Cut-Off Criteria
Ore Reserve Cut-Off Criteria
Cadia East Underground
Net Smelter Return (NSR) of approx. A$18.00/t milled.
NSR of approx. A$22.11/t milled.
Ridgeway Underground
NSR of A$12.50/t milled.
NSR of A$22.40/t milled.
Cadia Extended Underground
NSR of A$18.71/t milled.
Cadia Hill Stockpiles
Big Cadia
NSR of A$12.81/t milled.
NSR of A$12.81/t milled.
Telfer West Dome Open Pit
NSR of A$21.20/t milled.
NSR of A$21.20/t milled.
–
–
–
NSR of A$19.20/t milled.
NSR of A$19.20/t milled.
Telfer Stockpiles
Telfer Underground
Havieron
Satellites Deposits
Camp Dome
O’Callaghans
Variable NSR of A$ 44.92/t – A$147.96/t milled.
Variable NSR of A$ 44.92/t – A$147.96/t milled.
Variable NSR of A$ 50.00/t – A$100.00/t milled.
NSR of A$130.00/t milled.
0.20g/t gold in oxide material
0.30g/t gold for transitional and 0.54g/t gold in fresh
material based on dump leach processing.
0.13% copper based on dump leach processing.
NSR of A$54.90/t milled applied to visible high grade
mineralised skarn that has a minimum 5m height.
–
–
–
Red Chris Open Pit and Stockpiles NSR of C$16.10/t milled.
NSR of C$20.33/t milled.
Red Chris Underground
NSR of C$21.00/t milled.
Variable NSR of C$22.00/t – 22.80/t milled.
Lihir Open Pit and Stockpiles
1.00g/t gold.
1.00g/t gold.
WGJV – Golpu
WGJV – Wafi
WGJV – Nambonga
Namosi JV Waisoi
Namosi JV Wainaulo
NSR of US$22.29/t milled.
NSR of US$19.15/t – US$60.00/t milled (block cave).
0.40g/t gold for non-refractory gold and 0.90g/t gold for
refractory gold.
0.50g/t gold (potential block cave shell).
NSR of US$11.00/t milled.
NSR of US$23.20/t milled within a block cave shell.
–
–
–
–
Table 3 – Ore Reserve Metallurgical Recovery Assumptions
Deposit
Cadia East Underground
Ridgeway Underground
West Dome Open Pit and Telfer Stockpiles
Telfer Underground
Havieron
Red Chris Open Pit and Stockpiles
Red Chris Underground
Lihir Open Pit and Stockpiles
WGJV – Golpu
Recovery
Gold range 70–85%
Copper average – 87%
Silver range 60–70%
Molybdenum range 65–75%
Gold – 81%
Copper – 87%
Gold average – 77%
Copper average – 52%
Gold range 81–96%
Copper range 82–97%
Gold average – 88%
Copper average – 84%
Gold average – 54%
Copper average – 80%
Gold range 60–75%
Copper range 81–86%
Gold average – 82%
Gold average – 68%
Copper average – 95%
30
Mineral Resources and Ore Reserves continued
Attributable interests
Competent and Qualified Persons
The information in this section of the Annual Report that relates to Group
Mineral Resources, Ore Reserves, and associated scientific and technical
information, is based on and fairly represents information compiled and
approved by Ms J Terry. Ms Terry is Newcrest’s Head of Mineral Resource
Management and a full-time employee of Newcrest Mining Limited. She is
entitled to participate in Newcrest’s executive equity long term incentive
plan, details of which are included in Newcrest’s 2022 Remuneration
Report. She is a Fellow of the Australasian Institute of Mining and
Metallurgy (AusIMM). Ms Terry has sufficient experience which is relevant
to the styles of mineralisation and types of deposits under consideration
and to the activity which she is undertaking to qualify as a Competent
Person as defined in the JORC Code and as a Qualified Person under
NI 43-101. Ms Terry has reviewed and approves the disclosure of scientific
and technical information contained in this section of the Annual Report
and consents to the inclusion in this section of the Annual Report of
the matters based on her information in the form and context in which
it appears.
The information in this section of the Annual Report that relates to specific
Mineral Resources, Ore Reserves, and associated scientific and technical
information, is based on and fairly represents information and supporting
documentation compiled by the Competent Persons (as defined in the
JORC Code) and the Qualified Persons (as defined in NI 43-101) named in
Table 4. All Competent and Qualified Persons have, at the time of reporting,
sufficient experience relevant to the style of mineralisation and type of
deposit under consideration and to the activity they are undertaking
to qualify as a Competent and/or Qualified Person. Each Competent
Person and Qualified Person listed is, unless otherwise noted, a full-time
employee of Newcrest Mining Limited, or its relevant subsidiaries and may
be entitled to participate in Newcrest’s long term incentive plan, details
of which are included in Newcrest’s 2022 Remuneration Report. Some
hold Newcrest shares and declare that they have no issues that could be
perceived by investors as a material conflict of interest in preparing the
reported information. All Competent Persons are Fellows of the AusIMM
or Members of the AIG or a Recognised Professional Organisation.
Each Competent and Qualified Person consents to the inclusion in this
section of the Annual Report of the matters based on their information
in the form and context in which it appears.
As indicated in the footnotes below, Newcrest’s attributable interest in
Mineral Resources and Ore Reserves reported for the Wafi-Golpu Joint
Venture (WGJV) is 50%, for the Havieron Joint Venture is 70%, for the
Red Chris Joint Venture is 70% and for the Namosi Joint Venture is 72.88%.
Ore Reserves and Mineral Resources
Reporting Requirements
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 JORC Code
and that Newcrest’s Ore Reserves and Mineral Resources 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 TSX, including the
requirements of 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, Red Chris and Wafi-Golpu.
JORC and CIM Comparison
This section of the Annual Report has been prepared in accordance with
the JORC Code.
Mineral Resources and Ore Reserves are classified using the JORC Code.
The confidence categories assigned under the JORC Code were reconciled
to the confidence categories in the Canadian Institute of Mining, Metallurgy
and Petroleum (CIM) Definition Standards on Mineral Resources and
Mineral Reserves, May 2014. As the confidence category definitions are the
same, no modifications to the confidence categories were required.
There are differences in terminology from JORC compared to the CIM
Definition Standards. The term “Ore Reserves” in the JORC Code is
equivalent to “Mineral Reserves” using the CIM Definition Standards, and
the term “Proved Ore Reserves” in the JORC Code is equivalent to “Proven
Mineral Reserves” using the CIM Definition Standards. There are no other
material differences between JORC and the CIM Definition Standards.
Note that NI 43-101 reporting requirements do not permit Inferred
Mineral Resources to be added to other Mineral Resource categories.
Therefore, Measured and Indicated Mineral Resources have been
reported separately from Inferred Mineral Resources.
Mineral Resources that are not Ore Reserves do not have demonstrated
economic viability. Due to lower certainty, the inclusion of Mineral
Resources should not be regarded as a representation by Newcrest that
such amounts can necessarily be totally economically exploited, and
investors are cautioned not to place undue reliance upon such figures.
Therefore, no assurances can be given that the estimates of Mineral
Resources presented in this section of the Annual Report will be recovered
at the tonnages and grades presented, or at all.
Newcrest Annual Report 2022 31
Professional
Membership
MAIG
FAusIMM
FAusIMM
FAusIMM
MMSA (QP)
MAusIMM
FAusIMM
FAusIMM
FAusIMM
MMSA (QP)
FAusIMM
MAIG
Table 4 – Competent and Qualified Persons
Property
Deposit
Cadia
Telfer
Cadia East Underground, Ridgeway Underground,
Cadia Extended Underground, Big Cadia and Cadia Hill Stockpiles
Cadia East Underground
Ridgeway Underground
Telfer Open Pit Stockpiles, West Dome Open Pit, Telfer
Underground, Havieron, Satellite Deposits, Camp Dome
and O’Callaghans
Telfer Open Pit Stockpiles, and West Dome Open Pit
Telfer Underground
Accountability
Competent and
Qualified Person
Mineral Resources
Luke Barbetti
Ore Reserves
Ore Reserves
Ian Austen
Geoff Newcombe
Mineral Resources
Peter Morgan
Ore Reserves
Ore Reserves
Brett Swanson
Brad Cook
(Competent Person) and
Mark Kaesehagen (QP)
Havieron
Ore Reserves
Pasqualino Manca
Red Chris
Open Pit, Open Pit Stockpiles and Underground
Mineral Resources
Rob Stewart
Open Pit and Stockpiles
Underground
Lihir
Open Pit and Stockpiles
WGJV
Golpu
Wafi and Nambonga
Namosi JV
Waisoi and Wainaulo
1. Employed by Harmony Gold Mining Corporation Ltd.
NI 43-101 Technical Reports
Ore Reserves
Ore Reserves
Brett Swanson
Michael Sykes
Mineral Resources
Lauren Elliott
Ore Reserves
Christopher Chiang
FAusIMM
Mineral Resources
David Finn
Ore Reserves
Pasqualino Manca
Mineral Resources
Greg Job 1
Mineral Resources
Vik Singh
MAIG
FAusIMM
FAusIMM
FAusIMM
In connection with the TSX Listing, Technical Reports have been prepared in accordance with NI 43-101 for the following operations and projects,
which are Newcrest’s material mineral properties for the purposes of Canadian securities laws:
– Cadia Operations, New South Wales, Australia, NI 43-101 Technical Report, Report effective date 30 June 2020.
– Lihir Operations, Aniolam Island, Papua New Guinea, NI 43-101 Technical Report, Report effective date 30 June 2020.
– Wafi-Golpu Project, Morobe Province, Papua New Guinea, NI 43-101 Technical Report, Report effective date 30 June 2020.
– Red Chris Operations British Columbia, Canada NI 43-101 Technical Report, Report effective date 30 June 2021.
These reports (collectively, the Technical Reports) can be found on Newcrest’s website at www.newcrest.com and on Newcrest’s profile on the System for
Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com.
32
Mineral Resources and Ore Reserves continued
Table 5 – 30 June 2022 Gold and Copper Measured and Indicated Mineral Resources 1
Measured Resources
Indicated Resources
Jun 2022 Measured
and Indicated Resources
Dec 2021 Measured
and Indicated Resources
Tonnes
Grade
Tonnes
Grade
Tonnes
Grade
Contained
Metal
Tonnes
Grade
Contained
Metal
Mt
(Dry)
Au
(g/t)
Cu
(%)
Mt
(Dry)
Au
(g/t)
Cu
(%)
Mt
(Dry)
Au
(g/t)
Cu
(%)
Au
(MOz)
Cu
(Mt)
Mt
(Dry)
Au
(g/t)
Cu
(%)
Au
(MOz)
Cu
(Mt)
Operational Provinces
Cadia Province
Cadia East
Underground
Ridgeway
Underground
Cadia Extended
Underground
–
–
–
–
–
–
–
–
–
Cadia Hill Stockpiles
32
0.30
0.13
2,600
0.35
0.26
2,600
0.35
0.26
30
6.8
2,600
0.36
0.26
30
6.9
110
0.57
0.30
110
0.57
0.30
1.9
0.31
110
0.57
0.30
1.9
0.31
80
–
0.35
0.19
–
–
80
32
0.35
0.30
0.19
0.13
0.89
0.31
0.15
0.041
80
32
0.35
0.30
0.19
0.13
0.89
0.31
0.15
0.041
Telfer Province
Telfer Open Pit
Stockpiles
West Dome Open
Pit 2
Telfer Underground 3
Havieron 4
Satellites Deposits
O’Callaghans
Red Chris Province
Red Chris Open Pit 5
Red Chris Open
Pit Stockpiles 5
Red Chris
Underground 6
Lihir Province
Lihir Open Pit
8.1
0.42
0.10
13
0.35
0.046
21
0.37
0.068
0.26
0.014
19
0.39
0.066
0.24
0.013
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.65
0.064
0.65
0.064
0.63
0.061
76
35
28
0.44
69
76
35
28
0.46
0.51
–
0.44
0.29
69
1.8
3.2
2.9
–
0.46
0.51
1.6
2.0
2.9
0.049
0.16
0.14
–
–
0.040
0.29
–
0.20
78
24
15
0.44
69.0
1.8
3.2
2.9
–
1.6
1.5
1.9
0.048
0.11
0.099
0.43
0.64
–
0.040
–
0.29
–
0.20
1.8
3.9
2.9
–
240
0.30
0.36
240
0.30
0.36
2.4
0.88
290
0.28
0.34
2.6
0.97
9.5
0.15
0.24
–
–
–
9.5
0.15
0.24
0.047
0.023
10
0.16
0.24
0.053
0.025
–
–
–
–
Lihir Stockpiles
58
1.9
Non–Operational Provinces
WGJV
Golpu 7
Wafi 7
Namosi JV
Waisoi 8
–
–
–
–
–
–
Total Measured and
Indicated Mineral Resources9
–
–
–
–
–
–
670
0.46
0.40
670
0.46
0.40
10
2.7
670
0.46
0.40
10
2.7
510
14
2.3
1.5
690
110
0.71
1.7
–
–
1.1
–
510
72
2.3
1.8
690
110
0.71
1.7
–
–
1.1
–
1,800
0.11
0.35
1,800
0.11
0.35
Au
7,100
0.53
–
Cu 6,500
–
0.39
37
4.2
16
5.7
6.4
120
–
–
–
510
71
2.3
1.9
7.5
–
690
110
0.71
1.7
–
–
1.1
–
6.3
1,800
0.11
0.35
–
7,200
0.53
–
25 6,500
–
0.39
38
4.2
16
5.7
6.4
120
–
–
–
7.5
–
6.3
–
25
1. All data reported here is on a 100% asset basis, with Newcrest’s attributable interest shown against each asset within footnotes.
2. Updated Mineral Resource estimate informed by remodelling, interpretation and classification based on infill and extensional drilling. Studies are in progress to convert
Mineral Resources to Ore Reserves.
3. Updated Mineral Resource estimate informed by remodelling, interpretation and classification based on infill and extensional drilling.
4. Updated Mineral Resource estimate informed by remodelling, interpretation and classification based on infill and extensional drilling. Newcrest attributable share 70%.
5. Changes due to updated economic assumptions. Newcrest attributable share 70%.
6. Newcrest attributable share 70%.
7.
In March 2021, the Governor of the Morobe Province commenced a judicial review application against the State of PNG, challenging the December 2020 grant of the
environment permit for the Wafi-Golpu Project. The review is still to be heard and determined. Newcrest attributable share 50%.
8. Newcrest attributable share 72.88%.
9. Mineralisation is not coincident therefore total tonnages differ for each metal reported.
Newcrest Annual Report 2022 33
Table 6 – 30 June 2022 Gold and Copper Inferred Mineral Resources 1
Jun 2022
Inferred Resources
Dec 2021
Inferred Resources
Tonnes
Mt
(Dry)
Grade
Contained
Metal
Au
(g/t)
Cu
(%)
Au
(MOz)
Cu
(Mt)
Tonnes
Mt
(Dry)
Grade
Contained
Metal
Au
(g/t)
Cu
(%)
Au
(MOz)
Cu
(Mt)
500
41
11
1.5
10
57
4.4
14
9.0
8.5
180
0.24
0.38
0.70
0.17
0.40
0.52
3.8
0.50
0.25
0.85
0.17
0.058
0.79
0.079
0.038
0.0012
1.5
1.4
1.1
–
–
0.25
0.32
0.46
0.14
–
0.37
0.24
0.30
0.30
0.47
2.6
0.16
–
–
0.047
0.082
–
0.052
0.022
0.069
0.026
1.8
0.54
500
41
11
2.2
17
37
4.4
14
9.0
11
180
0.24
0.38
0.70
0.17
0.40
0.52
3.8
0.50
0.25
0.85
0.17
0.058
0.70
0.066
0.050
0.0015
1.4
1.4
1.1
–
–
0.23
0.32
0.43
0.18
–
0.37
0.24
0.27
0.30
0.79
1.7
0.16
–
–
0.073
0.067
–
0.052
0.022
0.082
0.030
1.8
0.54
67
2.3
–
4.9
–
67
2.3
–
4.9
–
140
37
48
170
290
1,300
1,500
0.63
1.4
0.69
0.081
–
0.50
0.85
–
0.20
0.27
0.43
–
–
0.32
2.8
1.6
1.1
1.2
–
0.094
0.45
0.46
–
21
–
1.2
–
4.8
140
37
48
170
290
1,300
1,500
0.63
1.4
0.69
0.081
–
0.49
0.85
–
0.20
0.27
0.43
–
–
0.33
2.8
1.6
1.1
1.2
–
0.094
0.45
0.46
–
20
–
1.2
–
4.8
Operational Provinces
Cadia Province
Cadia East Underground
Ridgeway Underground
Big Cadia
Telfer Province
West Dome Open Pit 2
Telfer Underground 3
Havieron 4
Satellites Deposits
Camp Dome
O’Callaghans
Red Chris Province 5
Red Chris Open Pit 6
Red Chris Underground
Lihir Province
Lihir Open Pit
Non–Operational Provinces
WGJV 7
Golpu
Wafi
Nambonga
Namosi JV 8
Waisoi
Wainaulo
Total Inferred Mineral
Resources 9
Au
Cu
1. All data reported here is on a 100% asset basis, with Newcrest’s attributable interest shown against each asset within footnotes.
2. Updated Mineral Resource estimate informed by remodelling, interpretation and classification based on infill and extensional drilling.
3. Updated Mineral Resource estimate informed by remodelling, interpretation and classification based on infill and extensional drilling.
4. Updated Mineral Resource estimate informed by remodelling, interpretation and classification based on infill and extensional drilling. Newcrest attributable share 70%.
5. Newcrest attributable share 70%.
6. Changes due to updated economic assumptions.
7.
In March 2021, the Governor of the Morobe Province commenced a judicial review application against the State of PNG, challenging the December 2020 grant of the
environment permit for the Wafi-Golpu Project. The review is still to be heard and determined. Newcrest attributable share 50%.
8. Newcrest attributable share 72.88%.
9. Mineralisation is not coincident therefore total tonnages differ for each metal reported.
34
Mineral Resources and Ore Reserves continued
Table 7 – 30 June 2022 Silver and Molybdenum Measured and Indicated Mineral Resources 1
Measured Resources
Indicated Resources
Jun 2022 Measured
and Indicated Resources
Dec 2021 Measured
and Indicated Resources
Tonnes
Grade
Tonnes
Grade
Tonnes
Grade
Contained
Metal
Tonnes
Grade
Contained
Metal
Mt
(Dry)
Ag
(g/t)
Mo
(ppm)
Mt
(Dry)
Ag
(g/t)
Mo
(ppm)
Mt
(Dry)
Ag
(g/t)
Mo
(ppm)
Ag
(MOz)
Mo
(Mt)
Mt
(Dry)
Ag
(g/t)
Mo
(ppm)
Ag
(MOz)
Mo
(Mt)
Operational Provinces
Cadia Province
Cadia East Underground
Ridgeway Underground
Non-Operational Provinces
WGJV 2
Golpu
Wafi
Total Measured and Indicated
Mineral Resources 3
–
–
–
–
–
–
–
–
–
–
–
–
2,600
110
0.65
0.74
690
110
1.3
4.4
–
–
–
66
2,600
110
0.65
0.74
66
–
55
2.5
0.17
2,600
0.65
0.74
66
–
55
2.5
0.17
–
110
690
110
1.3
4.4
Ag 3,500
0.89
–
–
–
28
15
100
690
110
1.3
4.4
3,500
0.89
–
–
–
28
15
100
–
–
–
Mo 2,600
–
66
–
0.17
2,600
–
66
–
0.17
Table 8 – 30 June 2022 Silver and Molybdenum Inferred Mineral Resources 1
Jun 2022
Inferred Resources
Dec 2021
Inferred Resources
Tonnes
Grade
Contained
Metal
Tonnes
Grade
Contained
Metal
Mt
(Dry)
Ag
(g/t)
Mo
(ppm)
Ag
(MOz)
Mo
(Mt)
Mt
(Dry)
Ag
(g/t)
Mo
(ppm)
Ag
(MOz)
Mo
(Mt)
Operational Provinces
Cadia Province
Cadia East Underground
Ridgeway Underground
Non–Operational Provinces
WGJV 2
Golpu
Wafi
Total Inferred
Mineral Resources 3
500
41
0.47
0.43
25
–
7.5 0.012
0.56
500
41
0.47
0.43
25
–
7.5 0.012
0.56
140
37
710
500
Ag
Mo
1.1
4.2
0.77
–
–
–
4.6
5.0
18
140
37
710
1.1
4.2
0.77
–
–
–
4.6
5.0
18
–
25
– 0.012
500
–
25
– 0.012
–
–
–
–
–
–
–
–
–
–
–
–
1. All data reported here is on a 100% asset basis, with Newcrest’s attributable interest shown against each asset within footnotes.
2.
In March 2021, the Governor of the Morobe Province commenced a judicial review application against the State of PNG, challenging the December 2020 grant of the
environment permit for the Wafi-Golpu Project. The review is still to be heard and determined. Newcrest attributable share 50%.
3. Mineralisation is not coincident therefore total tonnages differ for each metal reported.
Newcrest Annual Report 2022 35
Table 9 – 30 June 2022 Polymetallic Measured and Indicated Mineral Resources
Jun 2022 Polymetallic Measured
and Indicated Mineral Resources
Dec 2021 Polymetallic Measured
and Indicated Mineral Resources
Tonnes
Grade
Contained Metal
Tonnes
Grade
Contained Metal
Mt
(Dry)
1
WO3
(%)
Zn
(%)
Pb
(%)
WO3
(Mt)
Zn
(Mt)
Pb
(Mt)
Mt
(Dry)
WO3
(%)
Zn
(%)
Pb
(%)
WO3
(Mt)
Zn
(Mt)
Pb
(Mt)
O’Callaghans
Measured
Indicated
Total Measured and
Indicated Mineral Resources
–
69
–
–
–
–
–
–
0.34
0.53
0.26
0.24
0.36
0.18
–
69
–
–
–
–
–
–
0.34
0.53
0.26
0.24
0.36
0.18
69
0.34
0.53
0.26
0.24
0.36
0.18
69
0.34
0.53
0.26
0.24
0.36
0.18
Table 10 – 30 June 2022 Polymetallic Inferred Mineral Resources
Jun 2022 Polymetallic Inferred Mineral Resources
Dec 2021 Polymetallic Inferred Mineral Resources
Tonnes
Grade
Contained Metal
Tonnes
Grade
Contained Metal
Mt
(Dry)
WO3
(%)
9.0
9.0
0.25
0.25
Zn
(%)
0.19
0.19
Pb
(%)
0.11
0.11
WO3
(Mt)
Zn
(Mt)
Pb
(Mt)
Mt
(Dry)
WO3
(%)
0.023 0.017 0.0097
0.023 0.017 0.0097
9.0
9.0
0.25
0.25
Zn
(%)
0.19
0.19
Pb
(%)
0.11
0.11
WO3
(Mt)
Zn
(Mt)
Pb
(Mt)
0.023 0.017 0.0097
0.023 0.017 0.0097
O’Callaghans
Inferred
Total Inferred Mineral Resources
1. WO3 Tungsten Trioxide.
36
Mineral Resources and Ore Reserves continued
Table 11 – 30 June 2022 Gold and Copper Ore Reserves 1
Proved Reserves
Probable Reserves
Jun 2022 Proved
and Probable Reserves
Dec 2021 Proved
and Probable Reserves
Tonnes
Grade
Tonnes
Grade
Tonnes
Grade
Contained
Metal
Tonnes
Grade
Contained
Metal
Mt
(Dry)
Au
(g/t)
Cu
(%)
Mt
(Dry)
Au
(g/t)
Cu
(%)
Mt
(Dry)
Au
(g/t)
Cu
(%)
Au
(Moz)
Cu
(Mt)
Mt
(Dry)
Au
(g/t)
Cu
(%)
Au
(Moz)
Cu
(Mt)
Operational Provinces
Cadia Province
Cadia East
Underground 2
Ridgeway
Underground 3
Telfer Province
Telfer Open Pit
Stockpiles
West Dome Open Pit 4
Telfer Underground 5
Havieron 6
Red Chris Province
Red Chris Open Pit 7
Red Chris Open Pit
Stockpiles 8
Red Chris
Underground 9
Lihir Province
Lihir Open Pit 10
Lihir Stockpiles 11
Non-Operational Provinces
WGJV
Golpu 12
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
58
–
1.9
–
–
–
–
–
–
–
–
–
–
1,200
0.42
0.29
1,200
0.42
0.29
16
3.5
1,300
0.42
0.29
17
3.7
–
80
0.54
0.28
80
0.54
0.28
1.4
0.23
80
0.54
0.28
1.4
0.23
8.2
20
2.5
14
0.43
0.087
0.60 0.060
1.7
3.7
0.68
0.54
8.2
20
2.5
14
0.43 0.087
0.11 0.0071
0.60 0.060
0.39 0.012
1.7
3.7
0.68
0.54
0.14 0.017
1.6 0.073
8.8
32
3.7
14
0.43 0.086
0.12 0.0076
0.58 0.052
0.60 0.017
1.1
3.7
0.40
0.54
0.14 0.015
1.6 0.073
53
0.39
0.45
53
0.39
0.45
0.68
0.24
60
0.39
0.45
0.74
0.27
9.5
0.15
0.24
9.5
0.15
0.24
0.047 0.023
10.0
0.16
0.24
0.053 0.025
410
0.55
0.45
410
0.55
0.45
7.2
1.8
410
0.55
0.45
7.2
1.8
230
14
2.4
1.5
–
–
230
72
2.4
1.8
–
–
18
4.2
11
61
–
–
–
230
71
2.4
1.9
–
–
4.9
400
–
11
2,600
2,300
0.86
0.75
1.2
–
–
0.48
18
4.2
11
63
–
–
–
4.9
–
11
–
–
–
400
0.86
1.2
400
Au 2,500
0.86
0.76
1.2
–
Total Ore Reserves 13
Cu 2,200
–
0.49
Inventory decrease due to updated metallurgical recovery and increased breakeven cut-off grade. PC1-2 Feasibility Study in progress.
1. All data reported on a 100% asset basis, with Newcrest’s attributable interest shown against each asset within footnotes.
2.
3. Ridgeway is currently on care and maintenance subject to further studies, all necessary approvals, permits, internal and regulatory requirements and further works.
4. Ore Reserve updates in progress.
5. Changes in Ore Reserves due to Mineral Resource model updates partially offset by increased cost assumptions.
6. A Feasibility Study for Havieron is currently in progress and planned for completion in the December 2022 quarter. Newcrest attributable share 70%.
7. Changes due to updated economic assumptions. Newcrest attributable share 70%.
8. Newcrest attributable share 70%.
9. Red Chris Block Cave Feasibility Study is in progress and remains on track for completion in the second half of FY23. Newcrest attributable share 70%.
10. No changes to input assumptions applied in December 2021. The Feasibility Study for Phase 14A is due for completion in the December 2022 quarter.
11. No changes to input assumptions applied in December 2021.
12. In March 2021, the Governor of the Morobe Province commenced a judicial review application against the State of PNG, challenging the December 2020 grant of the
environment permit for the Wafi-Golpu Project. The review is still to be heard and determined. Newcrest attributable share 50%.
13. Mineralisation is not coincident therefore total tonnages differ for each metal reported.
Newcrest Annual Report 2022 37
Table 12 – 30 June 2022 Silver and Molybdenum Ore Reserves
Proved Reserves
Probable Reserves
Jun 2022 Proved and
Probable Reserves
Dec 2021 Proved and
Probable Reserves
Tonnes
Grade
Tonnes
Grade
Tonnes
Grade
Contained
Metal
Tonnes
Grade
Contained
Metal
Mt
(Dry)
Ag
(g/t)
Mo
(ppm)
Mt
(Dry)
Ag
(g/t)
Mo
(ppm)
Mt
(Dry)
Ag
(g/t)
Mo
(ppm)
Ag
(MOz)
Mo
(Mt)
Mt
(Dry)
Ag
(g/t)
Mo
(ppm)
Ag
(Moz)
Mo
(Mt)
Operational Provinces
Cadia Province
Cadia East
Underground 1
Ridgeway
Underground 2
–
–
–
–
–
–
Total Ore Reserves 3
Mo
1,200
–
82
– 0.099
1,200
0.70
82
1,200
0.70
82
27 0.099
1,300
0.70
80
0.66
–
80
Ag 1,300
0.66
0.69
–
–
1.7
29
–
–
83
–
–
83
29
0.11
1.7
30
–
–
–
0.11
80
1,300
1,300
0.66
0.70
–
Inventory decrease due to updated metallurgical recovery and increased breakeven cut-off grade. PC 1-2 Feasibility Study in progress.
1.
2. Ridgeway is currently on care and maintenance subject to further studies, all necessary approvals, permits, internal and regulatory requirements and further works.
3. Mineralisation is not coincident therefore total tonnages differ for each metal reported.
38
Corporate Governance
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.
Newcrest Annual Report 2022 39
Directors’ Report
Directors’ Report
Operating and Financial Review
Remuneration Report
Consolidated Financial Statements
Independent Auditor’s Report
40
45
92
125
184
40
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 2022.
Directors
The Directors of the Company during the year ended 30 June 2022, 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 Tomsett
Chairman (1)
Sandeep Biswas
Managing Director and Chief Executive Officer
Philip Aiken AM
Non-Executive Director
Philip Bainbridge
Non-Executive Director (appointed 1 April 2022)
Roger Higgins
Non-Executive Director
Sally-Anne Layman
Non-Executive Director
Jane McAloon
Non-Executive Director (appointed on 1 July 2021)
Vickki McFadden
Non-Executive Director
Peter Hay
Non-Executive Director and Non-Executive Chairman (2)
Gerard Bond
Finance Director and Chief Financial Officer (3)
(1) Appointed as Non-Executive Chairman on 10 November 2021.
(2) Retired as Non-Executive Director and Non-Executive Chairman on 10 November 2021.
(3) Ceased as Finance Director on 8 December 2021 and as Chief Financial Officer on 3 January 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
The profit after tax attributable to Newcrest shareholders
(‘Statutory Profit’) for the year ended 30 June 2022 was US$872 million
(2021: US$1,164 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.
Dividends
The following dividends of the Company were paid during the year:
– Final dividend for the year ended 30 June 2021 of US 40 cents per
share, amounting to US$327 million, was paid on 30 September 2021.
This dividend was fully franked.
– Interim dividend for the year ended 30 June 2022 of US 7.5 cents
per share, amounting to US$61 million, was paid on 31 March 2022.
This dividend was fully franked.
The Directors have determined to pay a final dividend for the year
ended 30 June 2022 of US 20 cents per share, which will be fully franked.
The dividend will be paid on 29 September 2022.
Subsequent Events
Subsequent to year end, the Directors have determined to pay a final
dividend for the year ended 30 June 2022 of US 20 cents per share, which
will be fully franked. The dividend will be paid on 29 September 2022.
The total amount of the dividend is US$179 million. This dividend has not
been provided for in the 30 June 2022 financial statements.
There have been no other matters or events that have occurred subsequent
to 30 June 2022 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.
Options
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 35 for the number of Performance Rights at year end.
Newcrest Annual Report 2022 41
Non-Audit Services
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.
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 2022 financial year and 2021 comparative year is shown in the
following table.
Category
Level 2
Level 3
Level 4
2022 – Number of incidents (1)
2021 – Number of incidents
19
6
0
0
0
0
(1) The majority of environmental incidents during the 2022 financial year related
to air (dust and odour) or noise emissions at Cadia, process material spills
contained within the footprint of the mine or process plant at Red Chris, along
with incidents related to water abstraction at Lihir.
During the year, Ernst & Young (external auditor to the Company), has
provided other services in addition to the statutory audit, as disclosed
in Note 37 to the financial statements. These services included
assurance and agreed-upon-procedure services relating to transaction
accounting services, sustainability assurance services and audit related
assurance 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 Chairman prior to engagement to ensure they did not
impact on the impartiality and objectivity of the auditor;
– all audit related or other assurance services with an estimated cost
of greater than US$100,000 have been approved by the Audit and
Risk Committee Chairman prior to engagement to ensure they did
not impact on the impartiality and objectivity of the auditor. The Chief
Financial Officer has informed the Chairman of all audit-related or
other assurance services with an estimated cost below US$100,000;
– none of the services undermine the general principles relating to
auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants, as they did not involve reviewing or auditing
the auditor’s own work, acting in a management or decision-making
capacity for the Company, acting as an advocate for the Company or
jointly sharing economic risks and rewards; and
– Ernst & Young has individually confirmed, prior to each service
commencing, that the service does not create any independence issues
with respect to the Corporations Act 2001. They have also provided a
copy of their Auditor’s Independence Declaration, as required by the
Corporations Act 2001, for inclusion in the Annual Report.
Auditor Independence
A copy of the Auditor’s Independence Declaration, as required by the
Corporations Act 2001, is included after this report.
Currency
All references to dollars in the Directors’ Report and the Financial Report
are references to US dollars ($ or US$) unless otherwise specified.
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.
42
Indemnification and Insurance of Directors
and Officers
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.
Gerard Bond
Finance Director and Chief Financial Officer
BComm, Chartered Accountant, Grad Dip App Fin & Investment, F Fin, 53
Mr Bond was appointed to the Board as an Executive Director in
February 2012, after joining Newcrest as Finance Director and Chief
Financial Officer in January 2012. Mr Bond ceased as a Director on
8 December 2021 and ceased as Chief Financial Officer effective
3 January 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
– Alternate Director of the World Gold Council (from 2017)
Information on Company Secretary and Deputy
Company Secretary
Information on Directors
Maria (Ria) Sanz Perez
Details of the Directors’ qualifications, experience and special
responsibilities are set out on pages 24 to 26. These details have been
updated since 19 August 2022.
Information on Former Directors (1)
Peter Hay
Independent Non-Executive Chairman
LLB, FAICD, 71
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 and resigned effective from the end of the Annual General
Meeting on 10 November 2021. Mr Hay was also the Chairman of the
Nominations Committee.
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.
Skills, experience and expertise
Current Directorships/Appointments
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)
– Director of Australian Resources and Energy Employer Association
(AREEA) (from 2022)
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.
Former Listed Directorships (last 3 years)
– Chairman of Vicinity Centres (2015–2019)
Newcrest Annual Report 2022Directors’ Report continued 43
Directors’ Interests
As at the date of this report, the interest of each Director in the shares and rights of Newcrest Mining Limited were:
Director
Peter Tomsett
Sandeep Biswas
Philip Aiken AM
Philip Bainbridge
Roger Higgins
Sally-Anne Layman
Jane McAloon
Vickki McFadden
Former Directors
Peter Hay (2)
Gerard Bond (3)
Number of
Ordinary Shares
42,143
718,684
19,187
4,310
13,675
10,510
6,132
11,747
58,459
172,520
Nature of Interest
Indirect
Direct and Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Direct and Indirect
Direct and Indirect
Number of Rights
Over Ordinary Shares(1)
Nature of Interest
–
457,962
–
–
–
–
–
–
–
42,999
–
Direct
–
–
–
–
–
–
–
Direct
(1) Represents unvested performance rights granted pursuant to the Company’s Long Term Incentive plans in the 2020, 2021 and 2022 financial years for Sandeep Biswas
and in the 2020 and 2021 financial years for Gerard Bond.
(2) Number as at his retirement date of 10 November 2021.
(3) Numbers as at his cessation date of 3 January 2022.
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
Human Resources &
Remuneration
Safety &
Sustainability
Nominations
Special Board
Committees(1)
Committees of the Board
Director
Peter Tomsett (2)
Sandeep Biswas
Philip Aiken AM
Philip Bainbridge (3)
Roger Higgins
Sally-Anne Layman
Jane McAloon (4)
Vickki McFadden (5)
Former Directors
Peter Hay (6)
Gerard Bond (7)
A
11
11
11
2
11
11
11
11
6
7
B
11
11
11
2
11
11
11
11
6
7
A
2
–
–
–
–
7
5
7
–
–
B
2
–
–
–
–
7
5
7
–
–
A
–
–
6
–
6
–
6
6
–
–
B
–
–
6
–
6
–
6
6
–
–
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.
A
1
–
4
1
4
4
–
–
–
–
B
1
–
4
1
4
4
–
–
–
–
A
5
–
5
–
–
–
–
2
3
–
B
5
–
5
–
–
–
–
2
3
–
A
1
2
–
–
–
–
–
2
1
1
B
1
2
–
–
–
–
–
2
1
1
(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) Peter Tomsett was appointed as Chairman and ceased to be a member of the Audit and Risk Committee and Safety and Sustainability Committee effective from the
end of the Annual General Meeting on 10 November 2021.
(3) Philip Bainbridge was appointed as a Director and a member of the Safety and Sustainability Committee effective 1 April 2022.
(4) Jane McAloon was appointed as a Director and member of the Human Resources and Remuneration Committee effective 1 July 2021 and as a member of the Audit and
Risk Committee effective 10 November 2021.
(5) Vickki McFadden was appointed as a member of the Nominations Committee effective 10 November 2021.
(6) Peter Hay resigned as a Director and Chairman effective from the end of the Annual General Meeting on 10 November 2021.
(7) Gerard Bond ceased as a Director effective 8 December 2021 and ceased as Chief Financial Officer effective 3 January 2022.
Details of the functions and memberships of the Committees of the Board are presented in Newcrest’s Corporate Governance Statement and on
Newcrest’s website.
44
Remuneration Report
The Remuneration Report is set out on pages 92 to 123 and forms part of this Directors’ Report.
This report is signed in accordance with a resolution of the Directors.
Peter Tomsett
Chairman
19 August 2022
Melbourne
Sandeep Biswas
Managing Director and Chief Executive Officer
Newcrest Annual Report 2022Directors’ Report continued
45
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 2021.
Section 1 Endnotes are located at the end of the section.
1. Summary of Results for the 12 Months ended 30 June 2022 1,2,3,4,5
Key points
– Gold production of 1.96 million ounces 6
– Copper production of 120.7 thousand tonnes
– Statutory profit 7 and Underlying profit 8 of $872 million
– All-In Sustaining Cost (AISC) 6,8 of $1,043 per ounce 9, delivering an AISC margin 10 of $732 per ounce
– Cash flows from operating activities of $1,680 million
– Free cash flow before M&A activity 8 of $229 million
– Free cash flow 8 of negative $868 million (including M&A activity)
Advancing Newcrest’s global organic growth portfolio
– Newcrest Board approved the Cadia PC1–2, Red Chris Block Cave, Havieron Stage 1 and Lihir Phase 14A Pre-Feasibility Studies to the Feasibility Stage
with works advancing on all projects 11
– Approval received for Cadia to increase its permitted processing capacity to 35Mtpa 12
– West Dome Stage 5 cutback underway, supporting the continuity of operations at Telfer
– Commissioning of the Cadia Molybdenum (Moly) Plant completed with first concentrate shipment delivered in June 2022
– The two-stage plant expansion as part of the Cadia Expansion Project and the Lihir Front End Recovery Project are on track for completion by the end
of September 2022 13
– Cadia PC1–2 Feasibility Study is nearing completion and is expected to be released with the September 2022 quarterly report 13
Successful acquisition of the high grade, Tier 1 Brucejack mine in British Columbia, Canada 14
– Immediate operational and financial contribution, with Brucejack delivering an EBITDA⁸ of $109 million and Free cash flow of $88 million in the
four-month ownership period 15
– Synergy expectations raised to C$20–30 million (~US$16–24 million) per annum with further opportunities being pursued 16
Robust balance sheet and significant liquidity to fund growth
– Balance sheet remains well within financial policy targets, with net debt of $1.3 billion, leverage ratio of 0.6 times and a gearing ratio of 10.2%
– Significant liquidity with $2.4 billion in cash and committed undrawn bank facilities
Delivering strong shareholder returns
– Total dividends paid in the current period of US 47.5 per share
– Fully franked final dividend of US 20 cents per share
46
1. Summary of Results for the 12 Months ended 30 June 2022 1,2,3,4,5 continued
Endnote
UoM
2022
2021
Change
Change %
For the 12 months ended 30 June
TRIFR
Group production – gold
Group production – copper
Revenue
EBITDA
EBIT
Statutory profit
Underlying profit
Cash flow from operating activities
Free cash flow before M&A activity
Free cash flow*
EBITDA margin
EBIT margin
All-In Sustaining Cost
All-In Sustaining margin
Realised gold price
Realised copper price
Average exchange rate
Average exchange rate
Average exchange rate
Closing exchange rate
Earnings per share (basic)
Earnings per share (diluted)
Dividends paid per share
Cash and cash equivalents
Net debt or (net cash)
Leverage ratio
Gearing
ROCE
Interest coverage ratio
Total equity
17
6
8
8
7
8
8
8
6,8,9,18
10
19
19
8
8
8
mhrs
oz
t
US$m
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
3.9
1,956,182
120,650
4,207
2,054
1,304
872
872
1,680
229
(868)
48.8
31.0
1,043
732
1,797
4.36
0.7260
0.2843
0.7903
0.6889
103.4
103.1
47.5
565
1,325
0.6
10.2
11.4
37.6
11,665
2.3
2,093,322
142,724
4,576
2,443
1,770
1,164
1,164
2,302
1,125
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
1.6
(137,140)
(22,074)
(369)
(389)
(466)
(292)
(292)
(622)
(896)
(1,972)
(4.6)
(7.7)
132
(144)
1
0.70
(0.0207)
(0.0011)
0.0114
(0.0629)
(39.1)
(39.0)
15.0
(1,308)
1,501
0.7
12.0
(7.1)
(3.1)
1,541
70%
(7%)
(15%)
(8%)
(16%)
(26%)
(25%)
(25%)
(27%)
(80%)
(179%)
(9%)
(20%)
14%
(16%)
0%
19%
(3%)
(0%)
1%
(8%)
(27%)
(27%)
46%
(70%)
853%
(700%)
667%
(38%)
(8%)
15%
* Free cash flow in the current period includes the payment for the acquisition of Pretium Resources Inc. (Pretium) of $1,084 million (net of cash acquired).
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 47
Full year results
In line with its purpose of creating a brighter future for people through
safe and responsible mining, Newcrest delivered another twelve-month
period free of fatalities and reported a Total Recordable Injury Frequency
Rate (TRIFR) of 3.9 per million hours worked. Injury rates were 70% higher
than the prior period driven by minor hand injuries and other low severity
incidents. Newcrest is actively focused on enhancing safety behaviours with
the aim of ensuring all employees and contractors go home safely each day.
Newcrest continues to implement actions through its Respect@Work
program to enable everyone across its global workforce to feel safe,
respected and valued. In particular, a dedicated team has been established
to focus on actions to prevent and eliminate any form of sexual assault and
sexual harassment at Newcrest. In conjunction with Newcrest’s program
to promote inclusion, diversity and psychological safety across all of its
operations and locations, this is expected to support Newcrest’s aspiration of
a high-performing and inclusive culture where everyone can thrive and excel.
In the current period, Newcrest also progressed its sustainability
commitments. The A$20 million Community Support Fund continued
to benefit many communities with approximately 67 initiatives receiving
funding since its inception, with a total value spent of A$11.4 million as
at 30 June 2022. Initiatives ranged from immediate health assistance to
livelihood restoration and economic recovery across Papua New Guinea,
Australia, Canada (British Columbia), Ecuador and Fiji. A new A$10 million
Newcrest Sustainability Fund has been established to commence
in July 2022 which will be used to drive strategic social investments in
support of the United Nations Sustainable Development Goals.
The Group Net Zero Emissions Roadmap has identified key steps for
Newcrest to deliver its goal of net zero carbon emissions by 2050. Scoping
and planning of key trials and studies is currently underway. As previously
announced, Newcrest entered into a 15-year renewable Power Purchase
Agreement (PPA) to secure a significant portion of Cadia’s future projected
energy requirements from 2024. The Rye Park Wind Farm, which is the
underlying asset for the PPA, reached financial close during the period,
with construction of the project underway.
To date, Newcrest has not experienced any material COVID-19 related
disruptions to production. Some project activities have experienced a level
of disruption as a result of COVID-19 with efforts made to minimise their
impact on the overall cost and schedule. The operating cost of managing
COVID-19 risks in the current period was approximately $52 million
(of which $41 million related to Lihir), which included additional costs
related to flights, transport, rosters, leave, screening and testing (excludes
additional COVID-19 costs related to capital projects).
Newcrest’s gold production of 1.966 million ounces was 7% lower than the
prior period, which primarily reflects lower mill throughput at Cadia with
the planned replacement and upgrade of the SAG mill motor (completed in
November 2021) and the expected decline in grade. Gold production was
also lower at Lihir which reflects the impact of major maintenance activity,
lower autoclave availabilities and unplanned downtime. This was partially
offset by the inclusion of four months of production from Brucejack15.
Copper production of 120.7 thousand tonnes was 15% lower than the prior
period largely driven by the planned replacement and upgrade of the
SAG mill motor at Cadia.
Statutory profit and Underlying profit were both $872 million in the
current period.
Underlying profit of $872 million was $292 million lower than the prior
period primarily due to lower gold and copper sales volumes, largely driven
by lower production at Cadia and Lihir. Operating costs were impacted
by the acute inflationary pressures experienced globally across a range of
input costs such as oil and gas, steel and labour as well as higher shipping
costs due to the global tightness and challenges in the sea freight market.
Newcrest continues to collaborate with its suppliers to identify ways to
manage these cost pressures.
These impacts to Underlying profit were partially offset by a higher realised
copper price, a lower income tax expense as a result of the Company’s
decreased profitability in the current period, the receipt of a $75 million
insurance settlement in relation to the Cadia Northern Tailings Storage
Facility (NTSF) embankment slump on 9 March 2018, the favourable impact
on operating costs (including depreciation) from the weakening of the
Australian dollar against the US dollar, an increase in Newcrest’s share of
profits from its associates and lower volume linked costs such as royalties.
Newcrest’s AISC of $1,043 per ounce6 was 14% higher than the prior
period, primarily due to the proportionately lower contribution of low cost
Cadia production during the replacement and upgrade of the SAG mill
motor in the current period, higher sustaining capital expenditure at Lihir
and Cadia, an increase in production stripping activity at Telfer, Red Chris
and Lihir and higher site costs at Lihir and Red Chris.
Newcrest’s Free cash flow of negative $868 million was lower than the
prior period, primarily due to the acquisition of Pretium. ‘Free cash flow
before M&A activity’ of $229 million was 80% lower than the prior period
reflecting lower EBITDA, unfavourable net working capital movements (of
which ~$100m was related to the acquisition of Pretium) and increased
investment in major capital projects at Cadia, Red Chris, Havieron and
Lihir. These impacts were partially offset by the benefit of a higher realised
copper price, the Free cash flow contribution from Brucejack15, the receipt
of an insurance settlement related to the Cadia NTSF embankment slump,
the favourable impact on costs from a weaker Australian dollar, increased
receipts from the Fruta del Norte finance facilities and proceeds from the
sale of the royalty portfolio.
On 25 February 2022, Newcrest received the final regulatory approval for
the acquisition of Pretium, the owner of the Tier 1 Brucejack mine in the
highly prospective Golden Triangle region of British Columbia, Canada.
Brucejack began commercial production in July 2017 and is one of the
highest-grade operating gold mines in the world. Newcrest completed
the acquisition of Pretium on 9 March 2022.
Brucejack delivered immediate operational and financial contribution,
including an additional 114 thousand ounces of gold production,
EBITDA of $109 million and Free cash flow of $88 million for the
four-month ownership period15. A three-phase transformation program
commenced during the current period with a range of initiatives in
progress to maximise the long-term potential and value of the Brucejack
mine and associated district.
In the current period, the Newcrest Board approved the progression of the
Cadia PC1–2, Red Chris Block Cave, Havieron Stage 1 and Lihir Phase 14A
Pre-Feasibility Studies (PFS) to the Feasibility Stage with works advancing
on all projects. The Cadia PC1–2 Feasibility Study (FS) is nearing
completion and is expected to be released with the September 2022
quarterly report13. Newcrest intends to fund its share of all four projects
through its internal cash flow generation and prudent use of its strong
balance sheet. In addition, the Newcrest Board approved total expenditure
of $182 million 20 for the West Dome Stage 5 (WDS5) cutback at Telfer in
August 2021.
48
1. Summary of Results for the 12 Months ended 30 June 2022 1,2,3,4,5 continued
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 an appropriately conservative level of balance
sheet leverage.
Newcrest’s net debt as at 30 June 2022 was $1,325 million. This comprises of $565 million of cash holdings, less $1,636 million of capital market debt,
$143 million in bilateral bank debt facilities and lease liabilities of $111 million.
As at 30 June 2022, Newcrest had liquidity coverage of $2,422 million, comprising $565 million of cash and cash equivalents and $1,857 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
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
As at
30 June 2022
As at
30 June 2021
BBB/Baa2
BBB/Baa2
0.6
10.2%
(0.1)
(1.8%)
$2.42bn
($565m cash)
$3.87bn
($1.87bn cash)
Telfer gold hedging
No new hedging in relation to Telfer was undertaken in the current period. The total outstanding volume and prices of gold hedged for Telfer and in total
for Newcrest are:
Financial Year Ending
30 June 2023
Gold Ounces
Hedged
Average Price
A$/oz
137,919
1,942
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 204,615 ounces of Telfer gold sales hedged at an average price of A$1,902 per ounce, representing a net realised revenue
loss of $91 million for the current period. As at 30 June 2022, based on gold forward curves, the unrealised mark-to-market loss of the remaining hedges
was $68 million.
Approximately 90% of Newcrest’s gold sales in the period were unhedged and therefore benefitted from the strong gold prices in the period.
Dividend Policy
Newcrest looks to pay ordinary dividends that are sustainable over time having regard to its cash flow generation, reinvestment options in the business
and external growth opportunities, financial policy metrics and 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 US 15 cents per share on a full year basis.
Consistent with Newcrest’s commitment to disciplined capital management, the Board has determined that a final fully franked dividend of US 20 cents
per share will be paid on Thursday, 29 September 2022. The record date for entitlement is Monday, 29 August 2022.
The financial impact of the FY22 final dividend amounting to $179 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 US 7.5 cents per share, total dividends in respect of the 2022 financial year amount to US 27.5 cents per share, which
exceeds the minimum US 15 cents per share on a full year basis.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 49
Guidance 3,21,22
Newcrest provides the following guidance for FY23, subject to market and operating conditions.
The production guidance numbers for FY23 assume no COVID-19 related interruptions.
The AISC expenditure guidance for FY23 includes:
– Approximately 6–8% of inflationary impacts to operating costs
– 12 months of costs relating to Brucejack
– The impact on costs of increased mining and throughput rates at Cadia and Lihir
Continued pressure on capital costs is expected due to competition for labour from infrastructure projects together with the acute inflationary pressures
experienced globally across a range of input costs such as energy and steel, which has been factored into the FY23 guidance.
Newcrest uses multiple levers to manage operating and capital cost pressures in the current inflationary environment and continues to evaluate cost
estimates as its progresses its Feasibility Studies.
Guidance for the 12 months ending 30 June 2023
Cadia
Lihir
Telfer
Brucejack
Red Chris
Norte(a)
Havieron
Other
Group
Fruta del
Production
Gold – koz
Copper – kt
560 – 620
720 – 840
355 – 405
320 – 370
95 – 115
–
~20
–
~30
~20
125 – 145
–
All-In-Sustaining Cost (AISC) – Includes production stripping (sustaining) and sustaining capital
AISC – $m
10 – 130
935 – 1,035
550 – 640
330 – 380
80 – 120
110 – 120
Capital Expenditure ($m)
– Production stripping
(sustaining)
– Production stripping
(non-sustaining)
– Sustaining capital
– Major projects
–
95 – 115
55 – 75
–
–
–
215 – 255
75 – 95
115 – 135
–
35 – 55
–
30 – 40
35 – 55
60 – 70
(non-sustaining)
300 – 350
100 – 140
– Business integration
capital
–
–
–
–
50 – 60
95 – 115
~20
–
Total Capital Expenditure
515 – 605
385 – 485
90 – 130
100 – 120
190 – 240
Exploration and Depreciation ($m)
Exploration expenditure
Depreciation and amortisation (including depreciation of production stripping)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,100 – 2,400
135 – 155
110 – 130
2,100 – 2,400
–
155 – 185
–
~15
115 – 145
470 – 520
70 – 85
~15(b)
660 – 760
–
–
~20
70 – 85
~30
1,420 – 1,630
150 – 160
1,000 – 1,050
(a) For H1 of FY23, Newcrest has derived its guidance range for Fruta del Norte by taking the mid-point of Lundin Gold’s CY22 guidance range of 430koz to 460koz for
gold production and $820/oz to $870/oz for AISC. For H2 of FY23, Newcrest has derived its guidance range for Fruta del Norte by taking the mid-point of Lundin Gold’s
CY23 guidance range of 390koz to 430koz for gold production and $850/oz to $915/oz for AISC. The mid-points for both calendar years were then divided by two and
multiplied by Newcrest’s 32% attributable interest. Lundin Gold’s guidance ranges were sourced from their website (www.lundingold.com) as at 9 August 2022.
(b) Other major project expenditure (non-sustaining) includes non-sustaining capital in relation to Wafi-Golpu.
50
1. Summary of Results for the 12 Months ended 30 June 2022 1,2,3,4,5 continued
Review of Operations22
UoM
Cadia
Lihir
Telfer
Bruce jack15
Red Chris
Fruta del
Norte6
Other
Group
For the 12 months ended 30 June 2022
Operating
Production
Gold
Copper
Silver
Molybdenum
Sales
Gold
Copper
Silver
Molybdenum
Financial
koz
kt
koz
t
koz
kt
koz
t
Revenue
EBITDA
EBIT
Net assets/(liabilities)
Operating cash flow
Investing cash flow
Free cash flow*
AISC 9
AISC Margin
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$/oz
US$/oz
561
85
499
277
543
84
491
72
1,744
1,229
1,049
3,421
1,296
(683)
613
(67)
(124)
1,921
687
–
17
–
666
–
17
–
1,223
446
145
4,193
453
(366)
87
1,080
1,622
175
408
14
190
–
407
14
191
–
751
203
78
(83)
180
(77)
103
565
1,388
409
114
–
179
–
120
–
156
–
226
109
41
2,678
122
(34)
88
135
1,125
672
42
21
137
–
41
21
136
–
263
98
41
1,077
102
(222)
(120)
55
1,349
448
144
–
–
–
139
–
–
–
–
–
–
–
–
–
–
107
766
–
–
–
–
–
–
–
–
–
–
(31)
(50)
379
(473)
(1,166)
(1,639)
124
–
–
1,956
121
1,022
277
1,917
119
991
72
4,207
2,054
1,304
11,665
1,680
(2,548)
(868)
1,999
1,043
732
*
Free cash flow for ‘Other’ includes a net outflow of $1,023 million relating to other investing activities (comprising the cash consideration for the acquisition of Pretium
of $1,084 million (net of cash acquired), purchase of a put option of $19 million, $7 million relating to further investments in Lundin Gold, partially offset by net receipts
from the Fruta del Norte finance facilities of $51 million and net proceeds of $36 million relating to the sale of the royalty portfolio), income tax paid of $244 million,
exploration expenditure of $81 million, corporate costs of $103 million, other capital expenditure of $69 million, business transaction costs of $23 million, net interest
paid of $5 million, and other outflows of $91 million.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 51
UoM
Cadia
Lihir
Telfer
Bruce jack
Red Chris
Fruta del
Norte6
Other
Group
For the 12 months ended 30 June 2021
Operating
Production
Gold
Copper
Silver
Sales
Gold 18
Copper
Silver
Financial
Revenue
EBITDA
EBIT
Net assets
Operating cash flow
Investing cash flow
Free cash flow*
AISC 18
AISC Margin 18
koz
kt
koz
koz
kt
koz
US$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 million, 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.
52
1. Summary of Results for the 12 Months ended 30 June 2022 1,2,3,4,5 continued
1
2
3
4
5
6
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 2022 (current period)
compared with the 12 months ended 30 June 2021 (prior period), except where otherwise stated. All references to ‘the Company’ are to Newcrest Mining Limited.
Technical and scientific information: The technical and scientific information contained in this document relating to Red Chris was reviewed and approved by
Craig Jones, Newcrest’s Chief Operating Officer (Americas), 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 and Lihir was reviewed and approved by Philip
Stephenson, Newcrest’s Chief Operating Officer (Australasia), FAusIMM and a Qualified Person as defined in NI 43-101.
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”, “target”, “anticipate”, “believe”, “continue”,
“objectives”, “outlook” and “guidance”, or other similar words and may include, without limitation, statements regarding estimated reserves and resources, internal rates
of return, expansion, exploration and development activities and the specifications, targets, results, analyses, interpretations, benefits, costs and timing of them; certain
plans, strategies, aspirations and objectives of management, anticipated production, sustainability initiatives, climate scenarios, dates for projects, reports, studies or
construction, 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 resources or 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 see the risk factors discussed in Section 7 of this document and the Annual Information Form dated
6 December 2021 which is available to view at www.asx.com.au under the code “NCM” and on Newcrest’s SEDAR profile. Climate scenarios incorporate key elements of
assumed future states and highlight key factors that may impact future developments. As a tool to enhance critical strategic thinking, scenarios are intended to explore
alternatives that may significantly differ from the underlying basis for ‘business as usual’ assumptions. They are hypothetical and do not represent forecasts, predictions or
sensitivity analyses. Scenario analysis has inherent limitations, including its reliance on assumptions that may or may not be correct, and may be impacted by factors apart
from the assumptions disclosed. It is difficult to predict which (if any) of the scenarios might eventuate.
Forward looking statements are based on management’s current expectations and reflect Newcrest’s good faith assumptions, judgements, estimates and other
information available as at the date of this report and/or the date of Newcrest’s planning or scenario analysis processes as to the financial, market, regulatory and other
relevant environments that will exist and affect Newcrest’s business and operations in the future. Newcrest 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
Newcrest. 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 global events such as geopolitical tensions and the ongoing COVID-19 pandemic. Forward looking statements in this document
speak only at the date of issue. Except as required by applicable laws or regulations, Newcrest 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.
Reliance on Third-Party Information: This document contains information that has been obtained from third parties and has not been independently verified, including
estimates and actual outcomes that relate to production and AISC for Fruta del Norte. No representation or warranty is made as to the accuracy, completeness or
reliability of the information. This document should not be relied upon as a recommendation or forecast by Newcrest.
Ore Reserves and Mineral Resources Reporting Requirements: 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 and reporting 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 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, Red Chris and Wafi-Golpu. Copies of the NI 43-101 Reports for
Cadia, Lihir and Wafi-Golpu, which were released on 14 October 2020, and Red Chris, which was released on 30 November 2021, are available at www.newcrest.com
and on Newcrest’s SEDAR profile.
Group gold production, gold sales and AISC includes Newcrest’s 32% attributable share of Fruta del Norte through its 32% equity interest in Lundin Gold Inc. The
outcomes for Fruta del Norte have been sourced from Lundin Gold’s news releases and have been aggregated to reflect the twelve-month period ended 30 June 2022.
Refer to Section 6.7 for further details.
–
Gold production in the current period includes 143,723 ounces relating to Newcrest’s 32% attributable share of the 449,133 ounces reported by Lundin Gold for the
twelve-month period ended 30 June 2022; and
Group AISC in the current period includes a reduction of $22 per ounce, which represents 35,714 ounces of Newcrest’s 32% attributable share of the 111,605
ounces sold resulting in an AISC of $804 per ounce as reported by Lundin Gold for the September 2021 quarter, 34,712 ounces of Newcrest’s 32% attributable
share of the 108,476 ounces sold resulting in an AISC of $715 per ounce as reported by Lundin Gold for the December 2021 quarter, 38,170 ounces of Newcrest’s
32% attributable share of the 119,282 ounces sold resulting in an AISC of $696 per ounce as reported by Lundin Gold for the March 2022 quarter, 30,813 ounces of
Newcrest’s 32% attributable share of the 96,291 ounces sold resulting in an AISC of $864 per ounce as reported by Lundin Gold for the June 2022 quarter.
–
7
8
9
Statutory profit is profit after tax attributable to owners of the Company.
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 ‘non-GAAP information’ within the meaning of National
Instrument 52-112 – Non-GAAP and Other Financial Measures published by the Canadian Securities Administrator. This non-IFRS financial information is defined in
Section 6 of this document.
Subsequent to the release of the June 2022 quarterly report, the FY22 AISC outcome for the Group and Fruta del Norte has been restated to include Newcrest’s 32%
attributable share of Fruta del Norte’s June 2022 quarterly results which Lundin Gold Inc released on 9 August 2022.
10 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.
11
Refer to Section 6.7 for further details.
Newcrest released an indicative longer-term outlook in October 2021 based on the findings of the Cadia PC1-2 Pre-Feasibility Study dated 19 August 2021, and the
Red Chris Block Cave, Havieron Stage 1 and Lihir Phase 14A Pre-Feasibility Studies dated 12 October 2021. The PFS findings are indicative only, subject to an accuracy
range of ±25% and should not be construed as guidance. Newcrest is currently progressing the studies through the Feasibility Stage, which will take into account
revised inflationary expectations and updated project economics. As a result, it is expected that the indicative longer-term outlook will be updated on completion of the
studies during FY23.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued
53
12 The modification approved in December 2021 to increase the permitted processing capacity from 32Mtpa to 35Mtpa is subject to conditions including Newcrest
commissioning an independent audit report to the satisfaction of the New South Wales Department of Planning & Environment Secretary in relation to Newcrest’s
approach to managing and minimising the off-site air quality impacts of the project.
13 Subject to market and operating conditions and potential delays due to COVID-19 impacts.
14 Newcrest defines Tier 1 assets as those having potential for >300kozpa Au at 15 years (preferred) and significant
resource or exploration upside likely. Newcrest defines Tier 2 assets as those having potential for >200kozpa Au at 10 years (preferred) and moderate resource or exploration upside likely. Classification of assets as Tier 1 or Tier 2 is not dispositive of, and does not necessarily imply,
the materiality of such assets to Newcrest.
15 Newcrest completed the Pretium transaction on 9 March 2022. In accordance with accounting standards, the acquisition date has been determined to be
25 February 2022. All Brucejack figures relating to FY22 represent the period since Newcrest’s acquisition.
Total Recordable Injury Frequency Rate (injuries per million hours).
16 The estimates are indicative only and are subject to market and operating conditions and all necessary approvals. They should not be construed as guidance.
17
18 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%
attributable share of Fruta del Norte’s June 2021 quarterly results which Lundin Gold Inc released on 11 August 2021.
19 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).
20 A$246 million has been converted to US dollars using the spot AUD:USD exchange rate on 12 August 2021 of 0.74.
21 The guidance stated assumes weighted average copper price of $3.45 per pound, AUD:USD exchange rate of 0.68 and CAD:USD exchange rate of 0.77 for FY23.
Newcrest’s brent oil price assumption for FY23 is $95/bbl (excludes impact of oil hedging at Lihir).
22 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%.
23 In accordance with the Havieron Joint Venture Agreement, Greatland Gold funded its 30% share of Early Works and growth drilling activities up to the completion of
the Pre-Feasibility Study. Following delivery of the Pre-Feasibility Study on 12 October 2021, Greatland Gold is now funding its proportional share of all joint venture
expenditure towards the delivery of the Feasibility Study. Spend is shown net of Greatland Gold contributions to the Havieron joint venture. Refer to Newcrest’s release
titled “Newcrest signs Havieron Joint Venture Agreement and expands its presence in the highly prospective Paterson Province” dated 30 November 2020 which is
available to view at www.asx.com.au under the code of “NCM” and on Newcrest’s SEDAR profile.
24 Additional operational and financial information can be viewed via the Interactive Analyst CentreTM which is located under the Investor Centre tab on Newcrest’s
website (www.newcrest.com). This interactive tool allows users to chart and export Newcrest’s current and historical results for further analysis.
25 AISC per ounce is first quartile when compared to the Metals Focus Ltd “Q1 2022 Gold Mine Cost Service” report dated 29 June 2022.
26 Subject to further studies, all necessary approvals, permits, internal and regulatory requirements and further works.
54
2. Discussion and Analysis of Operations and the Income Statement
2.1. Profit overview
Statutory profit and Underlying profit were both $872 million in the current period.
Underlying profit of $872 million was $292 million lower than the prior period primarily due to the planned replacement and upgrade of the Cadia SAG mill
motor (completed in November 2021) and lower production at Lihir which reflects the impact of major maintenance activity, lower autoclave availabilities
and unplanned downtime.
The current period reflected lower gold and copper sales volumes driven by lower production. Operating costs were impacted by the acute inflationary
pressures experienced globally across a range of input costs such as oil and gas, steel and labour as well as higher shipping costs due to the global
tightness and challenges in the sea freight market.
These impacts were partially offset by a higher realised copper price, a lower income tax expense as a result of the Company’s decreased profitability in
the current period, the receipt of a $75 million insurance settlement in relation to the Cadia NTSF embankment slump, the favourable impact on operating
costs (including depreciation) from the weakening of the Australian dollar against the US dollar, an increase in Newcrest’s share of profits from its
associates and lower volume linked costs such as royalties.
US$m
Gold revenue
Copper revenue
Silver revenue
Molybdenum 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 of associates
Other income/(expenses)
Net finance costs
Income tax expense
Underlying profit
Movement in Underlying Profit ($m)
Movement in Underlying Profit ($m)
For the 12 months ended 30 June
2022
3,194
1,149
22
3
(161)
4,207
(2,122)
(731)
2021
3,584
1,137
26
–
(171)
4,576
(2,155)
(650)
(2,853)
(2,805)
(138)
(76)
45
119
(75)
(357)
872
(143)
(69)
26
185
(102)
(504)
1,164
Change
Change %
(390)
12
(4)
3
10
(369)
33
(81)
(48)
5
(7)
19
(66)
27
147
(292)
(11%)
1%
(15%)
–
6%
(8%)
2%
(12%)
(2%)
3%
(10%)
73%
(36%)
26%
29%
(25%)
Revenue
($369)m
185 (393)
Operating Costs
$33m
Depreciation &
Amortisation
($81)m
1,164
3
(173)
(4)
3
10
4
29
(88)
7
5
(7)
19
(66)
27
147
872
FY21
GOLD
PRICE
COPPER
PRICE
GOLD
SALES
VOLUME
COPPER
SALES
VOLUME
SILVER
REVENUE
MOLY
REVENUE
REVENUE
DEDUCT-
IONS
OPERATING
COSTS
FX ON
OPERATING
COSTS
DEPREC-
IATION
FX ON
DEPREC-
IATION
CORPORATE
ADMINIS-
TRATION
EXPLOR-
ATION
SHARE OF
PROFIT OF
ASSOC-
IATES
OTHER
INCOME/
(EXPENSES)
NET
FINANCE
COSTS
INCOME
TAX
EXPENSE
FY22
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 55
2.2. Revenue
Total sales revenue for the current period of $4,207 million included deductions for treatment and refining costs of $161 million. Newcrest’s sales revenue
continues to be predominantly attributable to gold, being 75% of total net sales revenue in the current period (77% in the prior period).
US$m
Total gross revenue for 12 months ended 30 June 2021
Changes in revenues from volume:
Gold
Copper
Silver
Total volume impact
Change in revenue from price:
Gold
Copper
Silver
Total price impact
Revenue from Molybdenum
Total gross revenue for 12 months ended 30 June 2022
Less: treatment and refining deductions
Total net revenue for 12 months ended 30 June 2022
(393)
(173)
2
3
185
(6)
4,747
(564)
182
3
4,368
(161)
4,207
Gold revenue in the current period of $3,150 million included deductions for gold treatment and refining costs of $44 million. Excluding these deductions,
total gold revenue decreased by 11% compared to the prior period, driven by lower gold sales volumes at Cadia, Lihir, Red Chris and Telfer (driven by lower
production). This was partially offset by the inclusion of four months of gold production and sales from Brucejack 15.
Copper revenue in the current period of $1,034 million included deductions for copper treatment and refining costs of $115 million. Excluding these
deductions, total copper revenue increased by 1% compared to the prior period, driven by a 19% increase in the realised copper price ($4.36 per pound in
the current period compared to $3.66 per pound in the prior period), and higher copper sales at Telfer. This was partially offset by lower sales volumes at
Cadia and Red Chris.
2.3. Cost of sales
US$m
Site production costs
Royalties
Selling costs
Inventory movements – ore
Inventory movements – finished goods
Operating costs
Depreciation and amortisation
Cost of sales
For the 12 months ended 30 June
2022
1,915
125
82
20
(20)
2,122
731
2,853
2021
1,889
143
54
51
18
2,155
650
2,805
Change
Change %
26
(18)
28
(31)
(38)
(33)
81
48
1%
(13%)
52%
(61%)
(211%)
(2%)
12%
2%
Cost of sales of $2,853 million were $48 million (or 2%) higher than the prior period.
Site production costs of $1,915 million were $26 million higher than the prior period primarily due to the addition of Brucejack, higher costs relating to
unplanned downtime at Lihir and the acute inflationary pressures experienced globally across a range of input costs such as oil and gas, steel and labour.
These impacts were partially offset by the favourable impact on operating costs from the weakening Australian dollar against the US dollar together with
lower site production costs at Telfer and Red Chris driven by the capitalisation of costs to the balance sheet due to increased production stripping in the
current period.
The decrease in royalties primarily reflects the impact of lower gold sales volumes, partially offset by the addition of Brucejack.
Selling costs increased by $28 million driven by higher concentrate freight rates at Cadia, Telfer and Red Chris, together with the addition of Brucejack.
The favourable movements in inventory in the current period are a result of:
– Ore inventory – reflects a drawdown on stockpiles at Lihir, partially offset by an increase in stockpile levels at Cadia with mining continuing during the
planned SAG mill motor replacement and upgrade.
– Finished goods – primarily reflects the capitalisation of costs for unsold inventory on hand at Cadia which was caused by rail interruptions from rain
events in March and April 2022.
56
2. Discussion and Analysis of Operations and the Income Statement continued
2.3. Cost of sales continued
Depreciation expense was higher than the prior period which primarily reflects the addition of Brucejack and the increased capital expenditure in the
current period, partially offset by the impact of an increase in Ore Reserves at Red Chris following completion of the Block Cave PFS together with
the benefit at Cadia and Telfer of a weakening Australian dollar against the US dollar.
As the Company is a US dollar reporting entity, its cost of sales will vary in accordance with the movements in the operating currencies where those costs
are not denominated in US dollars. The table below shows indicative currency exposures on operating costs by site for the current period:
Cadia
Telfer
Lihir
Red Chris
Brucejack
Group*
USD
20%
20%
30%
20%
5%
20%
AUD
80%
80%
30%
–
–
55%
PGK
–
–
40%
–
–
15%
CAD
–
–
–
80%
95%
10%
* The Group number also includes the impact of currency exposures on corporate administration expenses and exploration expenditure.
2.4. Corporate, Exploration and Other items
US$m
Corporate administration expenses
Exploration expenses
Share of profit of associates
Other income/(expenses)
Corporate, Exploration and Other items
For the 12 months ended 30 June
2022
2021
Change
Change %
(138)
(76)
45
119
(50)
(143)
(69)
26
185
(1)
5
(7)
19
(66)
(49)
3%
(10%)
73%
(36%)
(4,900%)
Corporate administration expenses of $138 million in the current period comprised corporate costs of $103 million, depreciation of $19 million and
equity-settled share-based payments of $16 million.
Exploration expenditure of $76 million was expensed in the current period, which was $7 million (or 10%) higher than the prior period, primarily due to
increased activity at Telfer (focused on mine life extensions) and in the Americas.
The share of profit of associates of $45 million represents Newcrest’s share of profits or losses reported by its equity accounted associates, comprising
Lundin Gold, SolGold, Azucar Minerals and Antipa Minerals.
Other income/(expenses) of $119 million comprised:
US$m
Net fair value movements on concentrate receivables
Net foreign exchange gain/(loss)
Net fair value gain on Fruta del Norte finance facilities
Insurance settlement for the Cadia NTSF embankment slump (net of associated costs)
Business acquisition and integration costs
Gain on sale of royalty portfolio
Other items
Other income/(expenses)
For the 12 months ended 30 June
2022
2021
Change
Change %
(51)
68
62
65
(42)
11
6
119
124
(57)
118
–
–
–
–
185
(175)
125
(56)
65
(42)
11
6
(66)
(141%)
219%
(47%)
–
–
–
–
(36%)
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 57
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 loss on gold and copper derivatives in other income and is driven by the
movement in gold and copper prices across the quotational period.
The net foreign exchange gain 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 $62 million in the net fair value of Newcrest’s investment in the Fruta del Norte finance facilities,
primarily due to an increase in the gold price assumptions used in the fair value calculations.
In the current period, Newcrest received an insurance settlement of $75 million (presented in the table above as net of associated costs) in relation to the
NTSF embankment slump at Cadia, which occurred on 9 March 2018.
Business acquisition and integration costs of $42 million in the current period includes a $19 million put option that was purchased to hedge the downside
risk on the USD cost of the cash consideration in relation to the acquisition of Pretium and business transaction costs totalling $23 million.
2.5. Net finance costs
US$m
Interest on Fruta del Norte finance facilities
Other interest income
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
2022
2021
Change
Change %
19
6
25
(75)
(4)
(12)
(9)
–
(100)
(75)
22
5
27
(84)
(2)
(17)
(6)
(20)
(129)
(102)
(3)
1
(2)
9
(2)
5
(3)
20
29
27
(14%)
20%
(7%)
11%
(100%)
29%
(50%)
100%
22%
26%
Net finance costs of $75 million were $27 million (or 26%) lower than the prior period driven by the payment of debt extinguishment fees in the prior period
and reduced interest payments (following the mandatory redemption and cancellation of Newcrest’s outstanding 2022 Corporate Bonds on 28 April 2021).
This was partially offset by an increase in interest on the bilateral bank debt facilities.
2.6. Income tax
Income tax on Statutory and Underlying profit was $357 million, resulting in an effective tax rate of 29% which is lower than the Australian company tax
rate of 30% primarily due to the impact of Newcrest’s share of profits from its associates, which are not taxable.
2.7. Significant items
There were no significant items reported in the current or prior period.
58
3. Discussion and analysis of cash flow
Free cash flow was negative $868 million for the current period, primarily due to a net outflow of $1,097 million relating to M&A activities. The net outflow
from M&A activities comprised:
– Cash consideration for the acquisition of Pretium totalling $1,084 million (net of cash acquired of ~$208 million);
– Business acquisition and integration costs of $42 million comprising a $19 million put option that was purchased to hedge the downside risk on the
US dollar cost of the cash consideration in relation to the acquisition of Pretium and business transaction costs totalling $23 million;
– An additional $7 million investment in Lundin Gold to maintain Newcrest’s 32% ownership; and
– Net proceeds of $36 million relating to the sale of a portfolio of 24 royalties relating to Bonikro (Push Back 5), South Kalgoorlie Operations and Ballarat
operating gold mines, and 21 development and exploration stage projects across Australia.
‘Free cash flow before M&A activity’ of $229 million was 80% lower than the prior period which primarily reflects lower operating cash flows (largely
driven by lower production and unfavourable net working capital movements), and increased investment in major capital projects at Cadia, Red Chris,
Havieron and Lihir that underpin the expected future growth of Newcrest.
In the current period, Newcrest received net pre-tax cash flows of $132 million from the Fruta del Norte financing facilities (acquired in April 2020 for
$460 million). This is reflected within the cash flow statement as $81 million in operating cash flow (interest payments received) and $51 million in investing
cash flow (primarily principal repayments received). In total, Newcrest has received ~$226 million in net pre-tax cash flows since acquiring the facilities.
US$m
Cash flow from operating activities
Business transaction costs*
Production stripping and sustaining capital expenditure
Major capital expenditure (non-sustaining)
Reclassification of capital leases
Exploration and evaluation expenditure
Net receipts from Fruta del Norte finance facilities
Proceeds from sale of property, plant and equipment
Free cash flow (before M&A activity)
Acquisition of Pretium (net of cash acquired)
Business transaction costs*
Payment for purchase of put option*
Payments for investment in associates
Net proceeds from sale of royalty portfolio
Free cash flow
For the 12 months ended 30 June
2022
1,680
23
(644)
(773)
11
(120)
51
1
229
(1,084)
(23)
(19)
(7)
36
2021
2,302
–
(524)
(595)
11
(115)
38
8
1,125
–
–
–
(21)
–
Change
Change %
(622)
23
(120)
(178)
–
(5)
13
(7)
(896)
(1,084)
(23)
(19)
14
36
(27%)
–
(23%)
(30%)
–
(4%)
34%
(88%)
(80%)
–
–
–
67%
–
(868)
1,104
(1,972)
(179%)
*
Included within Cash flow from operating activities. Business and integration costs reported in Section 2.4 is the sum of business transaction costs and the payment for
purchase of put option presented in the table above.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 59
For the 12 months ended 30 June
2021
2,302
(1,198)
1,104
(685)
419
1,451
3
1,873
Change
Change %
(622)
(1,350)
(1,972)
258
(1,714)
422
(16)
(1,308)
(27%)
(113%)
(179%)
38%
(409%)
29%
(533%)
(70%)
For the 12 months ended 30 June
2021
2,443
69
(86)
2,426
7
57
87
4
155
(46)
(233)
2,302
Change
Change %
(389)
7
(39)
(421)
(1)
(95)
(122)
(13)
(231)
41
(11)
(622)
(16%)
10%
(45%)
(17%)
(14%)
(167%)
(140%)
(325%)
(149%)
89%
(5%)
(27%)
2022
1,680
(2,548)
(868)
(427)
(1,295)
1,873
(13)
565
2022
2,054
76
(125)
2,005
6
(38)
(35)
(9)
(76)
(5)
(244)
1,680
3.1. Cash at the end of the period
US$m
Cash flows from operating activities
Cash flows from investing activities
Free cash flow
Cash flows from financing activities
Net movement in cash
Cash and cash equivalents at the beginning of the period
Effects of exchange rate changes on cash held
Cash and cash equivalents at the end of the period
3.2. Cash flows from operating activities
US$m
EBITDA
Add: Exploration expenditure written-off
Deduct: 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 provided by operating activities
*
Includes adjustments for non-cash items.
Net cash provided by operating activities of $1,680 million was $622 million (or 27%) lower than the prior period. The decrease reflects lower gold and
copper sales volumes (due to lower production, which includes the impact of the Cadia SAG mill motor replacement and upgrade), unfavourable net
working capital movements (of which ~$100m was related to the acquisition of Pretium together with unfavourable inventory movements at Cadia driven
by timing of sales and increased stockpile levels) and higher site costs at Lihir and Red Chris.
These impacts were partially offset by a higher realised copper price, the receipt of a $75 million insurance settlement for the Cadia NTSF embankment
slump, a reduction in interest payments reflecting the payment of debt extinguishment fees in the prior period, reduced interest payments on borrowings
(following the mandatory redemption and cancellation of Newcrest’s outstanding 2022 Corporate Bonds in the prior period), and an increase in interest
received from the Fruta del Norte financing facilities together with the favourable impact on costs from a weakening Australian dollar against the US dollar.
60
3. Discussion and analysis of cash flow continued
3.3. Cash flows from investing activities
US$m
Production stripping
Telfer
Lihir
Red Chris
Total production stripping
Sustaining capital expenditure
Cadia
Telfer
Lihir
Red Chris
Brucejack
Corporate
Total sustaining capital
Major projects (non-sustaining)
Cadia
Lihir
Red Chris
Brucejack
Wafi-Golpu
Havieron 23
Total major projects (non-sustaining) capital
Total capital expenditure
Reclassification of capital leases
M&A activity
Acquisition of Pretium (net of cash acquired)
Payment for purchase of put option
Payment for investment in associates
Proceeds from sale of royalty portfolio
Total M&A activity
Net receipts from Fruta del Norte finance facilities
Exploration and evaluation expenditure
Proceeds from sale of property, plant and equipment
Net cash used in investing activities
For the 12 months ended 30 June
2022
2021
Change
Change %
31
132
50
213
141
33
156
72
15
14
431
544
77
81
16
5
50
773
1,417
(11)
1,084
19
7
(36)
1,074
(51)
120
(1)
–
120
28
148
106
65
109
70
–
26
376
465
70
29
–
6
25
595
1,119
(11)
–
–
21
–
21
(38)
115
(8)
31
12
22
65
35
(32)
47
2
15
(12)
55
79
7
52
16
(1)
25
178
298
–
1,084
19
(14)
(36)
1,053
(13)
5
7
2,548
1,198
1,350
–
10%
79%
44%
33%
(49%)
43%
3%
–
(46%)
15%
17%
10%
179%
–
(17%)
100%
30%
27%
–
–
–
(67%)
–
5,014%
(34%)
4%
88%
113%
Cash outflow from investing activities of $2,548 million was $1,350 million (or 113%) higher than the prior period primarily driven by the acquisition
of Pretium together with increased capital expenditure, partially offset by an increase in net receipts from the Fruta del Norte finance facilities.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 61
Capital expenditure of $1,417 million in the current period comprised:
– Production stripping of $213 million was $65 million (or 44%) higher than the prior period primarily due to the commencement of WDS5 stripping
activity at Telfer and the ramp up of Phase 7 stripping activity at Red Chris. The increase at Lihir is driven by increased production stripping activity
in Phases 14A, 16 and 17, partially offset by lower production stripping in Phase 15.
– Sustaining capital expenditure of $431 million was $55 million (or 15%) higher than the prior period due to a ramp up in tailings related expenditure at
Cadia, the Phase 14A PFS and Field Trials and the procurement of new mining fleet at Lihir, increased spend on tailings impoundment area and operational
improvement projects at Red Chris together with the inclusion of four months of expenditure for Brucejack 15. These drivers were partially offset by lower
spend on the tailings dam construction at Telfer and the benefit of a weaker Australian dollar on Australian dollar denominated capital expenditure.
– Major project, or non-sustaining, capital expenditure of $773 million was $178 million (or 30%) higher than the prior period. This investment underpins
the expected future growth of Newcrest, with the main projects being:
– Cadia – peak expenditure associated with the Cadia Expansion Project (Stages 1 and 2), which includes the development of PC2-3, and
underground/surface infrastructure;
– Red Chris – increasing activity associated with the development of the Red Chris Exploration Decline as part of the Early Works Program as well
as the Block Cave PFS and FS;
– Havieron – continuing development of the Exploration Decline as well as increasing activity associated with the PFS and FS;
– Lihir – primarily related to the Front End Recovery Project; and
– Brucejack – the inclusion of four months of expenditure 15.
These drivers were partially offset by a weaker Australian dollar favourably impacting Australian dollar denominated capital expenditure.
Exploration activity of $120 million was $5 million (or 4%) higher than the prior period, comprising the following:
US$m
Expenditure by nature
Greenfield
Brownfield
Resource Definition
Total
Expenditure by region
Australia
Papua New Guinea
North America
South America
Total
For the 12 months ended 30 June
2022
2021
Change
Change %
69
27
24
120
57
1
41
21
120
81
16
18
115
66
1
36
12
115
(12)
11
6
5
(9)
–
5
9
5
(15%)
69%
33%
4%
(14%)
–
14%
75%
4%
62
3. Discussion and analysis of cash flow continued
3.3. Cash flows from investing activities continued
In the current period, Newcrest continued its search for new discoveries with greenfield and brownfield exploration activity undertaken in Australia,
Canada, USA, Chile and Ecuador. Activity has been focused in and around fertile gold/copper districts including the Paterson Province (Western
Australia), the Golden Triangle of British Columbia (Canada), Nevada (United States), Chile and Ecuador. Exploration activity in the current period was
also focused on expanding the Mineral Resource base at Havieron and Red Chris to support the respective Feasibility Studies as well as commencing
exploration activity at Brucejack following the acquisition of Pretium.
Drilling at Havieron transitioned from Greenfield to Resource Definition to support the Havieron FS, with overall drilling activity at Havieron decreasing
during the period. Additionally, after Newcrest met its farm-in requirements, Greatland Gold covered its 30% share of all exploration expenditure for the
majority of the current period 23.
Brownfield expenditure at Red Chris increased with activity focused on East Ridge and Brownfield and Resource Definition expenditure increased at Telfer
with activity focused on potential mine life extensions.
There was increased expenditure in Chile and Ecuador driven by the target testing at the Silencio (Chile), Mioceno (Chile), Gorbea (Chile) and Gamora
(Ecuador) projects with the easing of COVID-19 related restrictions. In North America, the increase in spend was driven by increased drilling activity at
Red Chris, offset by the decision to exit the Jarbidge project (Nevada, USA).
3.4. Cash flows from financing activities
US$m
Net repayment of corporate bonds
Net proceeds from borrowings
Repayment of lease principal
Repayment of other loans
Dividends paid to members of the parent entity
Payment for treasury shares
Other financing activities
Net cash used in financing activities
For the 12 months ended 30 June
2022
2021
Change
Change %
–
143
(43)
(140)
(372)
(14)
(1)
(427)
(380)
–
(32)
(3)
(240)
(10)
(20)
(685)
380
143
(11)
(137)
(132)
(4)
19
258
100%
–
(34%)
(4,567%)
(55%)
(40%)
95%
38%
Net cash used in financing activities of $427 million for the current period comprised:
– Net draw down on the bilateral bank debt facilities of $143 million;
– Repayment of lease principal totalling $43 million;
– The repayment of Pretium’s term facility and convertible notes totalling $140 million;
– Dividends paid to Newcrest shareholders of $372 million, which were $132 million (or 55%) higher than those paid in the prior period; and
– Payment for treasury shares of $14 million represents shares purchased on market to satisfy obligations under employee incentive plans.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 63
For the 12 months ended 30 June
UoM
2022
2021
Change
Change %
ounces
tonnes
ounces
tonnes
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$/oz
560,702
85,383
543,029
83,888
764,895
106,402
766,118
105,444
(204,193)
(21,019)
(223,089)
(21,556)
1,744
695
1,229
1,049
1,296
141
544
685
613
(67)
(124)
2,180
764
1,615
1,416
1,796
106
465
571
1,232
(83)
(109)
(436)
(69)
(386)
(367)
(500)
35
79
114
(619)
16
(15)
(27%)
(20%)
(29%)
(20%)
(20%)
(9%)
(24%)
(26%)
(28%)
33%
17%
20%
(50%)
19%
(14%)
4. Review of Operations24
4.1. Cadia
Measure
Operating
Gold produced
Copper produced
Gold sales
Copper sales
Financial
Revenue
Cost of Sales (including 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
Gold production was 560,702 ounces for the current period, and copper production was 85,383 tonnes.
Cadia’s lower operating and financial performance in the current period reflects the reduced throughput rates during the planned replacement and
upgrade of the SAG mill motor which commenced in early July 2021 and was successfully completed in November 2021, together with the expected
decline in grade.
EBIT of $1,049 million was 26% lower than the prior period reflecting lower gold and copper sales volumes, partially offset by a higher realised copper
price, a weaker Australian dollar positively impacting Australian denominated costs and lower depreciation.
AISC of negative $124 per ounce was 14% lower than the prior period and is Cadia’s lowest reported AISC for a twelve-month period. Cadia’s AISC
remains around the bottom of the first quartile in the gold industry 25.
Free cash flow of $613 million was 50% lower than the prior period. This reflects lower EBITDA, unfavourable working capital movements and increased
capital expenditure in the current period. These impacts were partially offset by the receipt of an insurance settlement of $75 million relating to the
NTSF embankment slump. The unfavourable working capital movement primarily relates to unsold inventory on hand at 30 June 2022 caused by rail
interruptions from rain events in March and April 2022, with the higher capital expenditure due to peak expenditure on the Cadia Expansion Project
(Stages 1 and 2) which is expected to reduce in future periods 13.
In August 2021, the Newcrest Board approved the Cadia PC1-2 PFS, enabling the commencement of the FS and Early Works Program. The PFS updated
and defined 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 allowed critical infrastructure to be established in parallel with the FS before the commencement
of the Main Works Program.
Early Works have been progressing well with development activities, raise boring and preliminary earthworks for construction of the primary ventilation fans
commencing during the current period. The Cadia PC1-2 FS is nearing completion and is expected to be released with the September 2022 quarterly report13.
In December 2021, Newcrest received approval from the New South Wales Department of Planning, Industry & Environment for a modification to
increase the permitted processing capacity of Cadia from 32Mtpa to 35Mtpa 12. The expansion to a plant capacity of 35Mtpa is already underway, with mill
throughput rates expected to start ramping up towards 35Mtpa in the December 2022 quarter 13. The modification also provides approval for Newcrest to
repair the slumped section of the NTSF at Cadia.
Commissioning of the Moly Plant was completed in the March 2022 quarter, with the first concentrate shipment delivered in June 2022. The Moly Plant
provides an additional revenue stream for Cadia which is recognised as a by-product to AISC.
Cadia has commenced planning for the long-term continuation of mining operations known as the Cadia Continued Operations Project (CCOP).
Community consultation is ongoing in relation to the key aspects of the CCOP, including a proposed development consent for a new Tailings Storage
Facility adjacent to the current Southern Tailings Storage Facility, continued underground mining in the Cadia East area, additional off-site water storage
and realignment of local roads 26.
64
4. Review of Operations24 continued
4.2. Lihir
Measure
Operating
Gold produced
Gold sales
Financial
Revenue
Cost of Sales (including depreciation)
EBITDA
EBIT
Operating cash flow
Production stripping
Sustaining capital
Non-sustaining capital
Total capital expenditure
Free cash flow
All-In Sustaining Cost 18
All-In Sustaining Cost 18
For the 12 months ended 30 June
UoM
2022
2021
Change
Change %
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$/oz
687,445
665,993
737,082
773,146
(49,637)
(107,153)
1,223
1,078
446
145
453
132
156
77
365
87
1,080
1,622
1,425
1,112
590
313
621
120
109
70
299
321
1,076
1,391
(202)
(34)
(144)
(168)
(168)
12
47
7
66
(234)
4
231
(7%)
(14%)
(14%)
(3%)
(24%)
(54%)
(27%)
10%
43%
10%
22%
(73%)
0%
17%
Gold production was 687,445 ounces for the current period.
Lihir’s lower operating and financial performance in the current period reflects the impacts of major maintenance activity, lower autoclave availabilities
and unplanned downtime. In the current period, Newcrest commenced its mining improvement program at Lihir which improved mining rates and
culminated in a record for total material movements in the June 2022 quarter. The higher mining rates are expected to continue in FY23 in line with this
improvement program13.
EBIT of $145 million was 54% lower than the prior period driven by lower gold sales volumes, partially offset by lower cost of sales. Cost of sales
(including depreciation) was 3% lower than the prior period due to an increase in costs capitalised to the balance sheet driven by the commencement of
production stripping in Phases 14A, 16 and 17. The reduction in cost of sales was partially offset by higher depreciation.
AISC of $1,622 per ounce was 17% higher than prior period primarily reflecting lower gold sales volumes, increased sustaining capital expenditure,
higher operating costs (including costs relating to unplanned downtime) and higher production stripping expenditure.
Free cash flow of $87 million was 73% lower than the prior period. This reflects lower EBITDA together with increased capital expenditure. The key
drivers of the higher capital expenditure in the current period were higher sustaining capital expenditure relating to Phase 14A and additional mining fleet
including the addition of two new CAT 6060 shovels, increased production stripping activity, continued life extension structural remediation works and
several studies.
The number of COVID-19 cases at Lihir remained very low during the current period with the site continuing to successfully manage the ‘endemic’
phase of COVID-19. There were no material COVID-19 related disruptions to production, although Lihir did experience some supply chain challenges
and interruptions to some project activities, with efforts made to minimise their impact on the overall cost and schedule. The operating cost of managing
COVID-19 risks at Lihir in the current period was approximately $41 million, which included additional costs related to flights, transport, rosters, leave,
screening and testing (excludes additional COVID-19 costs related to capital projects).
In the current period, Newcrest continued with the execution of major construction activities on the Front End Recovery Project. The new electrical
substation for the project is being commissioned and the structures, equipment and services construction are nearing completion. Commissioning of
the processing facilities is expected to commence in the September 2022 quarter 13.
Following the release of the Phase 14A PFS in October 2021, Newcrest commenced the Feasibility phase and progressed with Early Works execution
activities in March 2022. These activities included ground support, upper drainage and shotcrete works, and procurement of mobile fleet equipment,
specialised civil engineering equipment and materials. First medium grade ore was delivered to the mill in the June 2022 quarter. The findings of the FS
are expected to be released in the December 2022 quarter 13.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 65
For the 12 months ended 30 June
UoM
2022
2021
Change
Change %
ounces
tonnes
ounces
tonnes
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
407,550
13,904
407,094
14,277
416,138
13,177
411,336
12,560
(8,588)
727
(4,242)
1,717
751
673
203
78
180
31
33
64
103
565
725
692
137
33
151
–
65
65
82
606
26
(19)
66
45
29
31
(32)
(1)
21
(41)
(85)
US$/oz
1,388
1,473
(2%)
6%
(1%)
14%
4%
(3%)
48%
136%
19%
–
(49%)
(2%)
26%
(7%)
(6%)
4.3. Telfer
Measure
Operating
Gold produced
Copper produced
Gold sales
Copper sales
Financial
Revenue
Cost of Sales (including depreciation)
EBITDA
EBIT
Operating cash flow
Production stripping
Sustaining capital
Total capital expenditure
Free cash flow
All-In Sustaining Cost
All-In Sustaining Cost
Gold production was 407,550 ounces for the current period, and copper production was 13,904 tonnes.
In the current period, the Newcrest Board approved expenditure of $182 million 20 for the WDS5 cutback which supports the continuity of operations at
Telfer. Ore mined from the Underground increased in the current period reflecting a ramp up of activity in new mining areas together with increased
production in the Sub Level Cave. The mill completed its transition back to an increased operational run time strategy (with the increased availability of
open pit ore feed) which has driven an increase in mill throughput in the current period. Gold recovery also improved in the current period which reflects
a lower sulphur content in open pit ore as well as the successful realisation of several recovery improvement initiatives.
EBIT of $78 million was 136% higher than the prior period due to higher revenue and lower cost of sales. The higher revenue was driven by a higher
realised copper and gold price, together with increased copper sales volumes, partially offset by lower gold sales volumes. Cost of sales (including
depreciation) was 3% lower than the prior period due to the capitalisation of costs to the balance sheet following the commencement of production
stripping in WDS5, a weaker Australian dollar favourably impacting costs, partially offset by higher costs associated with higher mill throughput, as well
as fuel and consumable price escalations and higher depreciation.
AISC of $1,388 per ounce was 6% lower than the prior period due to a higher realised copper price, higher copper sales volumes, lower sustaining
capital expenditure and a weaker Australian dollar positively impacting Australian denominated costs, partially offset by an increase in production
stripping from WDS5.
Free cash flow of $103 million was 26% higher than the prior period. This reflects higher EBITDA and lower sustaining capital expenditure. This was
partially offset by unfavourable net working capital movements, the commencement of production stripping activity in WDS5 and lower gold sales
volumes. Excluding the hedge losses of $91 million in the current period, Telfer’s Free cash flow would have been $194 million.
66
4. Review of Operations24 continued
4.4. Red Chris22
Measure
Operating
Gold produced
Copper produced
Gold sales
Copper sales
Financial
Revenue
Cost of Sales (including depreciation)
EBITDA
EBIT
Operating cash flow
Production stripping
Sustaining capital
Non-Sustaining capital
Total capital expenditure
Free cash flow
All-In Sustaining Cost
All-In Sustaining Cost
For the 12 months ended 30 June
UoM
2022
2021
Change
Change %
ounces
tonnes
ounces
tonnes
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
42,341
21,363
40,921
21,313
45,922
23,145
45,643
23,002
(3,581)
(1,782)
(4,722)
(1,689)
263
222
98
41
102
50
72
81
203
(120)
55
246
237
79
9
114
28
70
29
127
(37)
103
17
(15)
19
32
(12)
22
2
52
76
(83)
(48)
US$/oz
1,349
2,248
(899)
(8%)
(8%)
(10%)
(7%)
7%
(6%)
24%
356%
(11%)
79%
3%
179%
60%
(224%)
(47%)
(40%)
Gold production was 42,341 ounces for the current period, and copper production was 21,363 tonnes.
In the current period, Newcrest implemented several improvement initiatives to optimise operations at Red Chris. Total material mined was higher than
the prior period which reflects improvements in payload on the CAT 793 haul truck fleet together with improved productivities. Recovery also improved
in the current period driven by the successful installation of an additional cleaner column, enhancement of short interval control and process control
improvements. However, clay rich ore material handling issues, grid power disruptions caused by severe weather, and a higher proportion of mill feed
from the low-grade stockpile to supplement ore mined from Phase 5, while the Phase 7 stripping campaign continued, resulted in lower production in
the current period.
EBIT of $41 million was 356% higher than the prior period reflecting a higher realised copper price and lower cost of sales, partially offset by lower gold
and copper sales volumes.
Cost of sales (including depreciation) was 6% lower than the prior period, primarily due to an increase in production stripping costs capitalised to
the balance sheet (associated with the Phase 7 stripping campaign), lower depreciation (driven by an increase in Ore Reserves following completion
of Block Cave PFS in October 2021), partially offset by higher site costs (including fuel) and concentrate freight costs (largely driven by the impact of
inflationary cost pressures).
AISC of $1,349 per ounce was 40% lower than the prior period, primarily due to higher by-product revenue and the completion of the Phase 5
stripping campaign (which was classified as sustaining for AISC purposes), partially offset by lower gold sales volumes and higher site costs and
concentrate freight costs.
Free cash flow of negative $120 million was $83 million lower than the prior period, primarily driven by increased capital expenditure and unfavourable
working capital movements, partially offset by higher EBITDA. The higher capital expenditure in the current period is primarily driven by an increase in
non-sustaining capital expenditure relating to Block Cave projects (increasing activity associated with the development of the Red Chris Exploration
Decline as part of the Early Works Program as well as the Block Cave PFS and FS) together with increased production stripping expenditure in Phase 7.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 67
For Newcrest’s Ownership Period
UoM
2022
2021
Change
Change %
ounces
ounces
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$/oz
114,421
120,056
226
185
109
41
122
15
16
31
88
135
1,125
–
–
–
–
–
–
–
–
–
–
–
–
–
114,421
120,056
226
185
109
41
122
15
16
31
88
135
1,125
–
–
–
–
–
–
–
–
–
–
–
–
–
4.5. Brucejack15
Measure
Operating
Gold produced
Gold sales
Financial
Revenue
Cost of Sales (including 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
On 25 February 2022, Newcrest received the final regulatory approval for the acquisition of Pretium. In accordance with accounting standards, Newcrest
acquired control over Pretium effective from the date of this last regulatory approval. On 9 March 2022, Newcrest announced that it had completed the
acquisition of Pretium.
Pretium owned the Brucejack mine which is located in the highly prospective Golden Triangle region of British Columbia, Canada. Brucejack began
commercial production in July 2017 and is one of the highest-grade operating gold mines in the world.
Brucejack delivered immediate operational and financial contribution, including an additional 114 thousand ounces of gold production, EBITDA of
$109 million and Free cash flow of $88 million for the four-month ownership period.
A three-phase transformation program commenced in the current period with a range of initiatives in progress to maximise the long-term potential and
value of the Brucejack mine and associated district.
The expected synergy benefits have increased from C$15-$20 million (~US$12–16 million) to approximately C$20–$30 million (~US$16–$24 million) per
annum 16. Opportunities continue to be evaluated through the synergy process including contract synergies, integrating Brucejack and Red Chris travel
logistics, optimising the warehouse and logistics footprint and moving to a common Enterprise Resource Planning system. Newcrest expects around half
of the recurring synergy value to be realised by the end of FY23 on a run-rate basis, with the remainder by the end of FY24 13.
A debottlenecking concept study is also underway to investigate Newcrest’s proposal to increase process plant capacity from the current permitted rate
of 3,800 tonnes per day to between 4,500 and 5,000 tonnes per day 26. The study is anticipated to be completed in the December 2022 quarter, with the
permit application expected to be submitted in the March 2023 quarter 13.
68
5. Discussion and Analysis of the Balance Sheet
5.1. Net assets and total equity
Newcrest had net assets and total equity of $11,665 million as at 30 June 2022.
US$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
5.2. Financial metrics
5.2.1. Net debt and gearing
As at 30 June
2022
2021
Change
Change %
565
314
1,609
595
5
12,902
704
37
56
487
85
17,359
(675)
(136)
(1,779)
(111)
(68)
(657)
(2,268)
(5,694)
11,665
11,665
11,665
1,873
289
1,505
641
3
9,788
19
32
54
442
68
14,714
(577)
(107)
(1,635)
(62)
(110)
(735)
(1,364)
(4,590)
10,124
10,124
10,124
(1,308)
25
104
(46)
2
3,114
685
5
2
45
17
2,645
(98)
(29)
(144)
(49)
42
78
(904)
(1,104)
1,541
1,541
1,541
(70%)
9%
7%
(7%)
67%
32%
3,605%
16%
4%
10%
25%
18%
(17%)
(27%)
(9%)
(79%)
38%
11%
(66%)
(24%)
15%
15%
15%
Net debt (comprising total borrowings and lease liabilities less cash and cash equivalents) as at 30 June 2022 was $1,325 million (or $1,501 million higher
than the prior period). All of Newcrest’s borrowings are US dollar denominated.
The gearing ratio (net debt as a proportion of net debt and total equity) as at 30 June 2022 was 10.2%, an increase from negative 1.8% as at 30 June 2021.
Notwithstanding this increase from 30 June 2021, a gearing ratio of 10.2% remains comfortably within Newcrest’s financial policy target of being less than 25%.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 69
Components of the movement in net debt and gearing are outlined in the table below.
US$m
Bilateral bank debt facilities
Corporate bonds – unsecured
Capitalised transaction costs on facilities
Total borrowings
Lease liabilities
Total debt
Less cash and cash equivalents
Net debt or (net cash)
Total equity
Total capital Net debt or (net cash) and total equity
Gearing Net debt or (net cash)/total capital
5.2.2. Leverage Ratio and Interest Coverage Ratio
As at 30 June
2022
143
1,650
(14)
1,779
111
1,890
(565)
1,325
11,665
12,990
10.2%
2021
Change
Change %
–
1,650
(15)
1,635
62
1,697
(1,873)
(176)
10,124
9,948
(1.8%)
143
–
1
144
49
193
1,308
1,501
1,541
3,042
12.0
–
–
7%
9%
79%
11%
70%
853%
15%
31%
667%
Newcrest’s net debt to EBITDA (leverage ratio) of 0.6 times as at 30 June 2022 (an increase of 0.7 times compared to 30 June 2021) remains comfortably
within its financial policy target of being less than 2.0 times EBITDA on a trailing 12 month basis.
US$m
Net debt or (net cash)
EBITDA (trailing 12 months)
Leverage ratio (times)
As at 30 June
2022
1,325
2,054
0.6
2021
(176)
2,443
(0.1)
Change
Change %
1,501
(389)
0.7
853%
(16%)
(700%)
Newcrest’s interest coverage ratio decreased to 37.6 times as at 30 June 2022 (compared to 40.7 times as at 30 June 2021).
US$m
EBITDA
Less facility fees and other costs
Less discount unwind on provisions
Less debt extinguishment and related costs
Adjusted EBITDA
Net finance costs
Less facility fees and other costs
Less discount unwind on provisions
Less debt extinguishment and related costs
Net Interest Payable
Interest Coverage ratio
For the 12 months ended 30 June
2022
2,054
(12)
(9)
–
2021
2,443
(17)
(6)
(20)
2,033
2,400
75
(12)
(9)
–
54
37.6
102
(17)
(6)
(20)
59
40.7
Change
Change %
(389)
5
(3)
20
(367)
(27)
5
(3)
20
(5)
(3.1)
(16%)
29%
(50%)
100%
(15%)
(26%)
29%
(50%)
100%
(8%)
(8%)
70
5. Discussion and Analysis of the Balance Sheet continued
5.2. Financial metrics continued
5.2.3. Liquidity coverage
Newcrest had $2,422 million of cash and committed undrawn bank facilities as at 30 June 2022.
US$m
As at 30 June 2022
Cash and cash equivalents
Bilateral bank debt facilities
Liquidity coverage
As at 30 June 2021
Cash and cash equivalents
Bilateral bank debt facilities
Liquidity coverage
Facility
utilised
Available
liquidity
Facility
limit
n/a
143
143
n/a
–
–
565
1,857
2,422
1,873
2,000
3,873
n/a
2,000
2,000
n/a
2,000
2,000
6. Non-IFRS Financial Information
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 ‘non-GAAP information’ within the
meaning of National Instrument 52-112 – Non-GAAP and Other Financial Measures published by the Canadian Securities Administrator.
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 flows from operating activities less cash flows from 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);
– ‘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 and AIC 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 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.
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; and
– Free cash flow is reconciled to the cash flow statement in Section 3.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 71
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 and prior period, Statutory profit was equal to Underlying profit.
6.2. Reconciliation of Underlying profit to EBIT and EBITDA
US$m
Underlying profit
Income tax expense
Net finance costs
EBIT
Depreciation and amortisation
EBITDA
For the 12 months
ended 30 June
2022
872
357
75
1,304
750
2,054
2021
1,164
504
102
1,770
673
2,443
6.3. Reconciliation of All-In Sustaining Cost and All-In Cost
‘All-In Sustaining Cost’ and ‘All-In Cost’ are non-IFRS measures which Newcrest has adopted since the guidance was released by the World Gold Council
in June 2013.
The World Gold Council released an updated guidance note in November 2018, which Newcrest fully applied from 1 July 2019.
The AISC and gold sales outcomes presented in the table below are from Newcrest’s operations only and do not include Newcrest’s 32% attributable
share of Fruta del Norte (through its 32% equity interest in Lundin Gold).
Gold sales (koz)
Cost of sales
Depreciation and amortisation
By-product revenue
Gold concentrate treatment and refining deductions
Corporate costs
Sustaining exploration
Sustaining leases
Sustaining production stripping
Underground mine development
Sustaining capital expenditure
Rehabilitation accretion and amortisation
All-In Sustaining Cost
Growth and development expenditure
Non-sustaining capital expenditure*
Non-sustaining production stripping
Non-sustaining exploration
Non-sustaining leases
All-In Cost
For the 12 months ended 30 June
2022
2021
Reference
US$m
US$/oz
6.3.1
6.3.2
6.3.3
6.3.4
6.3.7
6.3.5
6.3.5
6.3.6
6.3.4
6.3.6
6.3.5
6.3.7
1,777
2,853
(731)
(1,057)
44
110
10
30
163
4
431
35
1,892
9
762
50
110
12
1,605
(411)
(594)
25
62
5
17
92
2
243
19
1,065
5
428
28
62
7
US$m
1,996
2,805
(650)
(1,040)
48
109
12
26
143
(4)
371
17
1,837
11
588
5
103
7
US$/oz
1,406
(326)
(521)
24
55
6
13
71
(2)
186
8
920
5
294
3
52
4
2,835
1,595
2,551
1,278
*
Represents spend on major projects that are designed to increase the net present value of the applicable mine and are not related to current production. Significant
projects in the current period include key project at Cadia (including PC2-3 development and the Expansion Project), the Front-End Recovery Project at Lihir, Red Chris
Block Cave PFS and Early Works and Havieron PFS and Early Works.
72
Directors’ Report continued
6. Non-IFRS Financial Information continued
6.3. Reconciliation of All-In Sustaining Cost and All-In Cost continued
6.3.1. Cost of sales
US$m
Cost of sales as per Note 5(b) of the consolidated financial statements
6.3.2. Depreciation and amortisation
US$m
Depreciation and amortisation per Note 5(b) of the consolidated financial statements
6.3.3. By-product revenue
US$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
Molybdenum concentrate sales revenue
Molybdenum concentrate treatment and refining deductions
Total molybdenum 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
For the 12 months
ended 30 June
2022
2,853
2021
2,805
For the 12 months
ended 30 June
2022
731
2021
650
For the 12 months
ended 30 June
2022
1,149
(115)
1,034
22
(2)
20
3
–
3
2021
1,137
(120)
1,017
26
(3)
23
–
–
–
1,057
1,040
For the 12 months
ended 30 June
2022
2021
138
(19)
(9)
110
143
(23)
(11)
109
For the 12 months
ended 30 June
2022
2021
163
4
50
217
4
213
217
143
(4)
5
144
(4)
148
144
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 6.3.6. Capital expenditure
US$m
Payments for plant and equipment, development and feasibility studies per the consolidated financial statements
Information systems development per the consolidated financial statements
Total capital expenditure
Sustaining capital expenditure (per 3.3 of the Operating and Financial Review)
Non-sustaining capital expenditure (per 3.3 of the Operating and Financial Review)
Capitalised Leases (per 3.3 of the Operating and Financial Review)
Total capital expenditure
6.3.7. Exploration expenditure
US$m
Exploration and evaluation expenditure per the 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
73
For the 12 months
ended 30 June
2022
1,181
12
1,193
431
773
(11)
1,193
2021
940
20
960
376
595
(11)
960
For the 12 months
ended 30 June
2022
2021
120
10
110
120
115
12
103
115
For the 12 months
ended 30 June
2022
103.4
103.1
2021
142.5
142.1
For the 12 months
ended 30 June
2022
388
2021
266
893,123,247
817,289,692
47.5
32.5
6.6. Reconciliation of Return on Capital Employed (ROCE)
Return on Capital Employed (ROCE) 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
Total capital (net debt and total equity) – as at 30 June 2020
Total capital (net debt and total equity) – as at 30 June 2021
Total capital (net debt and total equity) – as at 30 June 2022
Average total capital employed
Return on Capital Employed
For the 12 months
ended 30 June
2022
1,304
–
9,948
12,990
11,469
11.4%
2021
1,770
9,237
9,948
–
9,593
18.5%
74
6. Non-IFRS Financial Information continued
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)6
Gold Production
Gold production – Newcrest operations
Gold production – Fruta del Norte (32%)
Gold production
All-In Sustaining Cost6,9,18
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
Realised gold price 19
All-In Sustaining Cost – Newcrest operations
All-In Sustaining Cost margin
7. Risks
For the 12 months
ended 30 June
UoM
2022
2021
oz
oz
oz
1,812,459
143,723
1,964,037
129,285
1,956,182
2,093,322
For the 12 months
ended 30 June
2022
1,892
107
1,999
2021
1,837
91
1,928
1,777,092
139,409
1,996,243
120,181
1,916,502
2,116,425
1,065
766
1,043
For the 12 months
ended 30 June
2022
1,797
1,065
732
920
753
911
2021
1,796
920
876
UoM
$m
$m
$m
oz
oz
oz
$/oz
$/oz
$/oz
UoM
$/oz
$/oz
$/oz
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.
At an enterprise risk level Newcrest has a Risk Management Framework and determines risk according to a group Risk Architecture. Newcrest has
a process in place to identify those risk events 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 risk 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.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 75
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.
Further information on Newcrest’s approach to risk management is set out in Newcrest’s Corporate Governance Statement and Newcrest’s
Sustainability Report.
Fluctuations in external
economic drivers
External economic drivers (including macroeconomic, metal prices, exchange rates and costs)
Market risk has become a top risk area over the last 12 months, which reflects changes in the macroeconomic environment
and heightened uncertainty in relation to the impacts of inflation, interest rates and commodity prices.
External Risks
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 June 2023. 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 advers ely 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 and Canadian 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 and Brucejack uses the Canadian dollar as its functional currency. All other
material entities, including Lihir, use the US dollar as their functional currency.
76
7. Risks continued
Fluctuations in external
economic drivers
continued
Increased costs, capital and commodity inputs
External Risks continued
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 orebody, surface and underground haulage distances, 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 the delivered
cost for 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:
– increase the threat of cost escalation on Newcrest’s ability to deliver the capital project portfolio. It is noted that this risk
is heightened due to the connections it has to risk areas such as labour and supply chain vulnerabilities;
– impact the outcomes that will be reported in Newcrest’s upcoming Feasibility Studies;
– impact the profiles presented in Newcrest’s indicative longer-term outlook (which are expected to be updated on
completion of the studies noted above during FY23);
– change the economic viability of mining operations, particularly higher cost mining operations, which may result in
decisions to alter production plans, investment decisions 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 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 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 2023 financial year of metal prices
and exchange rates are approximately as follows:
Element
Realised gold price
Realised copper price
AUD:USD exchange rate
Change
+/-$10/oz
+/-$0.05/lb
+/-A$0.01
Impact on
Revenue
Revenue
EBIT
Estimated Impact
+/-$21m
+/-$14m
-/+$21m
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 77
Political events,
Government actions,
changes in law and
regulation and inability
to maintain title
Political events, actions by governments, authorities and changes in law and regulation
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.
In a number of jurisdictions where Newcrest has existing interests, the legal framework is becoming increasingly complex,
onerous and subject to change. Changes in law, regulations or policies, 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 or investment. There is a
risk that governments could review or amend laws and regulations, regulatory decisions (such as the grant of tenements),
contractual arrangements or government policy, or the manner in which they are interpreted or applied, 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 taxes, 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, cultural heritage 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);
– 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 continuing political focus on future policy directions, including in relation to the
extractives sector. The current Marape Government has stated it wants to increase benefits for PNG from extractive projects.
Potential policy changes could include introducing a new production sharing regime for minerals and oil/gas, amending the
existing Mining Act, introducing domestic processing/refining requirements, changing the level and manner of local equity
participation in projects and/or changing 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. National elections in mid 2022 may result in
further policy changes depending on the outcome.
In 2020, the PNG Government announced that the Special Mining Lease (SML) for the Porgera mining operation would not
be renewed. It subsequently amended the Mining Act and issued a new Special Mining Lease for Porgera to Kumul Mineral
Holdings Limited (a State-owned company). The PNG Government has been working with the Porgera JV participants and other
key stakeholders to establish new arrangements for restarting and operating Porgera. The PNG Government has stated that the
decision not to renew the Porgera SML is 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.
78
7. Risks continued
External Risks continued
Political events,
Government actions,
changes in law and
regulation and inability
to maintain title
continued
In 2020, the PNG Government 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 yet to be debated in the PNG 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 between the State of PNG and the Wafi-Golpu Joint Venture (WGJV) signed in December 2018. Those
proceedings were dismissed by the National Court in February 2020 and the Governor appealed the matter to the Supreme
Court. This appeal has not yet been determined. In March 2021 the Governor commenced a new judicial review application
against the State of PNG 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 the
permitting of the Wafi-Golpu Project and has commenced discussions in relation to the SML. 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 and Brucejack mines are located. First Nations in British Columbia have
made claims in respect of First Nations 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 regulate activities by companies 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 respective groups throughout British Columbia in order to
resolve many of these claims. Although none of these claims have impacted the Red Chris and Brucejack mines, the issues
surrounding First Nations title and rights remain to be resolved.
In addition, the Government of British Columbia has adopted the Declaration on the Rights of Indigenous Peoples Act (2019)
(DRIPA) to implement the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) in British Columbia. The
legislation commits to a systematic review of the province’s laws for alignment with UNDRIP principles, while also encouraging
new agreements with Indigenous Groups that are intended to address outstanding governance questions around the nature of
Indigenous rights and title interests in British Columbia.
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 DRIPA
with the TCG with respect to the Red Chris mine which would require that decisions under British Columbia’s 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. As a consent agreement or process is not yet in place, the
impacts of such an agreement or process on the permitting for the proposed development and operation of the Red Chris
block cave mine are currently unknown.
Several First Nations groups in British Columbia have recently launched challenges against the constitutionality of the
“free entry” mineral staking regime in the Province and the Government of British Columbia pledged to reform the Mineral
Tenure Act (the legislation that governs the acquisition and holding of mineral tenures in the Province) in consultation with
First Nations and First Nation organisations. The impacts of these developments on the acquisition and renewal of mineral
tenures in the Province are not yet known.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 79
In Western Australia, where Telfer and Havieron are located, the Government enacted a new Aboriginal Cultural Heritage Act
2021 (WA) to replace the existing Aboriginal Heritage Act 1972 (WA). Before the new Act comes into operation, the Government
needs to develop the regulations, statutory guidelines and operational policies to support and implement the operation of
the new Act, which is expected to take at least 12 months. Newcrest is working with the Jamukurnu-Yapalikurna Aboriginal
Corporation (the Prescribed Body Corporate for the Martu People in Western Australia) to review the existing heritage protocol
under its Indigenous Land Use Agreement which covers Telfer and Havieron. This review will take into account the changes to
cultural heritage laws, permits and management plans arising from the introduction of the new Act.
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 including in relation to community consultation and
environmental issues that seek to restrict mining activities in Ecuador present a risk to the mining industry.
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.
Legal compliance and inability to maintain title
Newcrest’s current and future mining operations, development projects and exploration activities are subject to various laws,
regulations and policies 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.
Disputes arising from the application or interpretation of applicable laws, regulations or policies in the countries where
Newcrest operates could adversely impact Newcrest’s operations, development projects, exploration assets, financial
performance and/or value. A failure to comply with applicable 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 titles 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 progressing initiatives to reform
international taxation rules and ensuring that multinational enterprises pay a fair share of tax wherever they operate including
through the October 2021 Statement on a Two-Pillar Solution to Address the Tax Challenges from the Digitisation of the Economy.
80
7. Risks continued
Political events,
Government actions,
changes in law and
regulation and inability
to maintain title
continued
Climate Change
External Risks continued
As Pillar 1 measures currently apply only to multinational enterprises that have a global turnover exceeding €20 billion and
profitability exceeding 10%, they should not apply to Newcrest. However, Pillar 2 measures which seek to introduce global
minimum tax prima facie apply to Newcrest given its annual turnover exceeds the €750 million threshold. This initiative 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 Government
and relevant tax authorities. Newcrest also participates in tax reform initiatives through industry bodies. Changes in taxation
and/or royalty laws and regulations could result in higher taxes and/or royalties being payable, require payment of taxes
and/or royalties due from previous years, which could adversely affect Newcrest’s profitability. Taxes may also adversely
affect Newcrest’s ability to effectively repatriate earnings and otherwise deploy its assets.
Newcrest supports tax transparency initiatives to highlight our fiscal contribution in the various jurisdictions in which we operate.
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, availability of equipment supply, access to external funding and insurances as well as physical risks
(such as the risk of water scarcity and extreme weather events). In addition, gold and copper mining operations are energy
intensive endeavours by their nature.
In line with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations, Newcrest has undertaken 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).
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 that are relevant only to the Company’s assessment of
its financial and physical risks. 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.
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 some 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 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.
In May 2021 Newcrest set a goal to achieve net zero carbon emissions by 2050, which relates to its 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 (with such baseline to be adjusted for any material acquisitions and divestments
based on GHG emissions at the time of the transaction).
The focus for FY22 was the development of a net zero roadmap outlining technologies to abate emissions and achieve net zero
by 2050. The roadmap is designed to align with the Paris Agreement goal to minimise the impact of climate change and limit
warming to well below 2oC, preferably to limit warming to 1.5oC.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 81
Direct action that results in absolute abatement is the preferred course of action. However, if technologies are not ready at
the timing assumed in the roadmap then carbon offsets will be used as a hedge against this risk. Carbon offsets will also be
utilised for hard to abate or residual emissions, and carbon offset projects that deliver social benefits are preferred.
Three of Newcrest’s assets (Cadia, Red Chris and Brucejack) are grid connected allowing for the use of renewable power
without needing geographic proximity to the site operations. Red Chris and Brucejack predominantly operate on hydroelectric
power and Cadia is in the process of reducing its net carbon emissions from its electricity supply through its current and future
Power Purchase Agreements (PPA).
On 16 December 2020, Newcrest announced that it entered into a 15-year renewable 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 GHG emissions intensity as it is expected
to provide Newcrest with access to large scale generation certificates which Newcrest intends to surrender to achieve
a reduction in its GHG emissions. This PPA is expected to deliver a ~20% reduction in Newcrest’s GHG emissions and
is a significant step towards achieving Newcrest’s target of a 30% GHG emissions intensity reduction by 2030. In FY22,
further work was undertaken on additional decarbonisation options for Cadia’s electricity supply and mobile fleet including
establishing electric vehicle trials.
GHG management plans and detailed actions are defined for each operating site and these continued to be implemented in
FY22. The net zero roadmap activities will be integrated with the site GHG management plans.
To inform investment decisions, Newcrest has also adopted a protocol for applying shadow carbon prices with the pricing set
updated in FY22 to US$50/tonne and US$100/tonne CO2-e, unless the jurisdiction has a higher regulated carbon price that
supersede these prices. Currently these shadow carbon prices enable us to simplistically scenario test the potential impact
on investments.
Financial Risks
Capital and Liquidity
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, interest rates, 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. Following extension in 2021, the deferred consideration
becomes payable in March 2023. There can be no certainty that Lundin Gold Inc. will be able to service the Facilities, nor that
Indotan will make payment of the deferred consideration.
82
7. Risks continued
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 or impairment reversal. Where an
indicator of impairment or impairment reversal exists, a detailed formal estimate of the recoverable amount is determined.
An Impairment is recognised when a cash generating units’ (CGU) carrying amount exceeds its recoverable amount. The
recoverable amount of each CGU is estimated using its fair value less costs of disposal.
Financial Risks continued
Failure to discover
new, or extend existing,
Mineral Resources and
convert to 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 $50
and $100 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 are 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
Proved and Probable Ore Reserves and cash operating costs are, to a large extent, based upon the interpretation of geologic
and scientific data obtained from drill holes and other sampling techniques. They are also based upon Pre-Feasibility and
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, presence of contaminant elements, expected recovery
rates of gold from the ore, estimated operating costs, tailings management 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.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 83
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 Mineral Resources and Ore Reserves can be estimated to obtain necessary ore body knowledge to assess the
technical and economic viability of mining projects and to support a development decision. 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, environmental and social considerations, 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 assumptions and
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/contaminants, geotechnical
assessments, permitting approvals, 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 and engineering interpretation and statistical and
economic analysis which may subsequently prove to be unreliable or flawed.
Newcrest’s annual Mineral Resources and Ore Reserves statement (most recently issued on 17 February 2022) is based upon a
number of factors, including, without limitation, resource exploration drilling and production results, geological interpretations,
historical production performance, mining dilution and ore loss, metallurgical recovery, tailings management, ESG
considerations, 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 and NI43-101. The inclusion of Mineral Resource estimates should not
be regarded as a representation that these amounts can be converted to Ore Reserves or that those Ore Reserves can be
economically mined. Investors are cautioned not to place reliance on Mineral Resource estimates, particularly Inferred Mineral
Resource estimates.
Newcrest has joint venture interests, including its interests in the Wafi-Golpu Project 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.
Joint venture
arrangements
84
7. Risks continued
Inability to make
or to integrate
new acquisitions
Strategic Risks continued
Newcrest’s ability to execute acquisitions and challenges or delays in the 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 unanticipated costs and liabilities, inability to realise targeted upsides, unanticipated issues that
may impact operations and/or the inability to realise other expected benefits and synergies, where identified. 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.
To mitigate these risks, Newcrest undertakes comprehensive, multi-functional due diligence, including peer reviews and third
party input as required. Guidelines and gating protocols are in place to approve new acquisitions, and post-investment reviews
are undertaken with learnings identified and incorporated into subsequent due diligence and or integration activities.
Operational Risks
Catastrophic
operational risks
As part of the annual business planning process, Newcrest identifies the operational issues which may put the delivery of
the business plan at risk and therefore potentially have a material adverse impact on Newcrest’s production, cash flows or
financial condition.
Consideration is given (but not limited) to areas including:
– Geotechnical engineering
– Tailings Management
– Hazardous materials containment and handling
– Non-process fire and explosion
– Asset and utilities integrity and performance
– Natural catastrophe
– Availability of critical utilities and inputs
Geotechnical Engineering
The identification and management of geotechnical conditions specific to each of Newcrest’s mines is essential in achieving
safe mine design.
Geotechnical risks include the potential for seismicity. 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 changing ground
conditions, seismic activity, inundation, inrush, airblast and the presence of high rock temperatures.
Newcrest faces particular geotechnical, geothermal and hydrogeological challenges, in particular due to the trend toward more
complex deposits, mine planning requires deeper and larger pits, and the use of deep, bulk or selective underground mining
techniques. This leads to higher pit walls, more complex underground environments and increased exposure to geotechnical,
geothermal and hydrogeological impacts.
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. On 2 July 2021 a significant seismic event was recorded
at Cadia which resulted in the requirement to change the mining plan and upgrade ground support systems over a period
of several months. 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. Cadia has recorded sudden unplanned releases of
both dry fine ore material and wet mud material through draw bells during the past financial year.
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. For example, at Cadia preconditioning
techniques need to be implemented to reduce the magnitude of large seismic events and reduce the risk associated with
airblast. At Cadia and Telfer ground support systems need to be designed and installed to contain potential energy release
that may result from a seismic event. At Cadia semi-autonomous equipment is deployed due to the safety risk associated with
unplanned release of material, including mud and dry fine ore, from the drawpoints. Significant removal of both groundwater
and sea water inflow and geothermal control is required at Lihir 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.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 85
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.
Tailings Management
Tailings are produced as part of the mining process. Tailings storage facilities are constructed progressively throughout the life
of the mine to support increasing capacity requirements. Should there be a failure in the integrity of a tailings facility, there is a
risk that tailings may be released and cause material harm to people and the environment downstream of the facility. 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.
In FY22 we updated our Group Standard on Tailings and Water Storage. The Standard is aligned to the International Council
on Mining & Metals (ICMM) Preventing Catastrophic Failure of Tailings Storage Facilities position statement. The updated
Standard sets the minimum critical controls for Newcrest to meet its obligations under the Global Industry Standard on Tailings
Management. As a member of the ICMM we are committed to conforming with the Standard, in line with the classifications of
our facilities. The updated Standard also defines and mandates a Tailings Stewardship program which applies to all qualifying
dams (tailings and water storage) across Newcrest. The design basis and stability of all Newcrest’s Tailings facilities have been
assessed through the use of independent experts.
Hazardous Materials Containment and Handling; and Non-process fire and explosion
Process Safety is the third key pillar of Newcrest’s Safety transformation program. Process Safety is focussed on the
identification of those conditions which have the potential to result in a sudden and unplanned release of energy resulting in
loss of containment or fire.
The Process Safety program includes consideration of equipment and process design; control design; and operational
excellence. Process Safety reviews are conducted throughout all Newcrest operations to challenge the adequacy of the
controls in place to manage site specific process safety risks.
Asset and utilities integrity and performance
The failure of critical assets is a risk to the achievement of the business plans which could result in a material adverse effect
on Newcrest’s operating results and financial position.
Newcrest facilitates independent reviews which analyse risk understanding, control design and control execution of those
risks which pose the highest business interruption risk to Newcrest. Newcrest also has asset integrity programs which
systematically review the condition of assets, determine current condition and the risk this poses on the business as a means
to prioritise any restoration work.
Natural catastrophe
As part of the annual risk identification process, each asset considers all potential natural catastrophes and any changes in the
likelihood of the event occurring. Risks include (but are not limited to), flood, fire, drought, landslides, hurricane and cyclones,
excessive snow falls/avalanches and tsunami events.
Availability of critical utilities and inputs
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 power and water, 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.
86
7. Risks continued
Information technology
and cyber risk
Failure to attract and
retain key employees
and effectively
manage industrial
relations issues
Supply Chain
availability, disruption
and performance
Operational Risks continued
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 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 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 malicious actors.
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 Newcrest’s systems,
information through fraud or other means of deceiving its third-party service providers, employees or contractors. 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.
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 employees, or that people trained by Newcrest will be retained
in the future. Newcrest values its people and has policies, procedures, frameworks and several initiatives in place to mitigate
this risk – including a Respect@Work program, performance reward and recognition, an annual organisational health survey,
and leadership development programs. Newcrest focuses on diversity and inclusion in the workplace and developing its people
at every level. Newcrest also seeks to build a future supply of industry labour by actively promoting mining and the resources
industry, within Australian Universities and other educational institutions, 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, Telfer and Red Chris. Legal proceedings
involving the certification of the United Steel Workers’ Union (USW) at the Red Chris site concluded on 29 September 2021,
resulting in the certification of the USW as the bargaining agent for eligible Red Chris employees for the negotiation of a
collective bargaining agreement. Negotiation of a collective bargaining agreement with the USW in respect of eligible Red
Chris mine employees is on-going.
Newcrest may be impacted by industrial relations issues, including labour unrest, strike or lockout or other labour disturbances
in connection with the negotiation of a collective bargaining agreement at Red Chris, as well as in connection with its
employees and the employees of Newcrest’s contractors and suppliers at any of Newcrest’s sites. Any such activity 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.
Newcrest is exposed to availability, disruption and performance risks across its supply chain, including lack of suitable
suppliers or contractors, cost increases, impacts of pandemics and epidemics on the supply chain, transportation and
logistics issues including delays in delivery, disruption to trade flows due to geopolitical tensions and/or changes in legislation,
performance of suppliers and contractors to contractual terms, and damage to our reputation caused by actions of our
suppliers or contractors.
Newcrest has published its Procurement Policy which sets out its commitment to procuring, delivering and managing goods
and services in a way that aligns to Newcrest’s Vision and its aspirations across five key pillars of Safety & Sustainability,
People, Operating Performance, Innovation & Creativity and Profitable Grow. Our Supplier Performance Commitments publicly
sets out our expectations for business conduct from all suppliers wishing to do business with, or on behalf of, Newcrest.
Newcrest has implemented and continually evolves its supplier selection, procurement governance and contract management
processes to evaluate and monitor performance in its supply chain.
However, there is a risk that availability, disruption and/or poor performance across the supply chain could have a material
adverse effect on Newcrest’s business, financial condition and results of operations.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 87
Risks associated
with doré and
mineral concentrates
Newcrest’s operations produce dore which is delivered to third party refineries for refining into gold and silver bullion. Refining
risks including penalties incurred from producing dore outside of the contractual specifications, quality of the refinery process,
theft, and refinery disruption such as through unplanned outages. Transportation risks include fluctuating transportation charges,
delays in delivery of shipments, theft, terrorism, geopolitical tensions and border closures and adverse weather conditions.
Corporate culture and
business conduct
Anti-bribery and
anti-corruption laws
Newcrest’s operations also produce mineral concentrates which are transported by ocean vessels to smelters, located
predominantly in Asia. Risks include assay differences between Newcrest and customers, losses during the smelting process,
disruption at the operations of receiving smelters, and fluctuating smelter charges. Transportation risks include fluctuating
transportation charges, delays in delivery of shipments, terrorism, port congestion, loss of or reduced access to export ports,
adverse weather conditions, geopolitical tensions and border closures, and environmental liabilities in the event of an accident
or spill. 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.
Ethics and Compliance Risk
Newcrest’s reputation and licence to operate is influenced by 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 are designed to promote 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 program which includes controls and procedures to help
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.
Company culture is a factor in achieving Newcrest’s strategic goals. As such Newcrest has established aspirations, standards
and expectations for its workforce and aims to enhance and shape the organisation’s culture by focusing on training and
awareness on leadership behaviours, organisational systems and workforce engagement. This commitment to enhancing
culture is a commitment made by the Executive Management team and is the responsibility of all senior leaders and is the
expectation of the workforce. Delivering on this commitment to employees will likely impact retention of key talent and assist
in creating the target High-Performing, Inclusive Culture that contributes to collaboration, creativity and an owner’s mindset.
Newcrest is conducting training on inclusive leadership skills for leaders across the organisation. Policies and processes
reinforce the values and behaviours expected in the workplace.
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.
88
7. Risks continued
Legal proceedings,
investigations and
disputes
Ethics and Compliance Risk continued
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.
In preparing Newcrest’s Financial Statements, Newcrest assesses liabilities for 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.
Health, Safety and Sustainability
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.
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.
The introduction of wide scale vaccination commencing in FY21 has seen an opening up of borders and businesses, however
given the ongoing and dynamic nature of the pandemic, it is difficult to predict the future impact of the COVID-19 pandemic on
Newcrest’s business (or on the operations of other businesses on which it relies). New variants of concern, and surges in cases
may mean governments adopt additional restrictions and controls that introduce additional impacts on Newcrest’s business,
and there is no guarantee that Newcrest’s efforts to address the adverse impacts of COVID-19 will be effective. Furthermore,
the ongoing efficacy of vaccines, the duration of the pandemic, the impact on contracts and agreements to which Newcrest
is a party, and the impact on the markets in which Newcrest operates and the global economy generally all potentially may
impact Newcrest.
There have been no material COVID-19 related events impacting gold production at any Newcrest operations. 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.
Newcrest has experienced positive COVID-19 cases at each of its operations. At the date of this report the number and
severity of positive COVID-19 cases have been within the capability of care and treatment and/or isolation facilities within
our operations. Whilst Lihir was impacted by restricted international travel between Australia and Papua New Guinea from
March 2021 due to Government COVID-19 measures, normal travel arrangements were re-established in April 2022 and there
were no material impacts to gold production.
All of Newcrest’s operations have business continuity plans and contingencies in place which seek to minimise disruptions
to the operations in the event that a significant number of operational employees and/or contractors contract the virus.
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.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 89
Health and safety
There are numerous occupational health and safety risks associated with mining and metallurgical processes such as the
operation of heavy and complex machinery in challenging geographic locations, exposure to hazardous substances, and
travel to and from operations. These hazards may cause personal injury and/or loss of life to Newcrest’s personnel, suppliers,
contractors 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 health, safety and environment management system with associated standards, tools and governance
processes which aims 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 implement a proactive approach to management of psychological safety risks, as
well as risks associated with sexual harassment and sexual assault 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.
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/metals extraction 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 and is regularly reviewed and updated throughout
the life of the operation in accordance with Newcrest’s Mine Closure Standard. 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.
90
7. Risks continued
Environment and closure
continued
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.
Health, Safety and Sustainability continued
Failure to maintain
community relations
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.
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, benefits sharing with First Nations’ governments, 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 stakeholder focus on ESG and the
degree to which companies undertake responsible community investment, respect the rights of Traditional Owners and First
Nations Peoples plans, manage 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 and First Nations communities, local landholders and the wider local community. These agreements may include
(but are not limited to) compensation, co-management and other benefits, consent provisions 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 and in partnership with relevant parties including
First Nations governments. 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 and First Nations organisations may limit
the ability of the parties 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.
To gain insight to external perceptions of Newcrest’s reputation, stakeholder mapping, perception awareness and risk sensing
is being undertaken. This information aims to support Newcrest activities and provide a baseline for ongoing monitoring.
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 in proximity to and potentially impacted by, such activities. Various non-government
and community-based organisations are vocal critics of the mining industry and its practices, including in relation to
the disturbance or destruction of cultural heritage, due diligence processes associated with human rights including
modern slavery risk management, the use of hazardous substances in processing activities, terrestrial tailings dam
stability and potential wall failure, dust 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.
Indigenous peoples
and engagement
There is heightened public scrutiny of agreements between mining companies and Indigenous/First Nations communities,
how industry engages with Indigenous/First Nations communities, and how companies manage cultural heritage with
Indigenous/First Nations communities.
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 and First Nations peoples, including the requirement
to secure the Free, Prior and Informed Consent (FPIC) from these communities for Newcrest’s activities. Some of these
jurisdictions impose obligations on government with respect to the statutory rights of Indigenous people/First Nations and/or
impose non-statutory obligations that derive from these rights. Some mandate consultation with Indigenous/First Nations
peoples, including actions to approve or grant mining rights or permits.
The obligations of government and private parties under various international and national instruments, legislation and other
considerations pertaining to Indigenous/First Nations people continue to evolve. This potentially impacts Newcrest operations
and projects.
Newcrest Annual Report 2022Directors’ Report continuedOPERATING AND FINANCIAL REVIEW continued 91
Cultural Heritage
For example, the Government of British Columbia in Canada has adopted the Declaration on the Rights of Indigenous Peoples
Act (2019) (DRIPA) to implement the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) in British
Columbia which will impact the Red Chris and Brucejack mines.
Newcrest’s current and future operations are subject to a risk that one or more groups of Indigenous/First Nations people,
or people in Papua New Guinea and Fiji may oppose continued operation, further development, or new development of its
projects or operations. Opposition by Indigenous/First Nations people to Newcrest’s activities may require modification
of, or preclude operation or development of, its projects or may require the entering into additional agreements with
Indigenous/First Nations people, beyond those to which Newcrest has previously entered into, which may result in additional
costs. Claims and protests of Indigenous/First Nations peoples may disrupt or delay activities, including permitting, at
Newcrest’s operations and projects.
Newcrest is subject to laws and regulations that provide for the protection and management of cultural heritage in the
jurisdictions in which Newcrest operates. Alongside host country requirements Newcrest has in place policies, standards and
procedures that underpin the management and protection of cultural heritage.
Following the Commonwealth Parliament Joint Standing Committee on Northern Australia, Newcrest has come under
heightened scrutiny regarding cultural heritage management. This includes our overall governance and systems, our
management of tangible and intangible heritage, consideration of cultural landscapes, Free Prior and Informed Consent (FPIC),
and risk and engagement. While the Parliamentary Inquiry focused on Indigenous cultural heritage, non-Indigenous (historic)
heritage must also be considered as this holds an important place in mining cultures.
Newcrest’s framework for management of cultural heritage risk includes the review of existing and proposed agreements
by the Group cultural heritage subject matter expert, cultural heritage risk assessments, appropriate use of cultural heritage
monitors and surveys, and compulsory cultural heritage and cultural sensitivity training and induction at Newcrest assets. In
FY22 Newcrest commenced the review of its cultural heritage risk tolerance framework and the development of a stand-alone
Cultural Heritage Standard and supporting materials which set out the mandatory activities to be carried out at all operating
sites, projects and exploration sites managed by Newcrest.
It remains possible that an asset could inadvertently disturb or destroy significant cultural heritage resulting in further
international scrutiny by investors and non-government organisations, negative impact on shareholder value, compensation
and/or offset claims, increased costs to projects and operations, schedule delays impacting construction and/or production,
and lasting reputational damage.
Human Rights
Respect for human rights is considered a fundamental business responsibility under the United Nations Guiding Principles on
Business and Human Rights (UNGPs) and is a reflected commitment in Newcrest’s Human Rights Policy.
Civil society, investors and those who receive our products are increasingly scrutinising the extractive industry. This is no
longer only evident in more complex socioeconomic and socio-political jurisdictions. The extractive industry is particularly
prone to complaints, grievances 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 and illegal mining activities.
There is emerging legislation in multiple jurisdictions which is increasing investor, shareholder and public awareness and focus
on human rights. For example, modern slavery legislation in Canada, and the European Commission’s Directive on corporate
sustainability due diligence.
Within Australia there are calls to strengthen the Australian Modern Slavery Act 2018. Areas of focus include forced labour, child
labour and other slavery-like practices, displacement of local communities, discrimination by race, ethnicity, religious beliefs,
age, gender, sexuality and other protected attributes, underpayment for labour or services provided and more recently the right
to personal safety with respect to sexual assault and sexual harassment in the mining industry. 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.
Newcrest has identified its salient human rights issues by conducting a human rights risk assessment. Further, Newcrest has
engaged an external audit specific to its human rights response maturity to assure the governance, systems and controls in
place which aim to prevent, mitigate, and account for actual and potential adverse human rights impacts. Newcrest’s human
rights response is governed at the group level and integrates human rights awareness through its value chain.
92
Directors’ Report continued
REMUNERATION REPORT
REMUNERATION REPORT
19 August 2022
Dear Shareholder
On behalf of the Board of Newcrest, I am pleased to provide our Remuneration Report for the year ended 30 June 2022, for which we seek your
support at our Annual General Meeting (AGM) in November 2022.
This report explains the links between Newcrest’s Executive remuneration framework and outcomes and Newcrest’s strategy and performance.
Year in review
In line with its purpose of creating a brighter future for people through safe and responsible mining, Newcrest delivered another twelve-month period
free of fatalities and reported a Total Recordable Injury Frequency Rate (TRIFR) of 3.9 per million hours worked. Injury rates were 70% higher than the
prior period driven by minor hand injuries and other low severity incidents. Newcrest is actively focused on enhancing safety behaviours with the aim
of ensuring all employees and contractors go home safely each day.
Newcrest continues to implement actions through its Respect@Work program to enable everyone across its global workforce to feel safe, respected
and valued. In particular, a dedicated team has been established to focus on actions to prevent and eliminate any form of sexual assault and sexual
harassment in the workplace. In conjunction with Newcrest’s program to promote inclusion, diversity and psychological safety across all of its
operations and locations, this is expected to support Newcrest’s aspiration of a high-performing and inclusive culture where everyone can thrive
and excel.
Newcrest’s Group Net Zero Emissions Roadmap has identified key steps for Newcrest to deliver its goal of net zero carbon emissions by 2050.
From an operations perspective, Newcrest’s gold production of 1.96 million ounces was 7% lower than the prior period, which primarily reflects lower
mill throughput at Cadia with the planned replacement and upgrade of the SAG mill motor (completed in November 2021) and the expected decline
in grade. Copper production of 120.7 thousand tonnes was 15% lower than the prior period largely driven by the planned replacement and upgrade of
the SAG mill motor at Cadia.
Newcrest’s AISC of $1,043 per ounce was 14% higher than the prior period, primarily due to the proportionately lower contribution of low cost Cadia
production during the replacement and upgrade of the SAG mill motor in the current period, higher sustaining capital expenditure at Lihir and Cadia,
an increase in production stripping activity at Telfer, Red Chris and Lihir, and higher site costs at Lihir and Red Chris.
During the year, the Newcrest Board approved the progression of the Cadia PC1-2, Red Chris Block Cave, Havieron Stage 1 and Lihir Phase 14A
Pre-Feasibility Studies (PFS) to the Feasibility Stage with works advancing on all projects. Newcrest also completed the acquisition of Pretium
Resources Inc (Pretium).
Newcrest‘s interim dividend was US 7.5 cents, and its final dividend is US 20 cents, to be paid on 29 September 2022.
KMP changes
During the 2022 financial year, Jane McAloon and Philip Bainbridge joined the Board as Non-Executive Directors, Peter Hay resigned as Chairman
and Non-Executive Director and Peter Tomsett was appointed as Chairman.
In addition, Gerard Bond ceased to be Finance Director and Chief Financial Officer and Sherry Duhe commenced as Chief Financial Officer. Lisa Ali
also ceased as Chief People and Sustainability Officer. It has since been announced that Megan Collins has been appointed as Chief People and
Culture Officer. A process is currently underway to appoint a Chief Sustainability Officer.
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 by driving strong individual and Group performance in the interests of both the
Company and its shareholders in accordance with the Company’s values and risk profile.
In the 2022 financial year, the structure and performance conditions for both the Short Term Incentives (STIs) and Long Term Incentives (LTIs) were
reviewed to ensure they deliver on their intended purpose and are aligned to the Company’s strategy. For the STIs, the FY23 Business Measures
will remain broadly similar, with some minor adjustments to measures and weightings compared to FY22. FY23 personal objectives for Executives
will be streamlined, resulting in fewer, more heavily weighted objectives designed to emphasise critical focus areas such as our culture, including
organisational health and Respect@Work. For the LTIs, the weighting of the relative total shareholder return (TSR) component of the FY23 award
will be increased from 33% to 50%.
In addition, the Minimum Shareholding Requirement for Executives has been increased for FY23 onwards to 200% of total fixed remuneration (TFR) for
the CEO, and 100% of TFR for other Executives, to encourage retention of shares and enhance the alignment of shareholder and Executive interests.
Newcrest Annual Report 2022Directors’ Report continued 93
Remuneration outcomes
FY22 STI outcomes for Executives ranged from 52.4% to 59.2% of the maximum possible award, against a scorecard of business and personal
performance metrics. In arriving at this result, and consistent with standard processes, the Board adjusted the score downwards by making a number
of standard exclusions, excluding the receipt of insurance settlement proceeds and making minor subjective adjustments to some qualitative measures.
66.67% of the 2018 LTIs vested during the 2022 financial year, representing performance for the three years to 30 June 2021.
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 comparator companies, as described at section 4.1 of this Report, in FY22 Executives other than the Managing Director
and Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) received fixed pay increases averaging 2.8%. The Chief Operating Officers
and Chief Technical & Projects Officer received an increase in STI opportunity to 80% of TFR at target, and an increase in their maximum LTI
opportunity to 120% of TFR. Further increases have been determined to take effect from 1 October 2022, comprising a fixed pay increase of 2.9% for
the Chief Executive Officer and fixed pay increases averaging 2.9% for other Executives. This is broadly in line with average increases expected to be
paid to the Newcrest workforce.
No increase was made in Board or Committee fees for the Non-Executive Directors (NEDs) during the 2022 financial year. A review is intended to be
undertaken in the second half of 2022.
We continue to welcome shareholder feedback and thank you for your support.
Philip Aiken AM
Chairman, Human Resources and Remuneration Committee
94
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 2022 financial year.
The KMP for the 2022 financial year comprised all permanent 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
Section 7
Non-Executive Directors’ Remuneration
Section 8
Shareholdings
Section 9
Statutory Tables
95
96
98
99
109
115
116
116
118
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued 95
1. Key Management Personnel (KMP)
The following table sets out the Company’s KMP during the 2022 financial year
Name
Executive Directors
Sandeep Biswas
Former Executive Directors
Gerard Bond (1)
Other Executives
Sherry Duhe
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Former Executives
Lisa Ali (2)
Non-Executive Directors
Peter Tomsett (3)
Philip Aiken AM
Philip Bainbridge
Roger Higgins
Sally-Anne Layman
Jane McAloon
Vickki McFadden
Role
CEO
Finance Director
CFO
CFO
Chief Operating Officer (COO) – Papua New Guinea
COO – Americas
Chief Legal, Risk & Compliance Officer (CLRCO)
Chief Development Officer (CDO)
COO – Australia & Americas
COO – Australasia
Chief Technical & Projects Officer (CTPO)
FY22 Term
1 Jul 2021 – present
1 Jul 2021 – 8 Dec 2021
1 Jul 2021 – 3 Jan 2022
21 Feb 2022 – present
1 Jul 2021 – 8 Mar 2022
9 Mar 2022 – present
1 Jul 2021 – present
1 Jul 2021 – present
1 Jul 2021 – 8 Mar 2022
9 Mar 2022 – present
1 Jul 2021 – present
Chief People & Sustainability Officer (CPSO)
1 Jul 2021 – 8 Mar 2022
Non-Executive Director
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
1 Jul 2021 – present
10 Nov 2021 – present
1 Jul 2021 – present
1 Apr 2022 – present
1 Jul 2021 – present
1 Jul 2021 – present
1 Jul 2021 – present
1 Jul 2021 – present
Former Non-Executive Directors
Peter Hay
Chairman and Non-Executive Director
1 Jul 2021 – 10 Nov 2021
(1) Gerard Bond ceased as an Executive Director on 8 December 2021, and ceased as Chief Financial Officer on 3 January 2022. He was on leave from 9 December 2021
until 3 January 2022 and Kim Kerr was the Acting Chief Financial Officer whilst Gerard Bond was on leave, until Sherry Duhe commenced on 21 February 2022.
(2) Lisa Ali was on leave from 9 March 2022, and ceased employment on 1 April 2022.
(3) Peter Tomsett was appointed as Chairman effective from the end of the AGM on 10 November 2021.
96
2. Remuneration Snapshot
2.1. Key remuneration outcomes for the 2022 financial year
Executive Remuneration
STI Outcomes
LTI Outcomes
NED Remuneration
No fixed remuneration increase was
made for the CEO or CFO in relation
to TFR. Other Executives received
TFR increases averaging 2.8%,
following a benchmarking review,
and the COOs and CTPO received
an increase in STI opportunity
to 80% of TFR at target and an
increase in maximum LTI to 120%
of TFR.
The average STI outcome for
the 2022 financial year for
Executives was 54.7% of the
maximum opportunity, based on
the assessment of business and
personal measures.
During the 2022 financial year,
66.67% of the 2018 LTIs vested
reflecting the Company’s
performance over the three year
performance period to 30 June 2021.
The 2019 LTIs (which were granted
in the 2020 financial year) are
expected to vest on or around
19 November 2022 and it is
anticipated that the vesting levels
will be in the range of 60% to 70%.
No changes were made to Board
or Committee fees.
2.2. Actual Remuneration
The table below details the cash and value of other benefits actually received by the Executives in the 2022 financial year in their capacity as KMP. This
disclosure provides shareholders with increased clarity and transparency in relation to Executive remuneration. It includes the value of LTI Rights and
Restricted 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 2022 financial year
TFR(1)
US$’000
STI Paid
as cash(2)
US$’000
Termination
Benefits
US$’000
Other
Benefits(3)
US$’000
LTI
Rights
Vested(4)
Restricted
STI Shares
Vested(5)
US$’000
US$’000
Sign-On
Rights
Vested(6,7)
US$’000
Total
US$’000
Executives
Sandeep Biswas
Sherry Duhe
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Former Executives
Gerard Bond
Lisa Ali
1,742
274
629
589
561
631
631
514
447
1,239
–
251
239
228
266
252
413
240
–
–
–
–
–
–
–
86
–
16
37
120
4
6
41
6
5
3
2,492
–
362
–
260
362
–
577
–
738
–
123
–
17
143
–
243
18
–
–
–
398
–
–
63
–
–
6,227
311
1,485
1,230
1,072
1,443
952
1,838
708
Notes to Actual Executive Remuneration
(1) TFR (Total Fixed Remuneration) comprises base salary, superannuation contributions and payment of unused statutory leave entitlements. For all 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 2021 financial year. The cash component for the 2021 financial year was paid in October 2021.
(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$35,000 (A$49,000) in relocation support paid to Sherry Duhe;
For Craig Jones, an allowance that covers part of the cost of housing, vehicle, and other expenses associated with his assignment to Canada.
(4) Represents 2018 LTIs that vested on 22 November 2021. 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 22 November 2022). The value of the Rights has been determined based on the share price at the close of business on the vesting
date of A$24.38 (US$17.73).
(5) On 11 November 2021, ordinary Newcrest shares were released by Pacific Custodians Pty Ltd as trustee for the Newcrest Employee Share Trust to:
–
–
Sandeep Biswas (22,019), Gerard Bond (7,139), Craig Jones (3,809) and Philip Stephenson (3,940) on vesting of restricted STI shares awarded for the 2019 financial year.
Sandeep Biswas (16,926), Lisa Ali (937) Gerard Bond (5,693), Craig Jones (2,675), Seil Song (902) and Philip Stephenson (3,596) on vesting of restricted STI shares
awarded for the 2020 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$25.72 (US$18.95).
(6) Represents the Sign-On Rights issued to Suresh Vadnagra that vested on 20 May 2022. The value of the Rights has been determined based on the share price at the
close of business on the vesting date of A$25.57 (US$17.89).
(7) Represents the Sign-On Rights issued to Maria Sanz Perez that vested on 20 August 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$24.71 (US$17.76).
TFR and Other Benefits have been translated from Australian dollars to US dollars using an average exchange rate of 0.7260. 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.
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued
97
2.3. Changes planned for the 2023 financial year
Executive Total Fixed Remuneration STI
LTI
NED Remuneration
The Board approved changes to
the weightings of the LTI measures.
These are described in detail at
section 4.5.3.
NED fees will be considered in light
of a benchmarking review in the
second half of 2022.
Following a benchmarking review
and with effect from 1 October 2022,
it has been determined that the CEO
will receive a TFR increase of 2.9%
and other Executives will receive
TFR increases averaging 2.9%.
Changes have been made to
the STI business measures and
weightings for the 2023 financial
year. These are described in detail
at section 4.4.4.
FY23 personal objectives for
Executives will be streamlined,
resulting in fewer, more heavily
weighted objectives, with increased
emphasis on culture, including
organisational health and
Respect@Work.
In addition, the Minimum Shareholding Requirement for Executives will increase to 200% of TFR for the CEO, and to 100% of TFR for other Executives.
2.4. Currency
Unless otherwise indicated, the currency used in this Report is US dollars which represents Newcrest’s reporting (presentation) currency.
Executive remuneration and NED fees are paid in Australian dollars and are translated into US dollars for reporting purposes at a rate of
A$1.00:US$0.7260. The TFR for current 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.
98
3. Remuneration Governance
Board
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.
HRR Committee
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.
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.
Set out below is a summary of the skills and experience of each of the members that are relevant to their responsibilities in
executive remuneration and which enable them to make decisions on the suitability of the Company’s remuneration policies and
practices. All members of the HRR Committee have served on remuneration committees of other companies or associations and all
members have provided leadership in business organisations and have participated in remuneration planning sessions and made
remuneration decisions.
Phillip Aiken AM
Vickki McFadden
Roger Higgins
Jane McAloon
Member
of HRR
Committee
Experience
– Member since April 2013
– Chairman since
November 2018
– Chair of Remuneration
Committee at New
Energy One Acqn.
– Since November 2017
– Since November 2018
– Since July 2021
– Ex officio Member of
– Chairman of the
– Chairman of Human
Human Resources and
Remuneration Committee
at GPT.
Human Resources and
Remuneration Committee
at Ok Tedi Mining Ltd.
Resources and
Remuneration Committee
at Allianz Australia.
– Member of Remuneration
Committee at Aveva
Group plc.
– Former member
of Remuneration
Committees at Balfour
Beatty, Kazakhmys plc
and Essar Oil Ltd.
– Member of Human
Resources and
Remuneration Committee
at Allianz Australia.
– Former Member
of Remuneration
Committees at eftpos
Australia Payments Pty
Ltd, Leighton Holdings
Limited and SKILLED
Group.
– Former member of
– Chairman of Nomination
Remuneration Committee
at International Copper
Association.
and Remuneration
Committees at United
Malt Group and Energy
Australia.
– Member of Remuneration
Committee at Home
Consortium.
External
remuneration
consultants
External remuneration consultants are on occasion engaged by the HRR Committee to provide advice on remuneration related issues.
During the 2022 financial year, KPMG provided advice to the HRR Committee, including:
– benchmarking data for CEO, Executive and NED remuneration;
– information and insights with respect to market practices and trends in remuneration within ASX listed and global gold
companies; and
– support in reviewing the executive remuneration framework.
During the 2022 financial year, KPMG provided remuneration recommendations as defined by the Corporations Act 2001, including
recommendations with respect to STI and LTI performance measures.
KPMG was paid $150,000 (excluding GST) in relation to remuneration recommendations provided as part of its engagement as a
remuneration consultant.
KPMG was paid $1,344,471 (excluding GST) for services not related to remuneration recommendations provided across the business
during the 2022 financial year.
No other remuneration consultants or advisors have been retained by the Company, the HRR Committee or any Directors at any
time since the end of the 2022 financial year.
KPMG was engaged in accordance with the Corporations Act 2001 and the Company’s protocols set out in its External
Remuneration Consultants Policy, and provided advice directly to the HRR Committee through the HRR Committee Chairman.
Both KPMG and the Board are satisfied that the remuneration recommendations were made free from undue influence from
the KMP to whom the remuneration recommendations applied. Remuneration recommendations were provided to the Board as
an input into decision-making only, and the Board considered the recommendations, along with other factors, when making its
remuneration decisions.
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued 99
Risks relating to
remuneration
The Board is responsible for ensuring that systems are in place to facilitate the effective identification, management and mitigation
of any significant financial and non-financial risks to which the Company is exposed. These risks include, but are not limited to,
those arising from the Company’s compensation policies and practices, such as the risk that an officer or employee is incentivised
to take inappropriate or excessive risks. The Board and the HRR Committee are advised of potential risks relating to human capital,
such as recruitment and retention, redundancy, resourcing and succession. The HRR Committee is involved in the design of the
remuneration framework and is required to approve the LTI measures, STI business measures and the CEO’s STI personal measures
and considers the risks relating to such matters.
The Company uses the following practices to discourage or mitigate inappropriate or excessive risk-taking by Executives:
– the structure of incentive compensation is designed not to focus on a single metric, which could be distortive, but instead
a combination of both financial and non-financial objectives;
– the Company has an appropriate compensation mix, including fixed and performance-based compensation with
short-term and long-term performance conditions and multiple forms of compensation; and
– the Board has discretion in assessing the annual incentive awards paid to Executives based on both individual and corporate
performance.
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
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.
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.
Executive remuneration packages are benchmarked against comparable roles in:
– ASX listed companies with market capitalisations ranked between 11–40;
– a customised peer group of ASX listed companies comprising largely industrial, materials, energy and utilities companies of comparable scale and
international complexity, i.e.: Woodside Energy Group Ltd, Transurban Group, South32 Ltd, Brambles Ltd, Amcor PLC, Fortescue Metals Group Ltd,
Origin Energy Ltd Santos Ltd, Aurizon Holdings Ltd, James Hardie Industries PLC, BlueScope Steel Ltd, Northern Star Resources Ltd, Evolution Mining
Ltd, Mineral Resources Ltd; and
– the following global gold mining companies: Agnico Eagle Mines Limited, AngloGold Ashanti Ltd, Barrick Gold Corporation, Gold Fields Ltd, Kinross
Gold Corporation, Newmont Corporation, Evolution Mining Limited, Northern Star Resources Limited and Endeavour Mining.
Minor changes were made to the ASX 11–40 group and the benchmarking group comprising global gold mining companies during the 2022 financial year.
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.
100
4. Executive remuneration framework continued
4.2. Components of the Executive Remuneration Framework
The table below outlines the remuneration components for the 2022 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)
Base salary plus
superannuation
contributions in
line with statutory
obligations, and any
salary packaged amounts.
Link with strategic
objectives
Set to attract, retain,
motivate and reward
high quality executive
talent to deliver on the
Company’s strategy.
Short Term Incentive (STI)
Long Term Incentive (LTI)
Cash
50% of STI award
paid in cash after the
financial year.
Equity
50% of STI award as
shares, with one half
restricted for one year and
the other half restricted for
two years.
Rights with a three year vesting
period and shares allocated on
vesting subject to a one year
holding lock (or cash at the
Board’s discretion).
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 restricted
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.
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued 101
The diagram below illustrates how the different components of Executive remuneration provided in respect of the 2022 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
Payable Oct 2022
Released Oct 2023
Released Oct 2024
Awarded as Rights
LTI
Performance Period
(3 years)
Vests as shares
Unlocked
Holding lock
Nov 2021
Nov 2024
Nov 2025
FY22
FY23
FY24
FY25
FY26
Newcrest’s mix of remuneration components, expressed as a percentage of “maximum” earning opportunity, for current Executives for the 2022 financial
year is illustrated in the following graph. 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 FY22 (%)
37.5
31.6
26.7
31.3
20.8
20.8
20.8
21.1
21.1
26.3
20.0
20.0
33.3
18.8
18.8
31.3
CEO
CFO, COO & CTPO
CLRCO
CDO
Totals in the above graph may not add to 100% due to rounding.
LTI
STI (Restricted Shares)
STI (Cash)
TFR
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.
102
4. Executive remuneration framework continued
4.3. Total Fixed Remuneration (TFR)
Feature
Composition
Relevant
Considerations
Review
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.
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.
TFR is reviewed annually. The CDO received an increase in TFR of 4.0%, the COOs and the CTPO each received an increase
in TFR of 2.9% and the CPSO and CLRCO each received an increase in TFR of 1.9%, effective 1 October 2021. There was no
change to TFR of the CEO or CFO as part of the 2021 annual salary review process.
After the end of the 2022 financial year, a benchmarking review of TFR took place and the CEO will receive an increase in TFR
of 2.9% and other Executives will receive increases in TFR averaging 2.9% with effect from 1 October 2022.
4.4. Short Term Incentive (STI)
4.4.1. Key features of the STI award for the 2022 financial year
Feature
Description
Participation
Opportunity
Rules
Performance
Period
Performance
Conditions
All Executives are eligible to participate.
For “at target” performance, the CEO has the opportunity to receive 100% of TFR; the CFO, COOs and CTPO have 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 2022 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 2022 financial year, the performance
period was 1 July 2021 to 30 June 2022.
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 Executive 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 and business STI measures and the outcomes are described in sections 4.4.2 and 5.3.1.
The diagram below illustrates the indicative weighting of the performance conditions, using the CEO’s FY22 personal conditions
as an example.
Safe & Sustainable 12.5%
Best People 7.5%
Outstanding Operators 35%
Innovation & Creativity 10%
Grow Profitably 35%
40%
Personal
measures
60%
Business
measures
Safety 20%
Sustainability 10%
Earnings 25%
Costs 20%
Free Cash Flow 25%
Calculation of STI
Award to Executives
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.
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued 103
Feature
Description
Payment, Delivery
and Deferral
For Executives, the STI for the 2022 financial year is delivered 50% in cash and 50% in restricted shares in October 2022, 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 12 months after the allocation date (in October 2023) and the remainder two years after the
allocation date (in October 2024). During the restriction period, the Executives are entitled to dividends and voting rights attaching
to their restricted shares.
Cessation of
Employment
Clawback
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.
Except at the discretion of the Board:
– if a participant resigns or is dismissed for cause during the STI 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 STI 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 STI shares are subject to restrictions, the restricted STI shares will
be forfeited;
– if the participant resigns while the restricted STI shares are subject to restrictions, the participant will be entitled to retain their
restricted STI shares and the shares will be released after the restriction period. The Board will have the discretion to increase
the STI restriction period for some or all of the existing restricted STI shares, from one year to two years; and
– if the participant ceases employment for any other reason while the restricted STI shares are subject to restrictions, the
participant will be entitled to retain their restricted STI shares and the shares will be released after the restriction period.
In general, the Board has the discretion to reduce or forfeit an STI award, or to seek recovery from an Executive, if an event or
circumstance has occurred which has resulted in an inappropriate benefit being conferred on an Executive (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.
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.
104
4. Executive remuneration framework continued
4.4. Short Term Incentive (STI) continued
4.4.2. Performance conditions for the STI award for the 2022 financial year in detail
Business measures for the 2022 financial year
Business Measure
Weighting Reason the Performance Measure Was Adopted
Safety
20%
TRIFR (1) (10%)
Significant Potential Incidents
(SPI) action verification and
investigation quality (10%)
Sustainability
Greenhouse gas emissions
(GHG) and water efficiency
actions completed on time (10%)
Earnings
Adjusted Net Profit/(Loss) After
Tax and Before Significant Items
Costs
AISC per ounce (2)
Free Cash Flow
(FCF)
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, and focus the business on reducing the number of significant incidents by assessing the quality
of investigations and verifying that actions arising from investigations are in place and performing
as envisaged.
10%
These measures are intended to drive timely completion of key milestones for the Group’s
GHG emissions plans and water efficiency plans which were developed in FY21.
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 measure 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) 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 in the
Company’s Annual Financial Report for the 2022 financial year (Operating and Financial Review).
Personal measures for the 2022 financial year
For the 2022 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 innovation.
The personal performance measures for other Executives for the 2022 financial year are set by the CEO following consultation with the Board. They are
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, innovation, sustainability and profitable growth. Non-financial targets are generally aligned to core
values, including safety, culture including organisational health and Respect@Work, diversity, cultural heritage 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 and other Executives, and outcomes with respect to such measures, is set out in section 5.3.1.
4.4.3. STIs for the 2021 financial year
The terms that applied to the 2021 financial year STI award in respect of the performance period from 1 July 2020 to 30 June 2021, were described in detail
in the Company’s Annual Financial Report for the 2021 financial year (2021 Remuneration Report). For 2021 financial year STI award, the cash component
was paid on 14 October 2021 and the restricted STI shares were granted on 29 October 2021.
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued 105
4.4.4. STIs for the 2023 financial year
In the 2022 financial year, a review of the executive remuneration framework was undertaken by the HRR Committee with assistance from KPMG. As a
result of that review, changes have been made to the STI business measures and weightings for the 2023 financial year. The measures and weightings are
set out below.
FY23 Business Measure
Weighting
Changes from FY22
Safety
TRIFR (7.5%)
Critical Control System Verifications (CCSV)
(7.5%)
Sustainability
Improved maturity of categories 1, 3 & 12 of the
GlobeScan Sustainability Leaders Survey relative
to FY22 baseline
Resolving community complaints, concerns
and grievances
15%
Overall weighting reduced from 20% to accommodate increase in Sustainability.
CCSV replaces Quality of Serious Incident Investigations.
15%
Overall weighting increased from 10% with new measures to determine how well
the Integrated Sustainability Framework is embedded throughout the business.
Earnings
20%
Weighting reduced from 25% to accommodate increased focus on costs.
Adjusted Net Profit/(Loss) After Tax and Before
significant items
Costs
AISC per ounce
Operating Cash Flow (1)
25%
Weighting increased from 20%.
25%
Changed from FCF to Operating Cash Flow (to increase relevance of the metric
for employees with limited control over non-sustaining or M&A activities).
(1) Operating Cash Flow is defined as the amount of cash generated by normal business operations, that is revenue less expenses, net of working capital movements,
and after interest and tax, and for the avoidance of doubt, it would include sustaining capex, sustaining production stripping and sustaining exploration but would not
include non-sustaining capex, non-sustaining production stripping, non-sustaining exploration and M&A activities.
FY23 STI personal measures for Executives will be streamlined, resulting in fewer, more heavily weighted objectives and increased weight on matters
relating to our culture, including organisational health and Respect@Work.
4.5. Long Term Incentive (LTI)
4.5.1. Key features of the 2021 LTIs (under which Rights were granted during the 2022 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), or a cash payment at the Board’s discretion in lieu of an allocation of shares. 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 2021 LTIs are governed by the Equity Incentive Plan Rules.
Maximum LTI Opportunity
Grant Date
The maximum LTI opportunity is 180% of TFR for the CEO, 120% of TFR for the CFO, COOs, and CTPO, 100% for the
CDO and 80% of TFR for the CLRCO. Section 4.2 indicates the value of the grants expressed as a percentage of the total
remuneration package.
The grant date was 17 November 2021 and Rights will vest, subject to the satisfaction of the performance conditions
and other terms of the grant, on 17 November 2024. The total number of Rights issued to, and held by, each Executive is
summarised in section 9.4.
LTI Grant Value
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 shares trading on the ASX immediately preceding the grant date (being, A$25.40917 per share).
Performance period
The 2021 LTI performance period is the three financial years commencing on 1 July 2021.
106
4. Executive remuneration framework continued
4.5. Long Term Incentive (LTI) continued
4.5.1. Key features of the 2021 LTIs (under which Rights were granted during the 2022 financial year) continued
Feature
Description
Performance Conditions
2021 LTI Rights issued are subject to the Performance Conditions shown below:
Comparative
cost position
33%
Relative total
shareholder
return
33%
ROCE
33%
Vesting
Holding lock
Dividends
Clawback
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 and other terms of the grant 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.
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 an Executive if an event or circumstance
has occurred which has resulted in an inappropriate benefit being conferred on an Executive (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 continue and vest in the
usual course 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 to vary the date of release of the restricted shares or a discretion under the clawback policy).
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 and any remaining unvested Rights will lapse. All restricted shares subject to holding lock will be released
from restrictions.
Change of control
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.
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued 107
4.5.2. 2021 LTI performance conditions in detail
Component
Assessment
Reason for adoption of the Performance Measure
Comparative Cost Position
The vesting scale for this measure is as follows:
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.
– 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 2021 until 30 June 2024.
Performance over the three year performance
period is compared against approximately 250
of the world’s largest gold producing operations
based on data sourced from an independent
provider selected by the Board, which is
currently Metals Focus Ltd. 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 vest and be exercised
in relation to this performance measure.
Return on Capital Employed (ROCE)
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.
The targets were 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 is an absolute measure, defined as
underlying earnings before interest and tax
(EBIT), divided by average capital employed,
being shareholders’ equity plus net debt.
The average of ROCE for each of the three
years of the performance period is used to
determine the number of Rights that may
vest and 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.
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.
108
4. Executive remuneration framework continued
4.5. Long Term Incentive (LTI) continued
4.5.2. 2021 LTI performance conditions in detail continued
Component
Assessment
Reason for adoption of the Performance Measure
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.
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 2021
– 30 June 2021) and the end (1 January 2024 –
30 June 2024) 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 2021 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.
4.5.3 Outlook for 2022 LTI Performance Conditions (2023 financial year)
The LTI Performance Conditions for the 2022 LTIs will be similar to those which apply to the 2021 LTIs, with the following changes in weightings:
– Comparative Cost Position: The weighting of this measure has been decreased from 33% to 25%, to accommodate the increased emphasis on relative TSR.
– ROCE: The weighting for the ROCE measure has been decreased from 33% to 25%, to accommodate the increased emphasis on relative TSR.
– Relative TSR: The weighting has been increased from 33% to 50%. The increased weighting of this measure better aligns Management reward with
shareholders’ experience, and encourages outperformance of international gold miners.
Full details of the measures and vesting schedules will be provided in the 2022 Notice of Annual General Meeting.
4.5.4 LTIs for past financial years
The terms that apply to the 2018, 2019 and 2020 LTIs, which vested or will vest in the 2022, 2023, and 2024 financial years respectively, are described in
detail in the 2019, 2020, and 2021 Remuneration Reports that can be found in the Company’s Annual Financial Reports in respect of such years. Refer to
sections 5.4 and 9.2 for details of prior vesting for LTI awards.
4.6. Sign-on arrangements
The following sign-on benefits were granted to Executives during the 2022 financial year to compensate them for forgone entitlements. The sign-on rights
are governed by the Equity Incentive Plan Rules and were granted at no cost to the Executive.
Performance conditions were imposed to ensure that an entitlement to the sign-on benefits does not arise in the event of underperformance. The CEO will
assess performance against the relevant conditions as he is best placed to assess the Executive’s performance. Where the vesting/payment conditions are
not satisfied, the sign-on rights will lapse and the cash payments will not be made. Therefore the minimum possible value of the sign-on benefits is zero.
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued 109
Recipient
Grant/Payment Date
Award
Vesting Date
Vesting/ Payment Conditions
Sherry Duhe
15 March 2022
Adequate performance and
continuing employment
(other than in limited
circumstances).
25,107 sign-on rights
are expected to vest
in February 2023, and
16,738 sign-on rights
are expected to vest
in February 2024,
subject to the Securities
Dealing Policy.
41,845 sign-on rights (face value of
A$1,000,000) with a nil exercise price,
granted in compensation for benefits that
were forfeited on leaving her previous
employer. One fully paid ordinary share is
received for each right that vests and is
automatically exercised (or an equivalent
cash payment in lieu of an allocation of
shares, at the Board’s discretion). Rights
are automatically exercised and do not
have an expiry date.
Any sign-on rights that do not vest at
the end of the vesting period will lapse.
In or around February 2023 A$200,000 cash (US$145,200)
In or around August 2023
A$300,000 cash (US$217,800)
N/A
N/A
In addition, relocation support of A$43,000 was provided to Sherry Duhe before she commenced employment from 23 December 2021 to 4 February 2022.
An additional amount of $6,000 was provided after she commenced employment. This is noted in section 9.1.
As set out in the 2021 Remuneration Report:
– 22,386 sign-on rights were granted to Maria Sanz Perez in the 2021 financial year, in compensation for benefits forfeited on leaving her previous
employer. These vested in August 2021.
– 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, and the remaining 3,500 vested in May 2022.
5. Remuneration Outcomes
5.1. Total Fixed Remuneration (TFR) for the 2022 financial year
Set out below is the TFR for the current Executives as at 30 June 2022, shown in Australian dollars, which is the currency in which they are paid, except
for Craig Jones, whose TFR is paid in Canadian dollars since his relocation. 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 increases in TFR for Craig Jones, Maria Sanz Perez, Seil Song, Phil Stephenson and
Suresh Vadnagra followed a benchmarking review.
Executive
Sandeep Biswas
Sherry Duhe
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
(1) Translated into Australian Dollars using an exchange rate of A$1.00:C$0.9116.
TFR A$
30 June 2022
TFR A$
30 June 2021
% Increase
2,400,000
1,050,000
875,000 (1)
815,000
780,000
875,000
875,000
2,400,000
–
850,000
800,000
750,000
850,000
850,000
0.0%
–
2.9%
1.9%
4.0%
2.9%
2.9%
110
5. Remuneration outcomes continued
5.1. Total Fixed Remuneration (TFR) for the 2022 financial year continued
Set out below is the TFR for the Executives as at 30 June 2022, shown in US dollars. The amounts for 2022 have been translated using the average
exchange rate for 2022 of 0.7260. The amounts for 2021 have been converted to US dollars using the average exchange rate for 2021 of 0.7467. The
difference between the TFR for the Executives as at 30 June 2022 and as at 30 June 2021 are on account of fluctuations in the exchange rate and
the increases in TFR outlined above.
Executive
Sandeep Biswas
Sherry Duhe
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
TFR US$
30 June 2022
TFR US$
30 June 2021
1,742,400
1,792,080
762,300
635,250
591,690
566,280
635,250
635,250
–
634,695
597,360
560,025
634,695
634,695
5.2. Newcrest’s Financial Performance for the past five financial years
The following table provides a summary of the key financial results for Newcrest over the past five financial years.
Year Ended 30 June
Statutory profit
Underlying profit (1)
Cash flows from operating activities
FCF (2)
FCF (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
2022
872
872
1,680
(868)
229
48.8
31.0
0.6
11.4
10.2
20.89
103.4
103.1
27.5
1,956
1,043
1,797
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
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
2019
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
2018
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
This table includes non-IFRS financial information. Refer to section 6 of the Operating and Financial Review in the audited consolidated financial statements of the
Company for the 2022 financial year 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) FCF is calculated as cash flow from operating activities less cash flow related to investing activities. FCF (before M&A activity) is calculated as FCF 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 2017 was A$20.16.
(6) Basic EPS is calculated as net profit after tax and non-controlling interests (statutory profit) divided by the weighted average number of ordinary shares. Underlying
earnings per share is calculated as net profit after tax and non-controlling interests and before significant items (underlying profit) divided by the weighted average
number of ordinary shares.
(7) Represents dividends determined in respect of the financial year.
(8) AISC metrics as per World Gold Council Guidance Note on Non-GAAP Metrics. See section 4.4.2 for further detail. Newcrest’s AISC will vary from period to period
as a result of various factors including production performance, timing of sales, the level of sustaining capital and the relative contribution of each asset.
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued 111
The graphs below show Newcrest’s performance over the last five years for metrics used for multiple years to determine the business component of STI
awards, before any adjustments as a result of the exercise of Board discretion. Where no values are shown in the graphs for particular years, they represent
years where it was not a business performance measure for STI purposes.
TRIFR
Quality of SPI Incident Investigations
(%)
Statutory Profit
(US$m)
3.9
100
88
90
2.4
2.3
2.6
2.3
1,164
872
647
561
202
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Underlying Profit
(US$m)
Free Cashflow before M&A Activity
(US$m)
AISC
(US$ per oz sold)
1,164
1,125
872
828
878
670
750
561
459
248
1,043
862
911
835
738
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
112
5. Remuneration outcomes continued
5.3. STI Outcomes for 2022 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. An Executive’s performance against their personal measures is assessed by the Board in respect of the CEO’s STI objectives and
by the CEO in respect of the other Executive’s STI objectives.
Element
Weight Performance (1)
Description
THRESHOLD
TARGET
MAXIMUM
60%
6%
6%
6%
15%
12%
15%
40%
5%
14%
14%
3%
4%
40%
Business Measures
Safety (1) – TRIFR
Safety (2) – SPI action verification
and investigation quality
Sustainability (1) – Greenhouse
gas emissions and water efficiency
(actions completed on time)
Earnings – NPAT before significant
items (US$m)
Cost – AISC/oz (US$)
Cash flow: FCF (US$m)
Total Business outcome
Personal Measures
(Sandeep Biswas – CEO)
Safe and Sustainable
Grow Profitably
Outstanding Operators
Best People
Innovation and Creativity
Personal Measures
(other Executives)
Individual measures based
on initiatives and key project
deliverables linked to company
strategy and performance
– TRIFR of 3.9 was below the target of 2.1.
– SPI action verification of 100% and investigation
quality of 89.6% exceeded target of 90% and
87.5% respectively.
– 100% of actions relating to greenhouse gas
emissions, and 94% of actions relating to water
efficiency were completed on time.
– Outcome of $595m was below target, inclusive
of adjustments (1).
– Outcome of $1,191/oz was above the minimum
and below the target, inclusive of adjustments (1).
– Outcome of ($17 million), inclusive of adjustments
(1). Targets included significant plans for capital
expenditure, which is why a negative cash flow
delivered a maximum outcome.
– The total business outcome was 114%.
– Significant progress on sustainability, including
2050 roadmap and strategy.
– Exceeded targets on expansion projects and
business development (including acquisition of
Pretium).
– Achieved maximum for FCF. Near to target on
AISC, and external spend reduction. Above
minimum on production.
– Diversity and organisational health index targets
not met.
– Exceeded target increase to innovation portfolio
and unlocked value through innovation-driven
reserve growth.
– Outcomes against individual measures for the
remaining Executives ranged from 0% to 200%.
(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 FY22 the Board used discretion to make minor unfavourable
adjustments to the financial metrics to exclude a prior year adjustment recognised for the Northern Tailings Storage Facility event in FY18, and a related insurance
settlement received in FY22. The unadjusted values for financial business metrics are NPAT $872m, FCF $868m and AISC ($1,043/oz).
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued Reconciliation of Earnings and FCF measures for the 2022 financial year
A reconciliation of the Earnings measure outcome to statutory profit is detailed below:
Statutory profit
Add back: Significant items after tax (1)
Underlying profit
Adjust: Board agreed adjustments (2)
Earnings measure
113
2022
US$m
872
–
872
(277)
595
2021
US$m
1,164
–
1,164
(412)
752
(1) There were no significant items in 2022 or 2021.
(2) Represents adjustments for the effect of commodity prices, foreign exchange rates and other significant items determined by the Board which are considered to be
outside the control of Management.
A reconciliation of the FCF measure outcome to the statutory cashflow is detailed below:
Cash flows from operating activities
Cash flows from investment activities
FCF
Add back: M&A activity (1)
FCF (before M&A activity)
Adjust: Board agreed adjustments (2)
FCF measure
2022
US$m
1,680
(2,548)
(868)
1,097
229
(246)
(17)
2021
US$m
2,302
(1,198)
1,104
21
1,125
(277)
848
(1) Refer to section 3 of the Operating and Financial Review for details.
(2) Represents adjustments for the effect of commodity prices, foreign exchange rates and other significant items determined by the Board which are considered to be
outside the control of Management.
114
5. Remuneration outcomes continued
5.3. STI Outcomes for 2022 financial year continued
5.3.2. STI outcomes for all Executives for the 2022 financial year
The table below summarises achievement against the performance conditions and final STI outcomes for all Executives for the 2022 financial year.
The 2022 STI awards are expected to be made in October 2022.
Executives
Sandeep Biswas
Sherry Duhe
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Former Executives
Gerard Bond (4)
Lisa Ali
% of STI
Target
Awarded (1)
Total STI
Awarded (2)
US$’000
Proportion
of Total STI
Restricted
(%) (3) (4)
% of Max STI
Opportunity
Forgone
109.6
108.4
105.2
112.0
118.4
104.8
108.4
108.4
–
1,910
235
443
398
402
441
456
323
–
50
50
50
50
50
50
50
50
N/A
45.2
45.8
47.4
44.0
40.8
47.6
45.8
45.8
100
(1) The assessment against personal measures for the Executives (which represent 40% of the award) ranged from 50% to 62.5% 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 award which will be deferred into restricted STI shares.
(4) Gerard Bond is eligible to receive a pro rata amount of his 2022 STI award, based on the portion of the STI performance period that he served up until his cessation
date. 50% of Gerard’s STI will be subject to deferral (over 1 and 2 years). The deferred component will be settled in cash.
5.4. Vesting Outcomes for 2018 LTIs
Following the completion of the performance period from 1 July 2018 to 30 June 2021, the 2018 LTI Rights vested on 22 November 2021 at 66.67% of maximum
based on the assessment of performance against the applicable measures.
Element
Comparative Cost
ROCE
Relative Total Shareholder Return (TSR)
TOTAL VESTING
Weighting
33.3%
33.3%
33.3%
Performance Achieved
20th percentile (3-yr avg)
16.6% (3-yr avg) (1)
NCM share price underperformed the S&P/TSX Global Gold Total
Return Index by 39.9 percentage points over the period
Percentage of
Total LTI Award Vesting
33.33%
33.33%
0.00%
66.67%
(33.33% lapsed)
(1) The 3-year ROCE average has been adjusted to allow for Development Projects that are not yet in commercial production. This amounted to an average reduction in
the Capital Employed of $1,135 million, representing approximately 13% of the pre-adjusted Capital Employed.
5.5. Estimated vesting of LTI rights in the 2023 financial year (2019 LTIs)
The 2019 LTI Rights are expected to vest on or about 21 November 2022. 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 2019 LTIs are the same as for the 2018 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 2020 Remuneration Report that can be found in the Company’s Annual Financial Report for the 2020 financial year.
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued 115
6. Executive Service Agreements
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 2022 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 for the current Executives. 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
Sherry Duhe
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
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
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 and grant terms. Refer to sections 4.4
and 4.5 for further details.
On termination of employment, the Executives continue to be bound by confidentiality and protection of intellectual property obligations and restrictive
covenants. In the case of each Executive, the restricted covenants include a non-competition and non-solicitation obligation.
During the 2021 financial year, two Executives, being Gerard Bond and Lisa Ali, ceased employment with the Company. The treatment of Gerard Bond’s
and Lisa Ali’s LTI and STI awards is set out in sections 9.1 and 9.2.
During the 2021 financial year, it was announced that Gerard Bond would leave Newcrest in early 2022. It was later announced that Gerard had been
appointed as CEO of OceanaGold Corporation, upon which Gerard’s termination date was brought forward to 3 January 2022. Under the terms of his
employment agreement, Gerard Bond was entitled to receive payment in lieu of his remaining notice period and his statutory entitlements (including accrued
annual and long service leave). Gerard Bond’s STIs and LTIs were treated in accordance with the terms of offer and Newcrest’s policy including that:
– Gerard Bond is eligible to receive a pro rata 2022 STI award (based on the portion of the STI performance period served). Any STI award will be
delivered in cash.
– He retained his 2020 restricted STI shares and 2021 restricted STI shares which will be released from restrictions at the end of the relevant
restriction period.
– No 2021 LTI grant was made to Gerard Bond.
– A pro rata number of Rights (based on the time served) held pursuant to the 2019 LTI plan and 2020 LTI plan continue, subject to the applicable vesting
conditions. The remaining Rights have lapsed.
The treatment of his STI and LTI outlined above was in recognition of his distinguished service to Newcrest as CFO and Finance Director for 10 years.
On cessation, Lisa Ali was paid the value of her statutory entitlements (including accrued annual leave). Lisa did not retain her unvested LTIs. The restricted
STI shares she received as part of her STI awards for FY20 and FY21 continue to be treated in accordance with the applicable terms of the grant and the
plan rules.
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 on 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
AGM held on 28 October 2010, shareholders approved the current aggregate fee pool of A$2,700,000 per annum (US$1,960,200).
7.3. Fee Structure
In reviewing the level of fees, the Board obtains independent market data from its remuneration adviser, KPMG, primarily (but not exclusively) in relation
to ASX listed companies with market capitalisations ranked between 11–40. Base Board fees and Committee fees remained unchanged as a result of the
review in May 2022, but it was decided to review the fees again in the second half of 2022.
The table below outlines the main Board and Committee fees as at 30 June 2022.
Fees (per annum) (1)
Board (2)
Audit & Risk Committee
Safety & Sustainability Committee
HRR Committee
Chairman
Member
A$’000
US$’000
A$’000
US$’000
630
55
44
44
457
40
32
32
210
28
22
22
152
20
16
16
(1) Board and Committee fees have been translated from Australian dollars to US dollars using the average exchange rate for the 2022 financial year.
(2) The Chairman 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 2021 or 2022 financial years.
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 at least annually.
As at 30 June 2022, each current KMP who has been KMP for at least the period set out below has met the current requirement, as have each of Seil Song,
Suresh Vadnagra and Maria Sanz Perez.
CEO
Executives
NEDs
Minimum Shareholding Requirement
100% of TFR in shares
50% of TFR in shares
One year’s total annual fees in shares
Deadline for achieving shareholding
(from the date of appointment)
5 years
5 years
3 years
From FY23, the Minimum Shareholding Requirement value will increase to 200% of TFR for the CEO, and to 100% of TFR for other Executives. The
Minimum Shareholding Requirement for NEDs will remain as one year’s total annual fees.
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued 117
8.2. Executive Shareholdings
A summary of shareholdings of Executives, including their closely related parties, as at 30 June 2022 are set out below.
Executives
Sandeep Biswas
Sherry Duhe
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Former Executives
Gerard Bond
Lisa Ali
Opening
balance (1)
581,054
–
46,715
7,000
3,715
127,747
3,500
135,566
1,874
Granted as remuneration
STIs (2)
LTIs (3)
Sign-on (4)
Net other
movements (5)
Closing
balance (6)
Value based
on VWAP (7)
A$’000
Percentage
of TFR
%
69,800
–
14,152
13,440
12,862
15,002
14,196
23,266
13,520
140,535
–
20,429
–
14,640
20,429
–
32,531
–
–
–
–
22,386
–
–
3,500
–
–
(72,705)
–
(29,869)
–
(7,771)
(3,768)
–
(18,843)
–
718,684
–
51,427
42,826
23,446
159,410
21,196
172,520
15,394
17,976
–
1,286
1,071
586
3,987
530
4,315
385
749
0
147
131
75
456
61
432
47
(1) Opening balance is as at 1 July 2021 for all Executives, except for Sherry Duhe, whose opening balance is as at her commencement date of 21 February 2022.
(2) Remuneration granted in FY22 includes shares allocated on 29 October 2021 in respect of 50% of an Executive’s STI award for the STIs for the 2021 financial year.
The number of shares granted was determined using the five day VWAP of shares, being A$24.0337 per share, calculated over the period 8 to 14 October 2021, being the
five trading days prior to the date the 2021 cash STI payment was made. Restricted STI shares were granted subject to restrictions.
(3) Represents the shares acquired on vesting and automatic exercise of 2018 LTI Rights.
(4) Represents the shares acquired on vesting and automatic exercise of sign-on rights.
(5) Net other movements represents the sale or purchase of shares.
(6) The closing balance is as at 30 June 2022 for current Executives, and as at the date of cessation of employment for former Executives.
(7) Based on VWAP for the period 1 July 2021 to 30 June 2022 of A$25.013.
8.3. Non-Executive Directors’ Shareholdings
A summary of shareholdings of NEDs, including their closely related parties, as at 30 June 2022 is set out below.
Non-Executive Directors
Peter Tomsett
Philip Aiken AM
Philip Bainbridge
Roger Higgins
Sally-Anne Layman
Jane McAloon
Vickki McFadden
Former Non-Executive Directors
Peter Hay
Opening
balance (1)
Net other
Movements (2)
Closing
balance (3)
Value based
on VWAP (4)
A$’000
Percentage
of ongoing
annual fees
%
21,500
18,696
–
13,675
4,150
3,891
11,446
20,643
491
4,310
–
6,360
2,241
301
42,143
19,187
4,310
13,675
10,510
6,132
11,747
1,054
480
108
342
263
153
294
57,191
1,268
58,459
1,462
167
174
46
124
101
59
102
n/a
(1) Opening balance is as at 1 July 2021, except for Philip Bainbridge, whose opening balance is as at the date of commencement.
(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 2022. For Former Non-Executive Directors, the closing balances is as at the date they ceased
to be a Non-Executive Director.
(4) Based on VWAP for the period 1 July 2021 to 30 June 2022 of A$25.013.
8.4. Securities Dealing Policy
The Company has a Securities Dealing Policy which prohibits the use by Directors, Executives and employees of hedging and derivatives such as caps,
collars, warrants or similar products in relation to Newcrest securities, including shares acquired under the Company’s equity incentive schemes, whether
or not they are vested. The Securities Dealing Policy also prohibits entry into transactions in associated products that operate to limit the economic
risk of their security or interest holdings in the Company. Employees are not permitted to enter into margin loans in relation to Newcrest securities
at any time without prior approval from the Chairman or Company Secretary. The Securities Dealing Policy is available on the Company’s website at
www.newcrest.com/about-newcrest/corporate-governance.
118
9. Statutory Tables
9.1. Executive Remuneration
Short Term
Long Term
Post-
Employ-
ment
Short
Term
Incentive
US$’000
(B)
Other
Cash
Benefits
US$’000
(C)
Salary
US$’000
(A)
Other
Benefits
US$’000
(D)
Leave
US$’000
(E)
Super-
annuation
US$’000
(F)
Termi-
nation
Benefits
Termi-
nation
Benefits
US$’000
(G)
Share-Based Payments
STI
Restricted
Shares
US$’000
(I)
LTI Rights
US$’000
(H)
Other
US$’000
(J)
Total
US$’000
Perfor-
mance
related
%
(K)
1,725
268
617
584
544
614
614
360
446
955
118
221
199
201
221
228
323
–
5
132
118
–
–
20
–
–
–
5,772
2,466
275
1,776
731
588
618
597
544
618
618
6,090
1,253
418
243
254
241
231
269
255
3,164
9
–
37
–
224
–
16
68
354
11
1
2
4
6
21
6
5
3
59
11
3
–
2
–
3
18
2
39
76
8
3
17
5
40
20
(2)
(44)
123
40
27
31
9
37
22
38
30
234
17
6
12
5
17
17
17
13
–
104
16
16
–
16
–
16
16
16
96
–
–
–
–
–
–
–
86
–
86
–
–
–
–
–
–
–
–
–
2,553
85
506
223
264
506
298
87
(327)
999
118
229
199
201
228
228
14
–
–
194
–
–
–
–
30
–
–
6,341
930
1,708
1,231
1,238
1,667
1,441
886
78
4,195
2,216
224
15,520
3,087
803
258
547
120
140
547
159
1,543
512
243
305
241
231
322
255
5,661
3,652
–
–
–
–
523
–
–
100
623
7,735
2,510
1,400
1,751
1,983
1,187
1,844
1,503
19,913
71.1
34.5
56.0
50.4
53.8
57.3
52.3
47.9
n/a
76.1
69.0
53.1
63.2
30.4
50.7
61.7
44.5
Executives
2022
Sandeep Biswas
Sherry Duhe (1)
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Former Executives
Gerard Bond
Lisa Ali
Total
2021 (2)
Sandeep Biswas
Gerard Bond
Lisa Ali
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Total
(1) Appointed as KMP during the 2022 financial year and therefore no prior year comparison is shown.
(2) Executive remuneration for the 2021 financial year excludes Executives who ceased being an Executive in the 2021 financial year. Total remuneration for these
Executives in the 2021 financial year was US$52,000.
The table above details the statutory remuneration disclosures in respect of the 2022 financial year 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
0.7260 (2021: 0.7467) except where otherwise stated in the associated footnotes below.
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
granted to Executives.
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued
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 2022 financial year.
(B) Short Term Incentive refers to cash amounts earned as STIs. This represents 50% of the total STI awarded as detailed in section 5.3.2. The remaining 50% is awarded
as restricted shares. Refer to item (H) below. The cash amount is paid in the financial year following the STI performance period.
(C) Other cash benefits comprise travel costs, parking, insurance and applicable fringe benefits tax payable on these benefits. It also includes sign-on arrangements to
Lisa Ali, Suresh Vadnagra, Maria Sanz Perez and Sherry Duhe as outlined in section 4.6, and an expatriate allowance to Craig Jones. 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 statutory leave entitlements, measured on an accruals basis, and reflects the net movement in the entitlements over the year. Negative movement indicates
leave taken during the year exceeded leave accrued during the current 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 Australian Superannuation Guarantee legislation (SGC). The Australian superannuation payment is
required by legislation. It is made to a superannuation fund of the employee’s choice. Employees can make additional contributions over and above those required to be
paid by the Company.
(G) Termination Benefits represent payment in lieu of Gerard Bond’s outstanding notice period, being approximately 6.6 weeks of fixed pay, which was made following the
advancement of Gerard Bond’s termination date.
(H) 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 comparative cost position and return of capital employed), 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.
(I) 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 continue until released at the end of
the restriction period, including on resignation. Restricted STI shares granted in respect of the 2022, 2021 and 2020 financial year are therefore expensed in the 2022,
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.
(J) Represents Sign-On Rights issued to Suresh Vadnagra, Maria Sanz Perez and Sherry Duhe 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.
(K) Represents performance related remuneration as a percentage of total remuneration. Performance related remuneration comprises cash STI, LTI Rights and restricted
STI shares and sign-on rights.
9.2. Executives – Incentive Plan Awards – Granted, Vested or Earned during the 2022 financial year
Number of Rights
Executives
Sandeep Biswas
Sherry Duhe
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Former Executives
Gerard Bond (10)
Lisa Ali
Opening
balance (1)
2021 LTIs
498,738
–
87,299
44,293
56,598
87,299
32,595
128,779
39,569
170,017(6)
45,245
34,436
25,660
30,698
34,436
34,436
–
25,660
Other
Grants
–
41,845 (7)
–
–
–
–
–
–
–
Rights
Lapsed/
Forfeited (2)
Vested
and/or
Exercised (3)
Closing
balance (4) (5)
(70,258)
–
(10,214)
–
(2,928)
(10,214)
–
(53,249)
(65,229)
(140,535)
–
(20,429)
(22,386) (8)
(14,640)
(20,429)
(3,500) (9)
457,962
87,090
91,092
47,567
69,728
91,092
63,531
(32,531)
42,999
–
–
(1) The opening balance is as at 1 July 2021 or the date of appointment for new Executives during the year.
(2) Represents 2018 LTI Rights which lapsed or were forfeited (which were granted in the 2019 financial year). For Gerard Bond, the number also includes the portion of his
2019 and 2020 LTI Rights that lapsed upon cessation.
(3) Represents 2018 LTI Rights that vested (which were granted in the 2019 financial year).
(4) The closing balance is on 30 June 2022 or the date of cessation for former Executives.
(5) These Rights are ‘at risk’ (unvested) 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. As at 30 June 2022, no Rights are vested and exercisable or vested and unexercisable.
(6) Approval from Newcrest shareholders for the issuance of these Rights to Sandeep Biswas was obtained for the purpose of ASX Listing Rule 10.14 at the 2021 AGM.
(7) Sherry Duhe was granted 41,845 sign-on rights in the 2022 financial year, as detailed in section 4.6.
(8) Maria Sanz Perez was granted 22,386 sign-on rights in the 2021 financial year which vested into fully paid ordinary shares on 20 August 2021.
(9) 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 vested into fully paid ordinary shares on 20 May 2022.
(10) A pro-rated number of Rights held by Gerard Bond in the 2019 LTI Plan (11,350 LTI Rights) and 2020 LTI Plan (25,635 LTI Rights) lapsed based on his cessation date
of 3 January 2022. Gerard Bond did not receive a grant of 2021 LTI Rights.
120
Directors’ Report continued
9. Statutory tables continued
9.2. Executives – Incentive Plan Awards – Granted, Vested or Earned during the 2022 financial year continued
Value of Awards Vested
Executives
Sandeep Biswas
Sherry Duhe
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Former Executives
Gerard Bond
Lisa Ali
Share-based awards – Value vested during the year
Non-equity
incentive plan
compensation
– Value earned
during the year
LTI (1)
STI (2)
US$’000
US$’000
Sign-On (3)
US$’000
Total
US$’000
Total (4)
US$’000
2,492
–
362
–
260
362
–
577
–
738
–
123
–
17
143
–
243
18
–
–
–
398
–
–
63
–
–
3,230
–
485
398
277
505
63
820
18
955
118
221
199
201
221
228
323
–
(1) Represents 2018 LTI Rights that vested on 22 November 2021. The value of the shares has been determined based on the share price at the close of business on the
vesting date of A$24.38 (US$17.73). These shares remain subject to a one year holding lock (i.e. they are not available for trading until 22 November 2022) except for
Seil Song’s shares which were granted prior to him becoming KMP.
(2) Represents the vesting of restricted STI shares. On 11 November 2021, ordinary Newcrest shares were released by Pacific Custodians Pty Ltd as trustee for the
Newcrest Employee Share Trust to:
–
–
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.
Sandeep Biswas (16,926), Lisa Ali (937) Gerard Bond (5,693), Craig Jones (2,675), Seil Song (902) and Philip Stephenson (3,596) on vesting of restricted STIs
awarded for the 2020 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$25.72 (US$18.95).
(3) Represents Sign-On Rights issued to Maria Sanz Perez that vested on 20 August 2021 and Suresh Vadnagra that vested on 20 May 2022. The value of the shares has
been determined based on the share price at the close of business on the vesting date of A$24.71 and A$25.57 (US$17.76 and US$17.89).
(4) This represents the amount of total STI awarded which will be paid in cash as detailed in section 5.3.2.
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued
121
9.3. Executives – Total Value of Rights Granted and Exercised during the 2022 financial year
Executives
Sandeep Biswas
Sherry Duhe
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Former Executives
Gerard Bond
Lisa Ali
Accounting
Fair Value of
2021 LTI
Rights
Granted
US$’000
Accounting
Fair Value of
Sign-on
Rights
Granted
US$’000
Value of
Rights
Exercised
US$’000
(A)
2,424
645
491
366
438
491
491
–
366
(B)
–
726
–
–
–
–
–
–
–
(C)
2,492
–
362
–
260
362
–
577
–
The following assumptions have been applied to the table:
(A) The accounting value of the 2021 LTI Rights reflects the fair value of a Right on the grant date, being US$14.25 multiplied by the number of Rights granted during the
year. These amounts represent 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 accounting value of a sign-on right reflects the fair value of the sign-on rights on the grant date, multiplied by the number of sign-on rights granted during the year.
The fair value of the sign-on rights on the grant date are US$18.75 for sign-on rights granted to Sherry Duhe. 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.
(C) The Rights which were exercised were 2018 LTIs and sign-on rights. 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 2022 (nil exercise price).
122
Directors’ Report continued
9. Statutory tables continued
9.4. Executives – Source of Rights Held as at 30 June 2022
Financial Year
Type
Grant Date
VWAP for grant (1)
Future financial years in which rights may vest
Executives
Sandeep Biswas
Sherry Duhe (2)
Craig Jones
Maria Sanz Perez
Seil Song (3)
Philip Stephenson
Suresh Vadnagra
Former Executives
Gerard Bond (4)
Lisa Ali
FY20
FY21
FY22
2019 LTI
2020 LTI
2021 LTI
19 Nov 19
18 Nov 2020
17 Nov 2021
Balance at
30 June 2022
FY22
Other
A$30.84
FY23
A$29.21
FY24
A$25.41
A$23.90
FY25
FY23 & FY24
140,074
–
27,561
–
13,358
27,561
–
27,559
–
147,871
–
29,095
21,907
25,672
29,095
29,095
15,440
–
170,017
45,245
34,436
25,660
30,698
34,436
34,436
–
–
–
41,845
–
–
–
–
–
–
–
457,962
87,090
91,092
47,567
69,728
91,092
63,531
42,999
–
(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 2019 LTI, 2020 LTI and 2021 LTI. Five day
VWAP of Newcrest’s share price for sign-on shares is for the period prior to commencement of employment of Sherry Duhe on 21 February 2022.
(2) 41,845 sign-on rights were granted to Sherry Duhe 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$1,000,000 (US$23.90 divided by the VWAP of Newcrest’s share price over the 5 trading days immediately prior to
commencement of employment on 21 February 2022).
(3) All 2019 LTIs granted to Seil Song were granted as GM – Business Development. 50% of such Rights are not subject to Performance Conditions, and all of the shares
allocated on vesting are not subject to holding lock.
(4) Rights held by Gerard Bond in the 2019 and 2020 LTI plans have been pro-rated to his cessation date.
Values of Rights
The table below details additional non-statutory disclosures in relation to outstanding rights held as at 30 June 2022.
Executives
Sandeep Biswas
Sherry Duhe
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
Former Executives
Gerard Bond
Lisa Ali
Market or
payout value
of share-based
awards that
have not
vested (1)
US$’000
Market or
payout value
of vested
share-based
awards
not paid or
distributed
US$’000
Number of
shares or units
of shares
that have
not vested
457,962
87,090
91,092
47,567
69,728
91,092
63,531
42,999
–
6,590
1,253
1,311
684
1,003
1,311
914
619
–
–
–
–
–
–
–
–
–
–
(1) The value of the shares has been determined based on the share price at the close of business on 30 June 2022 of A$20.89 (US$14.39).
Newcrest Annual Report 2022Directors’ Report continuedREMUNERATION REPORT continued 123
Short Term
Post
Employment
Board Fees
US$’000
Committee
Fees
US$’000
Super-
annuation (1)
US$’000
Total (2)
US$’000
330
137
149
151
34
–
135
137
135
104
136
–
135
137
159
443
1,213
1,109
13
37
48
49
4
–
48
49
36
22
29
–
56
57
–
–
234
214
17
16
4
2
4
–
17
16
18
13
17
–
17
16
6
16
100
79
360
190
201
202
42
–
200
202
189
139
182
–
208
210
165
459
1,547
1,402
FY
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
9.5. Non-Executive Directors compensation
Non-Executive Directors
Peter Tomsett
Philip Aiken AM
Philip Bainbridge
Roger Higgins
Sally-Anne Layman
Jane McAloon
Vickki McFadden
Former Non-Executive Directors
Peter Hay
Total (3)
(1) Represents Company contributions to superannuation under the SGC and insurance payments. The Australian superannuation payment is required by legislation.
It is made to a superannuation fund of the employee’s choice. Employees can make additional contributions over and above those required to be paid by Newcrest.
(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 0.7260 (2021: 0.7467).
(3) Non-Executive Director remuneration for the 2021 financial year excludes Non-Executives Directors who ceased being a Non-Executive Director in the 2021 financial
year. Total remuneration for these Non-Executives Directors in the 2021 financial year was US$67,000.
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.
124
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 2022, 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;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene 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 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Newcrest Annual Report 2022 Consolidated Financial Statements
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
Corporate Information
Basis of Preparation
1
2
3
126
126
127
128
129
130
131
183
184
131
131
131
131
Capital Structure and Financial Risk Management
20 Capital Management and Financial Objectives
21 Net Debt/(Net Cash)
Critical Accounting Judgements, Estimates and Assumptions
132
22 Leases
Performance
4
5
Segment Information
Income and Expenses
6 Net Finance Costs
7
8
9
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
Property, Plant and Equipment
Impairment of Non-Financial Assets
Inventories
Trade and Other Receivables
15 Other Assets
16 Goodwill
17 Other Intangible Assets
18 Deferred Tax
19 Provisions
133
133
136
137
138
138
139
139
140
140
143
146
146
147
147
147
148
149
23 Other Financial Assets and Liabilities
24 Financial Risk Management
25 Fair Value Measurement
26
Issued Capital
27 Reserves
Group Structure
28 Controlled Entities
29 Parent Entity Information
30 Deed of Cross Guarantee
31
Interest in Joint Operations
32
Investment in Associates
33 Acquisition of Pretium Resources Inc.
Other
34 Contingencies
35 Share-Based Payments
36 Key Management Personnel
37 Auditors’ Remuneration
38 New Accounting Standards and Interpretations
39 Events Subsequent to Reporting Date
125
151
151
152
154
155
158
164
167
168
169
169
170
171
173
174
175
178
178
178
180
181
182
182
126
Consolidated Income Statement
For the Year Ended 30 June 2022
Revenue
Cost of sales
Gross profit
Exploration expenses
Corporate administration expenses
Other income/(expenses)
Share of profit/(loss) of associates
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:
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(a)
6(b)
7(a)
2022
US$m
4,207
(2,853)
1,354
(76)
(138)
119
45
1,304
25
(100)
(75)
1,229
(357)
872
2021
US$m
4,576
(2,805)
1,771
(69)
(143)
185
26
1,770
27
(129)
(102)
1,668
(504)
1,164
872
1,164
8
8
103.4
103.1
142.5
142.1
Newcrest Annual Report 2022 Consolidated Statement of Comprehensive Income
For the Year Ended 30 June 2022
Profit after income tax
Other comprehensive income/(loss)
Items that may be reclassified subsequently to the Income Statement
Cash flow hedges
Cash flow hedge (gains)/losses transferred to the Income Statement
Cash flow hedge gains/(losses) deferred in equity
Income tax (expense)/benefit
Investments
Share of other comprehensive income/(loss) of associates
Foreign currency translation
Exchange gains/(losses) on translation of foreign operations,
net of hedges of foreign investments and tax
Items that will not be reclassified to the Income Statement
Investments
Note
24(a)
32
Fair value gain of equity instruments held at fair value through other comprehensive income (‘FVOCI’)
25(d)
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income for the year
Total comprehensive income attributable to:
Owners of the parent
The above Statement should be read in conjunction with the accompanying notes.
127
2022
US$m
872
2021
US$m
1,164
40
123
(49)
114
–
–
(457)
(457)
46
46
(297)
575
575
575
96
89
(56)
129
3
3
447
447
4
4
583
1,747
1,747
1,747
128
Consolidated Statement of Financial Position
As at 30 June 2022
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Current tax assets
Other assets
Total current assets
Non-current assets
Trade and other receivables
Inventories
Other financial assets
Property, plant and equipment
Goodwill
Other intangible assets
Deferred tax assets
Investment in associates
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Current tax liability
Other financial liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Provisions
Deferred tax liabilities
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Total equity
The above Statement should be read in conjunction with the accompanying notes.
Note
2022
US$m
2021
US$m
14
13
23
15
14
13
23
11
16
17
18
32
15
22
19
23
21
22
19
18
23
26
27
565
238
633
141
5
43
1,625
76
976
454
12,902
704
37
56
487
42
15,734
17,359
675
47
166
136
68
1,092
1,779
64
491
2,268
–
4,602
5,694
11,665
13,759
(1,726)
(368)
11,665
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
Newcrest Annual Report 2022 Consolidated Statement of Cash Flows
For the Year Ended 30 June 2022
Cash flows from operating activities
Profit before income tax
Adjustments for:
Depreciation and amortisation
Net finance costs
Net fair value gain on Fruta del Norte finance facilities
Exploration expenditure written off
Share of profit of associates
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
Cash consideration for acquisition of Pretium, net of cash acquired
Net receipts from Fruta del Norte finance facilities
Payments for investments in associates
Proceeds from sale of property, plant and equipment
Proceeds from sale of royalty portfolio
Payment for purchase of put option
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings:
– Bilateral bank debt
Repayment of borrowings:
– Bilateral bank debt
– Corporate bonds
– Convertible notes
– Term facility
– Other loans
Payment for treasury shares
Repayment of lease principal
Other financing activities
Dividends paid to members of the parent entity
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.
129
Note
2022
US$m
2021
US$m
1,229
1,668
5(e)
6
25(b)
11
10(a)
33(c)
32
21(d)
21(d)
21(d)
10(b)
10(b)
10(c)
26
750
75
(62)
76
(45)
(18)
(76)
1,929
86
(91)
(244)
1,680
(1,181)
(213)
(120)
(12)
(1,084)
51
(7)
1
36
(19)
673
102
(118)
69
(26)
58
155
2,581
61
(107)
(233)
2,302
(940)
(148)
(115)
(20)
–
38
(21)
8
–
–
(2,548)
(1,198)
860
(717)
–
(52)
(88)
–
(14)
(43)
(1)
(372)
(427)
(1,295)
1,873
(13)
565
–
–
(380)
–
–
(3)
(10)
(32)
(20)
(240)
(685)
419
1,451
3
1,873
130
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2022
2022
Balance at 1 July 2021
Profit for the year
Other comprehensive
income/(loss) for the year
Total comprehensive
income for the year
Transactions with owners
in their capacity as owners
Share-based payments
Shares purchased
Dividends
Shares issued – Dividend
reinvestment plan
Share consideration for acquisition
of Pretium Resources Inc. (Note 33)
Shares issued – Convertible notes
Share issue costs
Transfer of fair value reserves
Issued
Capital
US$m
12,419
–
–
–
–
(14)
–
16
1,289
50
(1)
–
FX
Translation
Reserve
US$m
Hedge
Reserve
US$m
(128)
–
(457)
(457)
–
–
–
–
–
–
–
–
(63)
–
114
114
–
–
–
–
–
–
–
–
Equity
Settlements
Reserve
US$m
137
–
–
–
14
–
–
–
–
–
–
–
Balance at 30 June 2022
13,759
(585)
51
151
Other
Reserves
US$m
Accumulated
Losses
US$m
31
–
46
46
–
–
–
–
–
–
–
(2,272)
872
–
872
–
–
(388)
–
–
–
–
(62)
15
62
(1,726)
2021
Balance at 1 July 2020
Profit for the year
Other comprehensive
income/(loss) for the year
Total comprehensive
income for the year
Transactions with owners
in their capacity as owners
Share-based payments
Shares purchased
Dividends
Shares issued – Dividend
reinvestment plan
Balance at 30 June 2021
Issued
Capital
US$m
12,403
–
–
–
–
(10)
–
26
12,419
FX
Translation
Reserve
US$m
Hedge
Reserve
US$m
Equity
Settlements
Reserve
US$m
Other
Reserves
US$m
Accumulated
Losses
US$m
(575)
–
447
447
–
–
–
–
(192)
–
129
129
–
–
–
–
(128)
(63)
123
24
–
–
–
14
–
–
–
137
–
7
7
–
–
–
–
31
(3,170)
1,164
–
1,164
–
–
(266)
–
(2,272)
The above Statement should be read in conjunction with the accompanying notes.
Total
US$m
10,124
872
(297)
575
14
(14)
(388)
16
1,289
50
(1)
–
11,665
Total
US$m
8,613
1,164
583
1,747
14
(10)
(266)
26
10,124
Newcrest Annual Report 2022 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2022
131
INTRODUCTION
This section provides information about the overall basis of preparation
that is considered to be useful in understanding these financial statements.
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 2022 was authorised for issue in accordance with a resolution
of the Directors on 19 August 2022.
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.
(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.
(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. The functional currency of Red Chris and Brucejack is
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.
132
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 CGU’s
– Note 13 – Net realisable value of ore stockpiles
– Note 18 – Recovery of deferred tax assets
– Note 19 – Mine rehabilitation provision
– Note 22 – Leases
– Note 25 – Valuation of Fruta del Norte (‘FdN’) finance facilities
– Note 25 – Valuation of power purchase agreement
– Note 33 – Business combination
– Note 35 – Share-based payments
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 133
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:
– Cadia, Australia
– Telfer, Australia
– Lihir, Papua New Guinea
– Red Chris JV (70% interest), Canada
– Brucejack, Canada (1)
– Exploration and Projects (2)
(1) Newcrest acquired the Brucejack mine as part of the acquisition of Pretium Resources Inc. during the current financial year. Refer to Note 33.
(2) Exploration and Projects mainly comprises projects in the exploration, evaluation and feasibility phase.
It includes the Havieron Project which is operated by Newcrest under a Joint Venture Agreement (‘JVA’) with Greatland Gold plc (‘Greatland’). Newcrest holds a 70% joint
venture interest in the Havieron Project. Newcrest currentl y has a registered interest of 40% in the Havieron mining lease.
It also includes Wafi-Golpu JV (50% interest) in PNG, Namosi JV (72.88% interest) in Fiji, O’Callaghans in Australia and Newcrest’s global greenfields exploration portfolio.
(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’).
Segment Revenues represent gold, copper, silver and molybdenum 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.
134
4. Segment Information continued
(a) Segment Results, Segment Assets and Segment Liabilities continued
2022
Gold
Copper
Silver
Molybdenum
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$m
1,014
806
11
3
(90)
1,744
1,229
(180)
1,049
685
4,237
(816)
Telfer
US$m
657
138
4
–
(48)
751
203
(125)
78
64
217
(300)
Lihir
US$m
1,222
–
1
–
–
1,223
446
(301)
145
365
5,655
(1,462)
Red Chris
US$m
Brucejack
US$m
Total
Operations
US$m
Exploration
Corporate
& Projects(2)
US$m
& Other(3)
US$m
75
205
3
–
(20)
263
98
(57)
41
203
1,243
(166)
226
–
3
–
(3)
226
109
(68)
41
31
3,606
(928)
3,194
1,149
22
3
(161)
4,207
2,085
(731)
1,354
1,348
14,958
(3,672)
–
–
–
–
–
–
(76)
–
(76)
55
801
(95)
–
–
–
–
–
–
45
(19)
26
14
1,600
(1,927)
Total
Group
US$m
3,194
1,149
22
3
(161)
4,207
2,054
(750)
1,304
1,417
17,359
(5,694)
3,421
(83)
4,193
1,077
2,678
11,286
706
(327)
11,665
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$447 million, Havieron JV of US$151 million and Namosi JV of US$25 million.
(3) Includes investment in associates, FdN finance facilities and eliminations.
2021
Gold
Copper
Silver
Treatment
and refining
deductions
Total revenue
EBITDA
Depreciation and
amortisation
EBIT (Segment
result) (1)
Capital
expenditure
Segment assets
Segment liabilities
Net assets/
(liabilities)
Cadia
US$m
1,417
853
18
(108)
2,180
1,615
Telfer
US$m
660
105
4
(44)
725
137
Lihir
US$m
1,424
–
1
–
1,425
590
(199)
(104)
(277)
1,416
571
4,017
(848)
33
313
65
296
(355)
299
5,508
(1,383)
Red Chris
US$m
Total
Operations
US$m
Exploration
Corporate
& Projects(2)
US$m
& Other(3)
US$m
Total Group
US$m
83
179
3
(19)
246
79
(70)
9
127
1,151
(148)
3,584
1,137
26
(171)
4,576
2,421
(650)
1,771
1,062
10,972
(2,734)
–
–
–
–
–
(69)
–
(69)
31
679
(81)
–
–
–
–
–
91
3,584
1,137
26
(171)
4,576
2,443
(23)
(673)
68
26
3,063
(1,775)
1,770
1,119
14,714
(4,590)
3,169
(59)
4,125
1,003
8,238
598
1,288
10,124
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$25 million.
(3) Includes investment in associates, FdN finance facilities and eliminations.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 135
Note
4(a)
6
2022
US$m
2021
US$m
1,304
(75)
1,229
1,770
(102)
1,668
1,622
19
7
1,648
1,500
261
191
174
155
143
110
25
2,559
4,207
4,541
5,644
5,178
346
25
15,734
1,771
17
–
1,788
1,727
387
236
109
49
168
–
112
2,788
4,576
4,454
5,554
1,449
397
25
11,879
(b) Reconciliation of EBIT (Segment Result) to Profit Before Tax
Segment Result
Net finance costs
Profit before tax
(c) Geographical Information
Total Revenue (1)
Bullion (2)
Australia
Canada
Switzerland
Total bullion revenue
Concentrate (3)
Japan
Korea
Singapore
Philippines
China
Switzerland
United States
United Kingdom
Total concentrate revenue
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$532 million (2021: US$521 million).
(3) Concentrate sales to one customer amounted to US$802 million (2021: US$967 million) arising from concentrate sales by Cadia and Telfer.
(4) Non-Current Assets includes deferred tax assets of US$56 million (2021: US$54 million).
136
5. Income and Expenses
(a) Revenue
Gold – Bullion
Gold – Concentrate
Gold – Concentrate treatment and refining deductions
Total gold revenue
Copper – Concentrate
Copper – Concentrate treatment and refining deductions
Total copper revenue
Silver – Bullion
Silver – Concentrate
Silver – Concentrate treatment and refining deductions
Total silver revenue
Molybdenum – Concentrate
Total molybdenum revenue
Total revenue (1)
(b) Cost of Sales
Site production costs (2)
Royalties
Selling costs
Inventory movements
Depreciation and amortisation
Total cost of sales
(c) Corporate Administration Expenses
Corporate costs
Corporate depreciation
Share-based payments
Total corporate administration expenses
(d) Other Income/(Expenses)
Net fair value movements on concentrate receivables
Net foreign exchange gain/(loss)
Net fair value gain on Fruta del Norte finance facilities
Net insurance recoveries (3)
Gain on sale of royalty portfolio
Business acquisition and integration costs (Note 33(d))
Other items
Total other income/(expenses)
(e) Depreciation and Amortisation
Property, plant and equipment
Intangible assets
Adjustments to inventory on hand or assets under construction
Total depreciation and amortisation expense
Included in:
Cost of sales depreciation
Corporate depreciation
Total depreciation and amortisation expense
2022
US$m
2021
US$m
1,646
1,548
(44)
3,150
1,149
(115)
1,034
2
20
(2)
20
3
3
1,787
1,797
(48)
3,536
1,137
(120)
1,017
1
25
(3)
23
–
–
4,207
4,576
1,915
125
82
–
2,122
731
2,853
103
19
16
138
(51)
68
62
65
11
(42)
6
119
807
17
824
(74)
750
731
19
750
1,889
143
54
69
2,155
650
2,805
105
23
15
143
124
(57)
118
–
–
–
–
185
642
21
663
10
673
650
23
673
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 (f) Employee Benefits Expense
Salaries, wages and other employment benefits
Defined contribution plan expense
Share-based payments
Redundancy expense
Total employee benefits expense
137
2022
US$m
2021
US$m
496
40
16
–
552
464
37
15
8
524
(1) Total revenue for the year comprises of revenue from contracts with customers of US$4,298 million (2021: US$4,675 million) and realised gold hedge losses of
US$91 million (2021: US$99 million).
(2) In 2021, includes benefit of US$8.9 million in relation to the Canada Emergency Wage Subsidy (CEWS) and US$0.2 million 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 was available to all eligible Canadian businesses.
(3) In April 2022, Newcrest settled an insurance claim in relation to the Northern Tailings Storage Facility embankment slump which occurred on 9 March 2018.
The settlement amount of US$75 million is presented net of associated costs of US$10 million.
(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’.
6. Net Finance Costs
(a) Finance Income
Interest on Fruta del Norte finance facilities
Other interest income
Total finance income
(b) Finance Costs
Interest on loans
Interest on leases
Facility fees and other costs
Discount unwind on provisions
Debt extinguishment and related costs
Total finance costs
Net finance costs
Note
25(b)
22(b)
19(b)
2022
US$m
2021
US$m
19
6
25
(75)
(4)
(12)
(9)
–
(100)
(75)
22
5
27
(84)
(2)
(17)
(6)
(20)
(129)
(102)
Interest income
Interest income on financial assets that are classified as fair value through profit and loss (‘FVTPL’) is accounted for on a contractual rate basis.
138
7. Income Tax Expense
(a) Reconciliation of Prima Facie Income Tax Expense to Income Tax Expense
per the Income Statement
Accounting profit before tax
Income tax expense calculated at 30% (2021:30%)
Recognition and de-recognition of deferred tax balances
Tax effect of profit from equity accounted investments
Impact of tax rates applicable outside of Australia
Other items
Income tax expense per the Income Statement
(b) Income Tax Expense Comprises:
Current income tax
Current income tax expense
Adjustments to current income tax of prior periods
Deferred tax (1)
Relating to origination and reversal of temporary differences
Adjustments to deferred tax of prior periods
Income tax expense per the Income Statement
(1) Refer to Note 18(a) for movements in deferred taxes.
8. Earnings per Share (EPS)
EPS (cents per share)
Basic EPS
Diluted EPS
Earnings used in calculating EPS
Earnings used in the calculation of basic and diluted EPS:
Profit after income tax attributable to owners of the parent
Weighted average number of shares
Share data used in the calculation of basic and diluted EPS:
Weighted average number of ordinary shares used in calculating basic EPS
Effect of dilutive securities: share rights
Adjusted weighted average number of ordinary shares used in calculating diluted EPS
2022
US$m
2021
US$m
1,229
369
1
(12)
(3)
2
(12)
357
272
(70)
202
90
65
155
357
2022
US¢
103.4
103.1
2022
US$m
1,668
500
17
(7)
(13)
7
4
504
340
(30)
310
146
48
194
504
2021
US¢
142.5
142.1
2021
US$m
872
1,164
No. of shares
No. of shares
842,968,290
816,719,267
2,420,456
2,425,239
845,388,746
819,144,506
Rights granted to employees as described in Note 35 have been included in the determination of diluted earnings per share to the extent they are dilutive.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022
139
9. Dividends
(a) Dividends declared and paid
The following fully franked ordinary dividends were paid during the year:
Final dividend:
Paid 30 September 2021
Paid 25 September 2020
Interim dividend:
Paid 31 March 2022
Paid 25 March 2021
2022
US¢ per share
2022
US$m
2021
US¢ per share
2021
US$m
40.0
–
7.5
–
47.5
327
–
61
–
388
–
17.5
–
15.0
32.5
–
143
–
123
266
Participation in the dividend reinvestment plan reduced the cash amount paid during 2022 to US$372 million (2021: US$240 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 2022 of US 20 cents per share, which will be
fully franked. The dividend will be paid on 29 September 2022. The total amount of the dividend is US$179 million.
(c) Dividend franking account balance
Franking credits at 30% as at 30 June 2022 available for subsequent financial years is US$440 million (2021: US$419 million).
10. Notes to the Consolidated Statement of Cash Flows
(a) Operating Cash Flows Arising from Changes in:
Trade and other receivables
Inventories
Trade and other payables
Provisions
Other assets and liabilities
Change in working capital
2022
US$m
2021
US$m
6
(38)
(31)
(4)
(9)
(76)
7
57
62
25
4
155
(b) Debt Assumed from Business Acquisition
Newcrest assumed Convertible notes liability of US$102 million on the acquisition of Pretium Resources Inc. (‘Pretium’). Subsequent to the acquisition,
this liability was settled for cash of US$52 million and issue of Newcrest shares for US$50 million (refer Note 26).
Newcrest assumed a term facility liability of US$88 million on the acquisition of Pretium. Subsequent to the acquisition, this liability was fully settled in cash.
(c) Other Information
The repayment of other loans of US$3 million in the prior year, comprises of repayment of US$4 million, less cash contribution from the Red Chris joint
venture participant of US$1 million.
140
RESOURCE ASSETS AND LIABILITIES
This section provides information that is relevant in understanding the composition and management of the Group’s resource assets and liabilities.
11. Property, Plant and Equipment
Exploration
& Evaluation
Expenditure
US$m
Deferred
Feasibility
Expenditure
US$m
Assets
Under
Construction
US$m
Production
Stripping
US$m
Right-
Of-Use
Assets
US$m
Mine
Develop-
ment
US$m
Plant and
Equipment
US$m
Total
US$m
At 30 June 2022
Cost
Accumulated depreciation
and impairment
Year ended 30 June 2022
Carrying amount at 1 July 2021
Business acquisition (Note 33)
Additions during the year
Expenditure written-off
Depreciation
Disposal of assets
Foreign currency translation
Reclassifications/transfers (1)
1,134
(80)
1,054
484
541
120
(76)
–
–
(15)
–
356
–
356
311
–
55
(3)
–
–
(7)
–
Carrying amount at 30 June 2022
1,054
356
947
–
947
807
19
663
–
–
–
(61)
(481)
947
811
200
9,753
8,879
22,080
(439)
372
337
–
213
–
(174)
–
(4)
–
372
(89)
111
60
12
85
–
(43)
–
(3)
–
111
(4,043)
5,710
(4,527)
4,352
(9,178)
12,902
4,162
1,751
74
–
(194)
–
(197)
114
5,710
3,627
568
343
–
(396)
–
(145)
355
9,788
2,891
1,553
(79)
(807)
–
(432)
(12)
4,352
12,902
(1) Total reclassifications of US$12 million relates to transfers to Other Intangible Assets (Note 17).
Exploration
& Evaluation
Expenditure
US$m
Deferred
Feasibility
Expenditure
US$m
Assets
Under
Construction
US$m
Production
Stripping
US$m
Right-
Of-Use
Assets
US$m
Mine
Develop-
ment
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 (1)
564
(80)
484
419
115
(69)
–
–
11
8
Carrying amount at 30 June 2021
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
8,184
8,070
18,670
(4,022)
4,162
(4,443)
3,627
(8,882)
9,788
3,905
177
–
(176)
–
198
58
4,162
3,500
185
–
(339)
(8)
148
141
3,627
8,809
1,297
(73)
(642)
(8)
413
(8)
9,788
(1) Total reclassifications of US$8 million relates to transfers to Other Intangible Assets (Note 17).
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 141
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.
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.
142
11. Property, Plant and Equipment continued
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.
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.
Capital Commitments
The Group’s capital expenditure commitments were US$307 million at
30 June 2022 (2021: US$429 million).
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 30 June each year, and reports in the following August. 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.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 143
12. Impairment of Non-Financial Assets
(b) Basis of Impairment and Impairment
(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 there were indicators of impairment at Lihir. Consequently,
a detailed estimate of the recoverable amounts of the CGU 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 was required as at
30 June 2022 for Lihir.
Goodwill is recognised in the Red Chris CGU following its acquisition
in August 2019. A detailed estimate was undertaken of the recoverable
amount of Red Chris as at 30 June 2022 and it was concluded no
impairment was required.
As a result of the Brucejack acquisition (refer Note 33) in the current year,
goodwill of US$690 million was recognised. 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. A detailed estimate was undertaken
of the recoverable amount of Brucejack at 30 June 2022 and the Group
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.
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 $50 per tonne of CO2-e, and at $100 a tonne of CO2-e for jurisdictions
where there is no regulated carbon price. Currently these shadow carbon
prices enable us to simplistically scenario test the potential impact
on investments. 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.
144
12. Impairment of Non-Financial Assets continued
(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, operating and capital costs and estimates of the value of unmined resources and
exploration potential. 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.
The table below summarises the key assumptions used in the carrying value assessments as at 30 June 2022, and for comparison also provides
the equivalent assumptions used in 2021:
Assumptions for
financial year
Gold
(US$ per ounce)
Copper
(US$ per pound)
AUD:USD
exchange rate
CAD:USD
exchange rate
USD:PGK
exchange rate
As at 30 June 2022
As at 30 June 2021
2023
2024
2025
2026
Long term
(2027+)
2022
2023
2024
2025
Long term
(2026+)
$1,750
$1,650
$1,550
$1,550
$1,500
$1,750
$1,700
$1,550
$1,500
$1,500
$3.70
$3.60
$3.50
$3.50
$3.50
$3.75
$3.50
$3.30
$3.30
$3.30
$0.73
$0.75
$0.75
$0.75
$0.75
$0.78
$0.78
$0.77
$0.76
$0.75
$0.80
$0.80
$0.80
$0.80
$0.80
$0.80
$0.80
$0.80
$0.80
$0.80
K3.52
K3.52
K3.52
K3.52
K3.52
K3.51
K3.51
K3.51
K3.51
K3.51
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 updated its US dollar gold price estimates and its US dollar copper prices applied as at 30 June 2022. These changes were to align with
observable market data, taking into account spot prices during the 2022 financial year and Newcrest’s analysis of observable market forecasts for future
periods. Newcrest has maintained its long-term gold price.
AUD:USD exchange rate
The AUD:USD exchange rate estimates for the 2023 to 2026 financial years have decreased from 2021, reflecting spot prices during the 2022 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 maintained its CAD:USD exchange rate estimates for all future periods, reflecting spot prices during the 2022 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 2022 financial year and Newcrest’s
analysis of observable market forecasts for future periods.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 145
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, Brucejack
Functional
Currency
AUD
USD
CAD
2022
4.50%
6.00%
4.50%
2021
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 the
discount rates.
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.
(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 2022,
and in recognising no requirement for asset impairment or impairment reversal, the Group has determined that the Lihir carrying amount as at
30 June 2022 is within a range that approximates its Fair Value. Lihir’s Fair Value has high sensitivity to the USD gold price, operating cost, and capital
cost and changes in these assumptions can have material impacts relative to Lihir’s 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 2022, and in recognising no requirement for asset impairment or impairment reversal,
the Group has determined that the Telfer carrying amount as at 30 June 2022 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).
Brucejack was acquired during the year. Any variation in the key assumptions used to determine the Fair Value of the Brucejack CGU that has 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 2022:
$ 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
110
300
n/a
100
370
Telfer
A$
70
10
minor
90
n/a
n/a
60
Red Chris
C$
Brucejack
C$
150
110
70
n/a
390
n/a
120
310
n/a
40
n/a
310
n/a
100
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.
146
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)
2022
US$m
2021
US$m
119
35
96
383
633
976
976
145
25
52
340
562
943
943
(1) Total inventories include inventories held at net realisable value of US$15 million (2021: US$18 million).
Ore stockpiles, gold in circuit, bullion and concentrate are physically measured or estimated and valued at the lower of cost and net realisable value.
Cost represents the weighted average cost and includes direct costs and an appropriate portion of fixed and variable production overhead expenditure,
including depreciation and amortisation, incurred in converting materials into finished goods. Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Ore stockpiles which are not scheduled to be processed in the twelve months after the reporting date are classified as non-current inventory. The Group
believes the processing of these stockpiles will have a future economic benefit to the Group and accordingly values these stockpiles at the lower of cost
and net realisable value.
Materials and supplies are valued at the lower of cost and net realisable value. Any allowance for obsolescence is determined by reference to stock
items identified.
Accounting Judgement and Estimate – Net Realisable Value of Ore Stockpiles
The computation of net realisable value for ore stockpiles involves significant judgements and estimates in relation to timing and cost of processing,
commodity prices, foreign exchange rates, recoveries and the timing of sale of the bullion and concentrate produced. A change in any of these
assumptions will alter the estimated net realisable value and may therefore impact the carrying value of ore stockpiles.
14. Trade and Other Receivables
Current
Metal in concentrate receivables
GST receivable
Receivable from joint venture partners (1)
Other receivables
Total current receivables
Non-Current
Receivable from joint venture partners (1)
Other receivables
Total non-current receivables
2022
US$m
2021
US$m
72
92
26
48
238
76
–
76
128
54
22
11
215
46
28
74
(1) Represents right to reimbursement from the Red Chris joint venture partner for its share of Red Chris’ liabilities and a receivable from the Havieron joint venture partner.
Metal in concentrate receivables are initially and subsequently measured at fair value and are generally expected to settle within one to four months.
Fair value movements are recognised in the Income Statement and presented as part of ‘Other Income/Expenses’.
GST and other receivables are initially measured at fair value then subsequently at amortised cost, less an allowance for doubtful debts. GST and other
current receivables are expected to settle within one to twelve months.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 15. Other Assets
Current
Prepayments and other
Total current other assets
Non-Current
Prepayments and other
Non-current tax assets
Total non-current other assets
16. Goodwill
Opening balance
Business acquisition (Note 33)
Foreign currency translation
Closing balance
Goodwill is attributable to the following CGUs:
– Red Chris
– Brucejack
147
2022
US$m
2021
US$m
43
43
3
39
42
51
51
5
12
17
2022
US$m
2021
US$m
19
690
(5)
704
18
686
704
17
–
2
19
19
–
19
Goodwill is measured at cost and is not amortised. It is tested annually for impairment (refer Note 12).
Goodwill arose upon the acquisition of Red Chris in 2020 and Brucejack in 2022. It reflected the requirement to record deferred tax balances for the
difference between the assigned values and the tax bases of assets acquired and liabilities assumed in those business acquisitions.
17. Other Intangible Assets
Information Systems Development
Cost
Accumulated amortisation and impairment
2022
US$m
237
(200)
37
2021
US$m
235
(203)
32
Costs incurred in developing information technology systems and acquiring software are capitalised as intangible assets. Amortisation is calculated on
a straight line basis over the useful life, ranging from three to seven years.
148
18. Deferred Tax
(a) Movement in Deferred Taxes
2022
Deferred tax relates to the following:
– Revenue losses recognised
– Property, plant and equipment
– Provisions
– Other
Net deferred taxes
Reflected in the statement of financial position
as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred taxes
2021
Deferred tax relates to the following:
– Revenue losses recognised
– Property, plant and equipment
– Provisions
– Other
Net deferred taxes
Reflected in the statement of financial position
as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred taxes
Opening
Balance at
1 July
US$m
Acquisitions
US$m
(Charged)/
(Charged)/
credited to
income
US$m
credited to
equity
US$m
Translation
US$m
Closing Balance
at 30 June
US$m
54
(1,372)
54
(46)
(1,310)
–
(791)
–
(33)
(824)
56
(1,231)
41
85
(1,049)
–
–
–
–
–
94
(147)
4
(12)
(61)
(7)
(107)
9
(96)
(201)
–
–
–
(49)
(49)
–
–
–
(36)
(36)
(6)
40
(3)
1
32
5
(34)
4
1
(24)
142
(2,270)
55
(139)
(2,212)
56
(2,268)
(2,212)
54
(1,372)
54
(46)
(1,310)
54
(1,364)
(1,310)
(b) Unrecognised Deferred Tax Assets
Deferred tax assets have not been recognised in respect of:
– capital losses with a tax effect of US$124 million (2021: US$145 million); and
– revenue losses and temporary differences with a tax effect of US$73 million (2021: US$80 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.
(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.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 149
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 unutilised 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.
19. Provisions
Current
Employee benefits
Mine rehabilitation
Other
Total current provisions
Non-Current
Employee benefits
Mine rehabilitation
Total non-current provisions
Note
2022
US$m
2021
US$m
(a)
(b)
(c)
(a)
(b)
143
7
16
166
9
482
491
149
8
15
172
10
553
563
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.
150
19. Provisions continued
(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 may affect this liability include; changes in technology,
changes in regulations, price increases, physical impacts of climate change, 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.
Movements in Mine Rehabilitation provision
Opening balance
Business acquisition (Note 33)
Movements in economic assumptions and timing of cash flows (1)
Change in cost estimates (2)
Paid/utilised during the year
Unwinding of discount (Note 6(b))
Foreign currency translation
Closing balance
Split between:
Current
Non-current
2022
US$m
561
27
(94)
20
(5)
9
(29)
489
7
482
489
2021
US$m
488
–
3
39
(6)
6
31
561
8
553
561
(1) Primarily related to changes in discount rates, which increased by an average of 1% during 2022.
(2) The change for 2022 primarily relates to an increase in estimated closure costs at Red Chris, following an update to Red Chris’s mine closure plan. The change for 2021
primarily relates to an increase in estimated closure costs at Telfer, following an update to Telfer’s mine closure plan.
(c) Other Provisions
Other provisions comprise of community obligations and other miscellaneous items.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 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 an appropriately 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$1.5 billion, with approximately one-third of that amount in the form of cash.
At 30 June, the Group’s position in relation to these metrics were:
Metric
Credit rating (S&P/Moody’s)
Leverage ratio (Net debt to EBITDA)
Gearing ratio
Policy ‘looks to’ be
Investment grade
Less than 2.0 times
Below 25%
Cash and committed undrawn facilities (US$)
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 debt or (net cash) (Note 21)
EBITDA (Note 4)
Leverage ratio
2022
2021
BBB/Baa2
BBB/Baa2
0.6
10.2%
(0.1)
(1.8%)
$2.42bn
($565m cash)
$3.87bn
($1,873m cash)
2022
US$m
1,325
2,054
2021
US$m
(176)
2,443
0.6 times
(0.1) times
Leverage Ratio is calculated as net cash or net debt at the end of the reporting period divided by the trailing 12 month EBITDA. Refer to Note 4, Segment
Information, for the definition of EBITDA.
Gearing Ratio
Net debt or (net cash) (Note 21)
Equity
Total capital (Net debt/(cash) and equity)
Gearing ratio
2022
US$m
1,325
11,665
12,990
10.2%
2021
US$m
(176)
10,124
9,948
(1.8%)
Gearing ratio is calculated as net cash or net debt at the end of the reporting period divided by net cash or net debt plus equity.
152
21. Net Debt/(Net Cash)
Newcrest obtains access to funds from financial institutions and debt investors in the form of committed revolving facilities and corporate bonds. As at
30 June 2022, all of Newcrest’s borrowings were unsecured.
Borrowings are initially recognised at fair value and subsequently at amortised cost. Borrowings are net of transaction costs incurred. Borrowings are
classified as non-current liabilities where Newcrest has an unconditional right to defer settlement or is not due to be settled for at least 12 months from
the year end.
Cash and cash equivalents comprise cash at bank and short-term deposits.
Net Debt/(Net Cash)
Corporate bonds
Bilateral bank debt
Less: capitalised transaction costs on facilities
Total non-current borrowings
Total borrowings
Lease liabilities (current)
Lease liabilities (non-current)
Total lease liabilities
Total Debt
Cash and cash equivalents
Net debt/(net cash)
Note
(a)
(b)
(d)
2022
US$m
1,650
143
(14)
1,779
1,779
47
64
111
1,890
(565)
1,325
2021
US$m
1,650
–
(15)
1,635
1,635
27
35
62
1,697
(1,873)
(176)
(a) Corporate Bonds (‘Notes’)
In each of November 2011 and October 2012, Newcrest issued US$1,000 million in US dollar Notes. Following repurchases in prior periods, US$500 million
remains on issue. In May 2020, Newcrest issued a further US$1,150 million in US dollar Notes. All Notes were issued in accordance with Rule 144A and
Regulation S of the Securities Act of the United States. The Notes consist of:
Maturity
May 2030
November 2041
May 2050
Coupon Rate
3.25%
5.75%
4.20%
2022
US$m
650
500
500
1,650
2021
US$m
650
500
500
1,650
(b) Bilateral Bank Debt
As at 30 June 2022, the Group had bilateral bank debt facilities of US$2,000 million (2021: US$2,000 million) with 13 banks (2021: 13 banks). These are
committed unsecured revolving facilities, individually negotiated and documented with each bank but with similar terms and conditions.
The facilities are on normal terms and conditions and include certain financial covenants. Interest is based on LIBOR plus a margin, which varies amongst
the lenders.
The maturity date profile of these facilities is shown in the table below:
Facility Maturity (financial year ending)
June 2024
June 2026
2022
US$m
1,077
923
2,000
2021
US$m
1,077
923
2,000
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 (c) Financing Facilities
The Group has access to the following unsecured financing facilities at the end of the financial year.
2022
Corporate bonds
Bilateral bank debt facilities
2021
Corporate bonds
Bilateral bank debt facilities
(d) Movement in Debt
Movement in total debt during the year was as follows:
Debt
Opening balance
Movements:
Cash movements:
Drawdown of bilateral bank debt facilities
Repayment of bilateral bank debt facilities
Repurchase of corporate bonds
Payment of lease principal
Repayment of other loans
Repayment – Convertible notes
Repayment – Term facility
Total cash movements
Non-cash movements
Business acquisition – Convertible notes
Business acquisition – Term facility
Business acquisition – Lease liabilities
Repayment of Convertible notes – non-cash (1)
Other non-cash movements (2)
Total non-cash movements
Net movement
Closing balance
153
Facility
Utilised
US$m
Facility
Unutilised
US$m
Facility
Limit
US$m
1,650
143
1,793
1,650
–
1,650
Note
33
33
33
10(b)
–
1,857
1,857
–
2,000
2,000
1,650
2,000
3,650
1,650
2,000
3,650
2022
US$m
1,697
2021
US$m
2,075
860
(717)
–
(43)
–
(52)
(88)
(40)
102
88
11
(50)
82
233
193
1,890
–
–
(380)
(32)
(4)
–
–
(416)
–
–
–
–
38
38
(378)
1,697
(1) Represents issuance of Newcrest’s ordinary shares for settlement of Pretium’s convertible notes during the period.
(2) Represents non-cash movements in lease liabilities (including additions, modifications and terminations), amortisation of transaction costs and foreign exchange
movements during the period.
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 includes equipment hire and contractor
provided equipment and 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
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
2022
US$m
62
2021
US$m
58
66
20
11
(49)
4
(3)
49
111
47
64
111
32
1
–
(34)
2
3
4
62
27
35
62
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.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 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$20 million (2021: US$42 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$16 million (2021: US$10 million) of
productivity-based lease payments that were not required to be included in the measurement of the lease liability.
Accounting Judgement and Estimate – Leases
Judgement is required when assessing whether a contract is or contains a lease. In exercising this judgement, the Group refers to the rights conferred
to it in the contract, such as whether it conveys the right to control, or the right to direct the use of an identified asset.
Judgement is also required in determining the lease term, in particular for service contracts that contain contractor provided equipment leases. The
Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is
reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
23. Other Financial Assets and Liabilities
Other Financial Assets/(Liabilities)
Fuel forward contracts (1)
FdN finance facilities
Total other financial assets – current
FdN finance facilities
Contingent consideration asset (2)
Power purchase agreement
Investment in Pretium (3)
Total other financial assets – non-current
Gold AUD forward contracts (4)
Total other financial liabilities – current
Gold AUD forward contracts (4)
Total other financial liabilities – non-current
Note
2022
US$m
2021
US$m
(b)
(b)
(c)
31
110
141
345
–
109
–
454
(68)
(68)
–
–
19
112
131
397
25
2
86
510
(68)
(68)
(42)
(42)
(1) Net fair value gain of US$31 million (2021: US$19 million gain). Refer Note 24 (a)(ii).
(2) Relates to the fair value of contingent consideration recognised on the sale of Bonikro in 2018. This asset was sold during the current financial year.
(3) Designated as fair value through other comprehensive income (‘FVOCI’). Refer Note 25(d).
(4) Net fair value loss of US$68 million (2021: US$110 million loss). Refer Note 24 (a)(i).
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 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.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 157
(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.
Lundin Gold also has the option to repay (i) 50% of the remaining Stream Credit Facility on 30 June 2024 for $150 million and/or (ii) the other 50%
of the remaining Stream Credit Facility on 30 June 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 other 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
In December 2020, Newcrest 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(a)(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).
158
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.
Refer to Note 25(b).
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 2022, 236,000 gold ounces and 48,000 copper tonnes were subject to QP adjustment (2021: 220,000 gold ounces and 46,000 copper tonnes).
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.
As of 30 June 2022, 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
Total
2022
2022
Quantity
(ounces)
(‘000s)
Weighted
Average Price
A$
Fair Value
US$m
Quantity
(ounces)
(‘000s)
Weighted
Average Price
A$
Fair Value
US$m
138
–
138
1,942
–
1,942
(68)
–
(68)
204
138
342
1,902
1,942
1,918
(68)
(42)
(110)
These forward contracts are measured at fair value with the effective portion of fair value movements being recognised in OCI and accumulated in the
‘Cash flow hedge reserve’ in equity. There was no hedge ineffectiveness recognised in the Income Statement during the year.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 159
(ii) Fuel and Electricity price
The Group’s input costs are exposed to price fluctuations, in particular to diesel and heavy fuel oil prices. To mitigate this risk, the Group has entered into
short-term fuel forward contracts to fix certain diesel and heavy fuel oil costs in line with budget expectations.
These fuel forward contracts have been designated as cash flow hedging instruments with a hedge ratio of 1:1 to the underlying price risk on fuel
purchases. Potential sources of hedge ineffectiveness that may affect the hedging relationship during the term include differences in the pricing structure
of the physical (hedged) item and the hedging instrument, the volume of physical delivery becoming misaligned with the volumes hedged, and credit risk.
Forward contracts maturing in:
Less than 12 months
Diesel (barrels)
Heavy fuel oil (tonnes)
Total fair value
2022
Quantity
(‘000s)
Weighted
Average Price
US$
288
156
90
455
Fair Value
US$m
Quantity
(‘000s)
2021
Weighted
Average Price
US$
13
18
31
402
142
62
327
Fair Value
US$m
7
12
19
These fuel forward contracts are measured at fair value with the effective portion of fair value movements being recognised in OCI and accumulated
in the ‘Cash flow hedge reserve’ in equity. The hedge ineffectiveness recognised in the Income Statement during the year was immaterial.
The Group’s input costs are exposed to price fluctuation in electricity prices. During the prior year, the Group entered into a power purchase agreement
with respect to the Cadia mine. Refer to Note 23(c) for further details.
(iii) Financial impacts of hedges
The impact of hedged items designated in hedging relationships on the Income Statement and OCI, is as follows:
Cash flow hedges
Telfer gold sales
Diesel
Heavy fuel oil
Total
(iv) Sensitivity analysis
Line item in the Income Statement
Revenue – Total gold revenue
Cost of sales – Site production costs
Cost of sales – Site production costs
Gain/(loss) reclassified from
OCI to Income Statement
2022
US$m
2021
US$m
(91)
20
31
(40)
(99)
(3)
6
(96)
The following table summarises the sensitivity of financial assets and financial liabilities held at the reporting date to movement in the gold and copper
prices with all other variables held constant. The movements for gold and copper are based on reasonably possible changes, over a financial year,
using an observed range of actual historical rates for the preceding five year period.
Post-tax gain/(loss)
Gold
Gold +15% (2021: +15%)
Gold -15% (2021: -15%)
Copper
Copper +15% (2021: +15%)
Copper -15% (2021: -15%)
Impact on Profit(1)
Higher/(Lower)
Impact on Equity(2)
Higher/(Lower)
2022
US$m
2021
US$m
2022
US$m
2021
US$m
45
(45)
41
(41)
41
(41)
45
(45)
(26)
26
–
–
(63)
63
–
–
(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.
160
24. Financial Risk Management continued
(a) Commodity and Other Price Risks continued
(iv) Sensitivity analysis continued
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).
(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
Gross Exposure
Net investment in US dollar functional currency entities
Net Exposure (inclusive of net investment in foreign operations)
Net investment hedges
2022
US$m
2021
US$m
316
155
99
31
–
601
30
1,779
3
1,812
(1,211)
1,779
568
344
174
53
19
25
615
18
1,635
9
1,662
(1,047)
1,635
588
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 is designated as a net investment in
foreign operations.
Exchange gains or losses upon subsequent revaluation of US dollar denominated borrowings 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 2022, US dollar borrowings of US$1,779 million were designated as a net investment in foreign operations (2021: US$1,635 million).
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 161
Sensitivity analysis
The following table details the Group’s sensitivity arising in respect of translation of financial assets and financial liabilities to a 5% movement (2021: 5%)
in the Australian dollar against the US dollar at the reporting date, with all other variables held constant. The impact of the movement in other currencies
against the US dollar is immaterial. The percentage sensitivity is based on reasonably possible changes, over a financial year, using the observed range of
actual historical rates for the preceding five-year period.
Post-tax gain/(loss)
AUD/USD +5% (2021: +5%)
AUD/USD -5% (2021: -5%)
Impact on Profit After Tax
Higher/(Lower)
Impact on Equity
Higher/(Lower)
2022
US$m
(14)
14
2021
US$m
(19)
19
2022
US$m
(88)
88
2021
US$m
(81)
81
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% (2021: 5%) was calculated by taking the AUD spot rate as at the reporting date, moving this spot rate by 5%
(2021: 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$1,500 million, with approximately one-third of that amount
in the form of cash.
– Targeting to maintain an investment grade credit rating.
– Forecasting cash flows relating to operational, investing and financing activities, including sensitivity analysis to test multiple scenarios.
– Managing repayment maturities to avoid excessive refinancing in any period.
– Maintaining funding flexibility with committed available credit lines with a variety of counterparties.
– Managing credit risk related to financial assets.
The Group maintains a balance between continuity of funding and flexibility through the use of cash, loans and committed available credit facilities,
and equity market raisings. Included in Note 21 is a list of committed undrawn credit facilities that the Group has at its disposal to manage liquidity risk.
The following table reflects all contractually fixed repayments and interest resulting from recognised financial liabilities at the reporting date, including
derivative financial instruments and leases. For derivative financial instruments the market value is presented, whereas for the other obligations the
respective undiscounted cash flows for the respective upcoming financial years are presented.
2022
Payables
Borrowings
Derivatives
Lease liabilities
2021
Payables
Borrowings
Derivatives
Lease liabilities
Less than
6 months
US$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
675
28
13
28
744
577
26
25
15
643
–
37
24
22
83
–
35
24
15
74
–
216
–
22
238
–
71
42
20
133
–
213
–
45
258
–
213
–
14
227
–
2,613
–
2
2,615
–
2,684
–
4
2,688
Total
US$m
675
3,107
37
119
3,938
577
3,029
91
68
3,765
162
24. Financial Risk Management continued
(d) Interest Rate Risk
The Group’s exposure to the risk of changes in market interest rates primarily relates to the Group’s cash and debt obligations that have floating interest
rates. The Group is also subject to interest rate risk with respect to the fair value of the FdN finance facilities, which are accounted for at fair value through
profit or loss (refer Note 25(b)). The Group’s interest rate exposure together with the effective interest rate for each class of financial assets and financial
liabilities at the reporting date is summarised as follows:
Consolidated
Financial Assets
Cash and cash equivalents
FdN finance facilities (1)
Other receivables
Financial Liabilities
Corporate bonds
Bilateral debt facilities
Lease liabilities
Net exposure
2022
2021
Floating
Interest
US$m
Fixed
Interest
US$m
Effective
Interest Rate
%
Floating
Interest
US$m
Fixed
Interest
US$m
Effective
Interest Rate
%
565
–
50
615
–
143
–
143
472
–
221
–
221
1,650
–
111
1,761
(1,540)
1.1
7.5
9.5
4.3
2.4
3.9
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) 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$61 million (2021: US$32 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 2022 or 30 June 2021.
The majority of the Group’s trade 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.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 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’).
2022
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
Fuel forward contracts
Power purchase agreement
Financial Liabilities
Trade and other payables
Borrowings
Lease liabilities – current
Lease liabilities – non-current
Telfer AUD gold hedges
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
Investment in Pretium
Fuel forward contracts
Contingent consideration asset
Power purchase agreement
Financial Liabilities
Trade and other payables
Borrowings
Lease liabilities – current
Lease liabilities – non-current
Telfer AUD gold hedges – current
Telfer AUD gold hedges – non-current
(1) The Trade and other receivables in this classification relates to concentrate receivables.
Amortised
cost
US$m
Fair Value
through profit
or loss(1)
US$m
Fair Value
through OCI
US$m
565
166
76
–
–
–
–
807
675
1,779
47
64
–
2,565
–
72
–
110
345
–
–
527
–
–
–
–
–
–
–
–
–
–
–
31
109
140
–
–
–
–
68
68
Amortised
cost
US$m
Fair Value
through profit
or loss(1)
US$m
Fair Value
through OCI
US$m
1,873
87
74
–
–
–
–
–
–
2,034
577
1,635
27
35
–
–
2,274
–
128
–
112
397
–
–
25
–
662
–
–
–
–
–
–
–
–
–
–
–
–
86
19
–
2
107
–
–
–
–
68
42
110
Total
US$m
565
238
76
110
345
31
109
1,474
675
1,779
47
64
68
2,633
Total
US$m
1,873
215
74
112
397
86
19
25
2
2,803
577
1,635
27
35
68
42
2,384
164
25. Fair Value Measurement
(a) Fair Value Measurements Recognised in the Statement of Financial Position
For financial assets and liabilities carried at fair value, the Group uses the following to categorise the fair value method used, as defined by
AASB 13/IFRS 13 Fair Value Measurement.
– Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
– Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices). Valuation inputs include forward curves, discount curves and underlying spot and
futures prices.
– Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The Group’s financial assets and liabilities which are measured at fair value on a recurring basis, are categorised as follows:
Financial assets and liabilities measured at fair value
Note
Level 1
US$m
Level 2
US$m
Level 3
US$m
Total
US$m
At 30 June 2022
Concentrate receivables
FdN finance facilities
Power purchase agreement
Fuel forward contracts
Telfer AUD gold hedges
At 30 June 2021
Concentrate receivables
FdN finance facilities
Power purchase agreement
Investment in Pretium
Fuel forward contracts
Contingent consideration asset
Telfer AUD gold hedges
(b)
(c)
(b)
(c)
(d)
–
–
–
–
–
–
–
–
–
86
–
–
–
86
72
–
–
31
(68)
35
128
–
–
–
19
–
(110)
37
–
455
109
–
–
564
–
509
2
–
–
25
–
536
72
455
109
31
(68)
599
128
509
2
86
19
25
(110)
659
There were no transfers between levels during the year.
(b) Fair Value of FdN Finance Facilities
In April 2020, Newcrest acquired the GPCA, SCFA and Offtake Agreement in relation to Lundin Gold’s FdN mine (refer Note 23(b)). Each of these financial
instruments are classified as Level 3 as their valuation includes significant unobservable inputs. The following table summarises the fair value of these
financial assets on an aggregated basis.
Movements in Fair Value
Opening balance
Net receipts during the period
Accrued interest
Fair value adjustments
Other movements
Closing balance
Split between:
Current
Non-current
2022
US$m
2021
US$m
509
(132)
19
62
(3)
455
110
345
455
461
(92)
22
118
–
509
112
397
509
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 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))
Discount rate
8.5%
FdN production profile
FdN mine plan
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$44 million/-US$44 million
(30 June 2021: +US$50 million/-US$51 million)
An increase or decrease in the discount rate of 1% would change the fair value of the
asset by -US$14 million/+US$15 million
(30 June 2021: -US$18 million/+US$19 million)
An increase or decrease in the production profile of 10% would change the fair value of
the asset by +US$13 million/-US$17 million
(30 June 2021: +US$14 million/-US$21 million)
Each of the sensitivities above assumes that the specific assumption moves in isolation, whilst all other assumptions are held constant. The sensitivity of
the exposure of silver prices on the FdN finance facilities has been analysed and determined to be not material to the Group.
Accounting Estimates and Assumptions – Fair Value of FdN finance facilities
Significant judgements, estimates and assumptions are required in determining estimates of Fair Value for the FdN finance facilities. It should be noted
that the Fair Value is subject to variability in key assumptions including, but not limited to, gold prices, discount rates and FdN production profiles.
A change in one or more of the assumptions used could result in a material change in the estimated Fair Value of the FdN finance facilities.
(c) Fair Value of Power Purchase Agreement
Movements in Fair Value
Opening balance
Fair value adjustments
Closing balance
Split between:
Current
Non-current
2022
US$m
2021
US$m
2
107
109
–
109
109
–
2
2
–
2
2
166
25. Fair Value Measurement continued
(c) Fair Value of Power Purchase Agreement continued
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$35 million/-US$35 million
(30 June 2021: +US$7 million/-US$7 million)
The sensitivity above assumes that the specific input moves in isolation, whilst all other assumptions are held constant. 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
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 Investment in Pretium Resources Inc
As at 30 June 2021, the Group held 9,025,216 shares in Pretium representing an interest of 4.8% with a market value of $86 million. This was based on the
closing share price of Pretium on the TSX at the reporting date.
On 8 November 2021, the Group entered into an agreement to acquire all of the issued and outstanding common shares of TSX-listed Pretium that it does
not already own, by way of a Canadian Plan of Arrangement. The acquisition was completed during the year. Refer Note 33 for further details.
A total gain of US$62 million was recognised within Other Comprehensive Income upon revaluation to the acquisition date (including a gain of
US$46 million in the current year). This total gain was transferred from Other Comprehensive Income to Accumulated Losses during the year, reducing
the Accumulated Losses balance.
(e) Fair value of financial instruments carried at amortised cost
The carrying amounts of financial assets and financial liabilities recognised at amortised cost in the financial statements approximate their fair value,
except as detailed in the following table:
Financial Liabilities
Borrowings:
Carrying amount
Fair value(1)
2022
US$m
2021
US$m
2022
US$m
2021
US$m
Fixed rate debt – Corporate Bonds
1,636
1,635
1,487
1,940
(1) The fair value is a level 2 valuation. Fair values of the Group’s fixed rate borrowings are determined by using discounted cash flow models that use discount rates that
reflect the issuer’s borrowing rate as at the end of the reporting period.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 26. Issued Capital
(a) Movements in Issued Capital
Opening balance
Shares issued – Acquisition of Pretium (1)
Shares issued – Convertible notes
Shares issued – Dividend reinvestment plan
Share issue costs
Shares repurchased and held in treasury (2)
Total issued capital
(b) Number of Issued Ordinary Shares
Comprises:
– Shares held by the public
– Treasury shares
Total issued shares
Movement in issued ordinary shares for the year
Opening number of shares
Shares issued – Acquisition of Pretium (1)
Shares issued – Convertible notes
Dividend reinvestment plan
Shares repurchased and held in treasury
Share plans (3)
Closing number of shares
Movement in treasury shares for the year
Opening number of shares
– Purchases
– Allocated pursuant to share plans
Closing number of shares
167
Note
33(a)
10(b)
33(a)
2022
US$m
12,419
1,289
50
16
(1)
(14)
2021
US$m
12,403
–
–
26
–
(10)
13,759
12,419
2022
No.
2021
No.
890,510,101
814,745,123
2,613,146
2,544,569
893,123,247
817,289,692
814,745,123
72,316,008
2,606,579
910,968
(800,000)
813,819,599
–
–
1,217,798
(500,000)
731,423
207,726
890,510,101
814,745,123
2,544,569
800,000
2,252,295
500,000
(731,423)
(207,726)
2,613,146
2,544,569
(1) Represents issue of shares on 9 March 2022 pursuant to the Plan of Arrangement between Pretium and its ordinary shareholders. Refer Note 33 for further details.
Transaction costs associated with the issue amounted to US$1 million.
(2) During the year, the Newcrest Employee Share Plan Trust (‘Trust’) purchased a total of 800,000 (2021: 500,000) fully paid ordinary Newcrest shares at an average price
of A$24.39 (US$17.70) per share (2021: average price of A$24.41 (US$18.92) per share). The shares were purchased on-market to be held by the Trustee on behalf of
the Trust to satisfy the future entitlements of the holders of performance rights (and any other rights to acquire shares) under Newcrest’s current and future employee
incentive schemes.
(3) Represents rights exercised under the Company’s share-based payments plans and executive service agreements. Refer to Note 35 for share-based payments.
(c) Significant Accounting Policies
Issued ordinary share capital is classified as equity and is recognised at the fair value of the consideration received by the Group. Any transaction costs
arising on the issue of ordinary shares and the associated tax are recognised directly in equity as a reduction of the share proceeds received.
Treasury Shares
The Group’s own equity instruments, which are purchased on-market for later use in employee share-based payment arrangements (Treasury shares),
are deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
168
27. Reserves
Equity settlements reserve
Foreign currency translation reserve
Hedge reserve
Other reserves
Total reserves
Note
(a)
(b)
(c)
(d)
2022
US$m
151
(585)
51
15
(368)
2021
US$m
137
(128)
(63)
31
(23)
(a) Equity Settlements Reserve
This reserve is used to recognise the fair value of rights and options issued to employees in relation to equity-settled share-based payments.
(b) Foreign Currency Translation Reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of subsidiaries
which do not have a functional currency of USD. The reserve is also used to record exchange gains and losses on hedges of the net investment in foreign
operations. Refer Note 24(b).
(c) Hedge Reserve
The hedge reserve is used to record the effective portion of changes in the fair value of cash flow hedges (refer Note 24). The components of the hedge
reserve at year end were as follows:
Component
Gold forward contracts – Telfer
Fuel forward contracts
Power purchase agreement
Tax effect
Total Hedge Reserve
Note
24(a)
24(a)
25(c)
2022
US$m
2021
US$m
(68)
31
109
72
(21)
51
(110)
19
2
(89)
26
(63)
(d) Other Reserves
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.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 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 Services Pty 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
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 BC Mining Ltd.
Newcrest Canada Inc.
Newcrest Canada Holdings Inc.
Newcrest Canada Services Inc.
Newcrest Red Chris Mining Limited
Pretium Exploration Inc.
Pretium Resources Inc.
Newcrest Chile SpA
Newcrest Ecuador S.A.
Notes
Country of
Incorporation
2022
%
2021
%
Percentage Holding
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Singapore
Singapore
Indonesia
Fiji
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
USA
USA
USA
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Chile
Ecuador
(a)
(a)
(a)
(a)
(a)
(a)
(b)
(f)
(f)
(b)
(b)
(b)
(b)
(b)
(c) (e)
(b)
(d) (e)
(d) (e)
(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.
(d) These entities were acquired during the year.
(e) During the year, Pretium Resources Inc was amalgamated with Pretium Exploration Inc. and Newcrest BC Mining Ltd.
(f) These entities were deregistered during the year.
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
2022
US$m
2021
US$m
666
(642)
24
92
8,997
9,089
272
540
812
8,277
13,759
151
(698)
(4,935)
8,277
496
610
1,106
99
8,024
8,123
277
559
836
7,287
12,419
137
(56)
(5,213)
7,287
6
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.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 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
2022
US$m
2,495
(1,365)
1,130
(38)
(130)
–
(92)
(5)
(19)
846
7
(94)
759
(284)
475
2021
US$m
2,905
(1,453)
1,452
(36)
(135)
(1)
126
(4)
(11)
1,391
6
(125)
1,272
(348)
924
172
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2022
30. Deed of Cross Guarantee continued
Statement of Financial Position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other assets
Total current assets
Non-current assets
Other receivables
Investment in subsidiaries
Property, plant and equipment
Other intangible assets
Deferred tax assets
Other financial assets
Other assets
Investment in associates
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Current tax liability
Lease liabilities
Other financial liabilities
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred tax liabilities
Lease liabilities
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Total equity
Consolidated
2022
US$m
2021
US$m
218
109
251
31
18
627
187
8,105
4,217
30
43
109
3
78
12,772
13,399
567
101
119
19
68
874
1,779
248
375
10
–
2,412
3,286
10,113
13,759
(2,684)
(962)
10,113
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
Newcrest Annual Report 2022 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
Havieron JV
Namosi JV
Country
Papua New Guinea
Australia
Fiji
Principal Activity
Mineral exploration
Mineral exploration
Mineral exploration
Interest
Note
(a)
(b)
(c)
2022
50.0%
70.0%
72.88%
2021
50.0%
70.0%
72.74%
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 2022, 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 2022 is US$447 million (2021: US$452 million).
(b) Havieron Joint Venture
The Havieron Project is operated by Newcrest under a Joint Venture Agreement (‘JVA’) with Greatland Gold plc (‘Greatland’). Newcrest holds a
70% joint venture interest in the Havieron Project. Newcrest currently has a registered interest of 40% (2021: 40%) in the Havieron mining lease.
Pursuant to the JV agreement, key operational decisions of the JV require a unanimous vote and therefore the Group has joint control. For segment
reporting, the Havieron JV is included within the ‘Exploration and Projects’ segment.
The carrying value of the Group’s interest in the Havieron JV as at 30 June 2022 is US$151 million (2021: US$72 million).
(c) 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 2022 is US$25 million (2021: US$25 million).
174
32. Investment in Associates
Movements in investment in associates
Opening balance
Acquisition – Lundin Gold Inc
Acquisition – SolGold plc
Acquisition – Antipa Minerals Ltd
Total acquisitions
Share of profit/(loss)
Share of other comprehensive income/(loss)
Foreign currency translation
Closing balance
2022
US$m
442
7
–
–
7
45
–
(7)
487
2021
US$m
386
8
10
3
21
26
3
6
442
An associate is an entity that is neither a subsidiary nor joint arrangement, over which the Group has significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The Group’s
investment in associates is accounted for using the equity method.
After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on its investment in its
associate. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is
the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and
recognises the amount in the Income Statement.
(a) Details of Associates
Associate
Lundin Gold Inc
SolGold plc
Azucar Minerals Ltd
Antipa Minerals Ltd
Interest
Carrying Amount
Country of
Incorporation
Canada
United Kingdom
Canada
Australia
2022
%
32.0%
13.5%
19.9%
9.9%
2021
%
32.0%
13.5%
19.9%
9.9%
2022
US$m
408
74
1
4
487
2021
US$m
349
86
2
5
442
Lundin Gold’s FdN mine is in commercial production. 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.
In March 2018, Newcrest acquired a 27.1% equity interest in Lundin Gold for US$251 million (inclusive of transaction costs of US$1 million), following a
share subscription agreement entered into on 24 February 2018. The Group’s current interest is 32.0%. The Group has appointed two directors to the
Board of Lundin Gold.
In April 2020, Newcrest acquired the FdN finance facilities. This did not have an impact on the Group’s equity interest in Lundin Gold. Refer to Note 23(b).
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 The following table discloses summarised financial information of the Group’s investment in Lundin Gold Inc.
Lundin Gold’s Statement of Financial Position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Proportion of Newcrest’s ownership
Carrying value calculated per ownership percentage
Fair value adjustment
Carrying amount
175
2022
US$m
569
1,095
(315)
(439)
910
2021
US$m
405
1,186
(296)
(563)
732
32.0%
32.0%
291
117
408
234
115
349
Lundin Gold had revenue during the year of US$771 million (100% basis) (2021: US$664 million).
As at 30 June 2022, the Group held 75,231,577 shares (2021: 74,350,738) with a market value of US$539 million (2021: US$624 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 2022, the Group held 309,309,996 shares
(2021: 309,309,996 shares) with a market value of US$110 million (2021: US$122 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 2022, the Group held 14,674,056 shares (2021: 14,674,056 shares) with a market value of US$1 million
(2021: US$1 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 2022, the Group held 310,830,163 shares (2021: 310,010,163 shares) with a market value of US$7 million
(2021: US$10 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 Pretium Resources Inc.
On 8 November 2021, the Group entered into an agreement to acquire all of the issued and outstanding common shares of TSX-listed Pretium Resources
Inc. (‘Pretium’) that it did not already own, by way of a Canadian Plan of Arrangement (‘the Plan’). The Plan required approval by 66⅔% of Pretium
shareholders and regulatory approvals including approval under the Investment Canada Act.
This transaction has been accounted for as business combination under AASB 3/IFRS 3 Business Combinations using the acquisition method of accounting.
On 25 February 2022, Newcrest received the final regulatory approval under the Investment Canada Act for the acquisition of Pretium. In accordance with
accounting standards, Newcrest acquired control over Pretium effective from the date of this last regulatory approval and therefore 25 February 2022 is
the acquisition date for this business combination. The total consideration (cash and scrip components) were settled on 9 March 2022.
Pretium is the owner of the Brucejack mine in the Golden Triangle region of British Columbia, Canada. Brucejack began commercial production in
July 2017 and is one of the highest-grade operating gold mines in the world. The acquisition aligns with Newcrest’s stated strategic goal of building a
global portfolio of Tier 1 orebodies.
176
33. Acquisition of Pretium Resources Inc. continued
(a) Consideration
The consideration comprised cash and Newcrest shares, and Pretium shareholders were able to elect either C$18.50 in cash or 0.80847 Newcrest shares
per Pretium share, subject to proration and an aggregate cap of 50% cash and 50% Newcrest shares. The consideration paid is shown in the table below:
Consideration paid in respect to:
Consideration – Cash component (1)
Consideration – Scrip component (2)
Fair value of consideration transferred (for 95.2%)
Fair value of existing 4.8% equity interest (3)
Total fair value (100% interest)
US$m
1,292
1,289
2,581
130
2,711
(1) Cash consideration paid to Pretium shareholders in March 2022.
(2) Newcrest issued 72,316,008 ordinary shares to Pretium shareholders. The fair value of the scrip component reflects the Newcrest share price on the acquisition date of
A$24.82 (US$17.82).
(3) Newcrest held 4.8% of Pretium’s issued shares prior to the completion of the acquisition. A gain of US$62 million was recognised within other comprehensive income
upon revaluation on the acquisition date. This gain was transferred from Other Comprehensive Income to Accumulated Losses.
(b) Provisional Fair Value
Given the timing of the acquisition, further work is required to determine the final fair values of the assets acquired and the liabilities assumed. The finalisation
of these fair values will be completed within 12 months of the acquisition date, at the latest.
Details of the provisional fair values at the date of acquisition are set out below:
Assets and Liabilities Acquired
Cash and cash equivalent
Receivables
Inventories
Property, plant and equipment
Other assets
Total assets
Trade and other payables
Debt – convertible notes
Debt – term facility
Debt – lease liabilities
Provisions – employee benefits
Provisions – mine rehabilitation
Deferred tax liabilities
Other liabilities
Total liabilities
Fair value of identifiable net assets
Goodwill on acquisition
Fair value of net assets
Provisional
Fair Value
US$m
208
36
39
2,891
26
3,200
(123)
(102)
(88)
(11)
(2)
(27)
(824)
(2)
(1,179)
2,021
690
2,711
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.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 (c) Net Cashflow Attributable to the Acquisition
Net cash outflow
Cash consideration paid
Less: Cash and cash equivalent balance acquired
Net cash outflow
(d) Business Acquisition and Integration Costs
Business acquisition and integration costs incurred during the year were as follows:
Business acquisition and integration costs
Purchase of put option (1)
Business transaction costs (2)
Total
177
2022
US$m
1,292
(208)
1,084
2022
US$m
19
23
42
(1) Newcrest purchased put options in November 2021 to hedge the downside risk on the USD cost of the cash consideration in relation to the Pretium acquisition.
(2) Comprises acquisition costs of US$17 million and integration costs of US$6 million.
The above items have been expensed in the Income Statement. Refer to Note 5(d).
(e) Other Information
Refer to Note 4 Segment Information for details of the segment result of Brucejack.
From the date of acquisition, Pretium contributed US$226 million of revenue and US$37 million to profit before tax.
If the combination had taken place at the beginning of the 2022 financial year, the Group’s:
– Revenue would have increased by US$452 million to US$4,659 million; and
– Profit before tax would have increased by US$74 million to US$1,306 million.
Accounting Estimates and Assumptions – Business Combination
Assets acquired and liabilities assumed as part of a business acquisition are generally recorded at their fair value at the date of acquisition.
Determining fair value of identifiable assets, particularly intangibles, and liabilities acquired also requires management to make estimates, which
are based on all available information and in some cases assumptions.
178
OTHER
This section includes additional financial information and other disclosures that are required by the accounting standards and the Corporations Act 2001.
34. 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$173 million (30 June 2021: US$157 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.
35. 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 2022 financial year for Executive General Managers 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.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 179
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
2022
2021
A$19.38
A$21.98
A$20.89
A$22.40
17 Nov 2021
A$24.66
3 years
Nil
0.8%
25.0%
A$23.89
A$25.80
18 Nov 2020
A$28.95
3 years
Nil
0.1%
30.0%
1.5%
1.2%
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:
Movement in Number of Rights During the Year
Granted
Exercised
Forfeited
End of year
Grant date
2022
17 Nov 2021
18 Nov 2020
19 Nov 2019
21 Nov 2018
Total
2021
18 Nov 2020
19 Nov 2019
21 Nov 2018
21 Nov 2017
Total
Exercise date
17 Nov 2024
18 Nov 2023
19 Nov 2022
21 Nov 2021
18 Nov 2023
19 Nov 2022
21 Nov 2021
15 Nov 2020
Beginning
of year
–
774,929
623,592
796,396
1,009,239
–
–
–
2,194,917
1,009,239
–
673,484
851,769
680,356
796,941
–
–
–
2,205,609
796,941
–
–
–
(544,204)
(544,204)
–
–
–
(363,089)
(363,089)
(55,265)
(116,350)
(93,826)
(252,192)
953,974
658,579
529,766
–
(517,633)
2,142,319
(22,012)
(49,892)
(55,373)
(317,267)
774,929
623,592
796,396
–
(444,544)
2,194,917
All Performance Rights have a nil exercise price. The number of performance rights exercisable at year end is nil (2021: nil).
180
35. Share-Based Payments continued
(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$4,950 to acquire shares in the plan year. At the time of acquisition of shares,
the Company grants a matching Right to an ordinary share for each share acquired. The Rights vest three years after grant subject to satisfaction of certain
conditions including continuous employment.
To support Newcrest’s ability to attract and/or retain suitable executives and senior managers, it is sometimes necessary to offer sign-on incentives.
Such incentives are consistent with market practice in the industry. Rights awarded under the Sign-on Share Plan vest over periods up to three years and
are subject to continued employment and/or performance.
The number of shares and rights granted under these plans during the year was not material to the Group. The number of rights outstanding under these
plans at year end was 278,137 (2021: 230,322).
(d) STI Deferral Plan
This plan applies to certain employees including Key Management Personnel. Under the STI Deferral Plan, for eligible employees, 50% of the payment
is provided in cash with the remaining 50% deferred into shares. The number of shares calculated is based on the Company’s volume weighted average
share price during the five trading days immediately preceding the date of payment of the cash portion. Half the shares are released after 12 months and
the remainder after 2 years.
During the year, 187,018 shares were granted in respect of this plan (2021: 73,488 shares).
36. Key Management Personnel
(a) Remuneration of Key Management Personnel and Directors
Short-term
Long-term
Post-employment
Termination benefit
Share-based payments expense
Total
(b) Loans and Other Transactions with Key Management Personnel
There are no loans made to Key Management Personnel, or their related entities, by the Group.
2022
US$’000
2021
US$’000
10,019
11,099
123
204
86
6,635
17,067
186
176
–
10,009
21,470
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022
37. Auditors’ Remuneration
The auditor of the Group is Ernst & Young Australia
(a) Fees to Ernst & Young Australia
Fees for auditing the statutory financial report of the parent covering the group and auditing the statutory
financial reports of any controlled entities (1)
Fees for assurance services required by legislation to be provided by the auditor
Fees for other assurance and agreed-upon-procedures services:
– Transaction accounting services
– Sustainability assurance services
– Audit-related assurance services
Fees for other services:
– Sustainability services
– Tax and other due diligence services
Total
(b) Fees to Other Member Firms of Ernst & Young Australia
Fees for auditing the financial report of any controlled entities
Total
Total fees to Ernst & Young
(c) Fees to Other Auditors
Audit or review of financial reports of subsidiaries
181
2022
US$’000
2021
US$’000
2,118
–
29
284
7
320
–
–
–
2,748
–
56
142
8
206
31
4
35
2,438
2,989
276
276
2,714
302
302
3,291
33
24
(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. This was not a recurring cost but the Company 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.
182
38. 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 2022, but have not been applied in preparing
this financial report.
Reference & Title
Application date for the Group
Impact on Group
Amendment to Accounting Standard AASB 116: Property, Plant and Equipment
1 July 2022
(a)
(a) Amendment to Accounting Standard AASB 116: Property, Plant and Equipment
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 will adopt the new standard on the required effective date of 1 July 2022. 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 adoption of this amendment is not considered material to the Group.
Apart from the above, other accounting standards, amendments and interpretations that have been issued and will be applicable in future periods have
been considered, however their impact is not considered material to the Group.
39. Events Subsequent to Reporting Date
Subsequent to year end, the Directors have determined to pay a final dividend for the year ended 30 June 2022 of US 20 cents per share, which will be
fully franked. The dividend will be paid on 29 September 2022. The total amount of the dividend is US$179 million. This dividend has not been provided for
in the 30 June 2022 financial statements.
There have been no other matters or events that have occurred subsequent to 30 June 2022 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.
Newcrest Annual Report 2022Notes to the Consolidated Financial Statements continuedFor the Year Ended 30 June 2022 Directors’ Declaration
183
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) Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its performance for the year ended on that date; and
(ii) Complying with Australian Accounting Standards and Corporations Regulations 2001.
(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 2022.
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 Tomsett
Chairman
19 August 2022
Melbourne
Sandeep Biswas
Managing Director and Chief Executive Officer
184
Independent Auditor’s Report
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
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 2022, 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 2022
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 audit or
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Newcrest Annual Report 2022 185
1. Acquisition of Pretium Resources Inc.
Why significant
How our audit addressed the key audit matter
On 25 February 2022, the Group received the
final regulatory approval for the acquisition of
Pretium Resources Inc. (‘Pretium’) and obtained
control effective from this date.
We read the arrangement agreement to gain an
understanding of the key terms and conditions and to
assess whether the appropriate accounting
treatment was applied.
The total consideration paid by the Group
amounted to $2,711 million, as disclosed in note
33(a).
We assessed the appropriateness of the criteria used
for the determination of the acquisition date and the
total consideration paid.
Accounting for this transaction was complex,
requiring judgement to be exercised to
determine the fair value of acquired assets and
liabilities assumed. Given the timing of the
acquisition, the provisional fair value of
identifiable assets acquired and liabilities
assumed is disclosed in the financial report for
the year ended 30 June 2022.
Disclosure in relation to this acquisition can be
found in Note 33 of the financial report.
With the involvement of our valuation specialists, we
assessed the:
reasonableness of the valuation assumptions
used by the internal and external experts in their
determination of the provisional fair value of the
acquired assets and liabilities and the amount
recognised as goodwill;
competence, qualifications and objectivity of the
internal and external experts;
whether the provisional fair values were
appropriately recorded in the financial report.
We assessed the adequacy of the financial report
disclosures in Note 33.
2. Assessment of the carrying value of non-current assets
Why significant
How our audit addressed the key audit matter
At 30 June 2022 the Group’s consolidated
statement of financial position includes property,
plant and equipment of $12,902 million, goodwill
of $704 million and other intangible assets of
$37 million. The Group is required to assess for
indicators of impairment and impairment
reversal at each reporting period. Where an
indicator of impairment or impairment reversal
exists for a cash generating unit (CGU), an
impairment test is performed for that CGU. For
CGUs containing goodwill, an impairment test is
performed at least annually.
As at 30 June 2022:
a. An assessment of the indicators of
impairment or impairment reversal was
required to be undertaken by the Group and
impairment indicators were noted for the
Lihir CGU, as set out in 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
considered the information supporting the inputs
used in the impairment models.
A member firm of Ernst & Young Global Limited
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186
Independent Auditor’s Report continued
Why significant
How our audit addressed the key audit matter
We assessed the reasonableness of the forecast
cashflows against the past performance of the CGUs.
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 these key
drivers of the cash flow projections. Having
determined the change in assumptions (individually
or collectively) that would be required for the CGUs
to record an impairment charge or reversal, we
considered the likelihood of such a movement in
those key assumptions arising.
We assessed the adequacy of the related financial
report disclosures in Note 12.
b. Due to the prior impairments recorded for
the Telfer CGU, an impairment assessment
was performed by the Group.
c. The Red Chris and Brucejack CGUs have been
tested for impairment due to the associated
goodwill balances.
The recoverable amount of the Telfer, Lihir, Red
Chris and Brucejack CGUs determined by the
Group are based on 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.
Determination as to whether or not an
impairment charge or reversal relating to an
asset or CGU is required involves significant
judgement relating to future results and plans for
each asset and CGU.
Further disclosures relating to the assessment of
impairment can be found in Note 12 of the
financial report.
3. 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 2022, the Group’s consolidated
statement of financial position includes $489
million of 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 in Note 19 of the
financial report.
We evaluated the Group’s determination of the
rehabilitation provisions.
The Group 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. We assessed
whether the information provided by the Group’s
internal and external experts was 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 related financial
report disclosures in Note 19.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Newcrest Annual Report 2022 187
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 2022 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.
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
judgement 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.
A member firm of Ernst & Young Global Limited
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188
Independent Auditor’s Report continued
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.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Newcrest Annual Report 2022 189
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 2022.
In our opinion, the Remuneration Report of Newcrest Mining Limited for the year ended
30 June 2022, 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 2022
Richard Bembridge
Partner
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
190
Shareholder Information
ISSUED CAPITAL (ON 1 SEPTEMBER 2022)
Title of Class
Ordinary
TWENTY LARGEST SHAREHOLDERS AS AT 1 SEPTEMBER 2022
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
NATIONAL NOMINEES LIMITED
CEDE & CO
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
CITICORP NOMINEES PTY LIMITED
PACIFIC CUSTODIANS PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MCCUSKER HOLDINGS PTY LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
PACIFIC CUSTODIANS PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ARGO INVESTMENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
20 MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
Total
SUBSTANTIAL SHAREHOLDERS (1) AS AT 1 SEPTEMBER 2022
Name
Allan Gray Australia Pty Ltd and its related bodies corporate
BlackRock Group
State Street Corporation and subsidiaries
(1) As notified to Newcrest under section 671B of the Corporations Act 2001.
(2) This number includes 133,519 American Depositary Receipts.
DISTRIBUTION OF SHAREHOLDERS AS AT 1 SEPTEMBER 2022
Size of Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and Over
Total
Number of Shareholders
Number of Shares
80,871
893,123,247
Number of
Shares
% Issued
Capital
401,433,554
152,530,402
124,438,665
32,255,271
24,501,022
19,647,689
6,695,655
5,826,061
4,521,338
3,462,568
2,524,823
2,229,299
2,195,000
1,806,430
1,676,395
1,553,606
1,540,410
1,378,908
1,330,132
1,290,083
44.95
17.08
13.93
3.61
2.74
2.20
0.75
0.65
0.51
0.39
0.28
0.25
0.25
0.20
0.19
0.17
0.17
0.15
0.15
0.14
792,837,311
88.77
Number of
Shares
% Issued
Capital
66,642,087(2)
96,411,977
54,568,016
7.46
10.82
6.11
Number of
Shareholders
Number of
Shares
% Issued
Capital
61,874
16,390
1,693
846
68
80,871
18,655,860
35,702,690
11,959,150
18,751,049
808,054,498
893,123,247
2.09
4.00
1.34
2.10
90.48
100.00
The number of shareholders holding less than a marketable parcel of ordinary shares was 6,023 (based on the closing market price on 1 September 2022).
Newcrest Annual Report 2022 191
UNQUOTED EQUITY SECURITIES AS AT 1 SEPTEMBER 2022
INVESTORS
The number of performance rights on issue under Newcrest’s Equity
Incentive Plan was 2,409,494 and the number of holders of those
performance rights was 931.
RESTRICTED SECURITIES OR SECURITIES SUBJECT TO
VOLUNTARY ESCROW
Newcrest currently has no restricted securities or securities subject to
voluntary escrow.
VOTING RIGHTS
Each ordinary shareholder present at a general meeting (whether in
person, by proxy or by representative) is entitled to one vote on a show
of hands or, on a poll, one vote for each fully paid ordinary share held.
The Company encourages shareholders to express their views on the
conduct of business by speaking at shareholder meetings or by writing
to the Chairman of the Board of Directors.
DIVIDENDS
The Board has determined a final dividend of US 20 cents per share for
the year ended 30 June 2022. An interim dividend of US 7.5 cents per
share was paid on 31 March 2022.
Mandatory Direct Credit of dividends applies to shareholders with a
registered address in Australia, Papua New Guinea or New Zealand.
Those shareholders are unable to receive their dividend by way of cheque.
Shareholders should provide or update their bank account details online or
via a relevant form (see below Online Share Registry Information).
The Dividend Reinvestment Plan (DRP) remains in place and will be
offered to shareholders according to the terms of the DRP. A copy of the
DRP Rules is on the Company’s website at www.newcrest.com.
ON MARKET BUY-BACK
Newcrest currently has no on-market buy-back program.
AMERICAN DEPOSITARY RECEIPTS
Newcrest may also be traded in the form of American Depositary Receipts
(ADRs). Each ADR represents one Newcrest ordinary share. The program
is administered on behalf of the Company by The Bank of New York
Mellon. Contact details are set out in the Corporate Directory Section at
the end of this Report.
ADR holders are not members of the Company but may instruct The Bank
of New York Mellon as to the exercise of voting rights pertaining to the
underlying shareholding.
During the 2022 financial year, the net movement for ADRs was
an increase of 1,607,206 and at year-end a net 8,126,112 ADRs
were outstanding.
Investors can access Newcrest’s market releases, reports,
presentations, dividend history, shareholder information,
key dates, the Interactive Analyst Centre™ and other information
through the investor section on the Company’s website
(www.newcrest.com/investor-centre/overview).
ONLINE SHARE REGISTRY INFORMATION
Visit the Company’s Share Registry, Link Market Services, at
www.linkmarketservices.com.au to access a wide variety of your holding
information, make the following changes online or download forms.
You can:
– check your current holding and balances;
– update your electronic communication instructions;
– update your address and bank details;
– confirm whether you have lodged your Tax File Number (TFN),
Australian Business Number (ABN) or exemption;
– check transaction and dividend history;
– enter your email address;
– download a variety of instruction forms; and
– add or update DRP instructions.
You can access your holding via your Portfolio login (you will need
your password). If you do not have a Portfolio login please register for a
Portfolio. To register, you will need your Securityholder Reference Number
(SRN) or Holder Identification Number (HIN), which you will find on
your holding record. You will also need the postcode recorded on your
holding record.
SHARE REGISTRY CONTACT INFORMATION
You can also contact the Company’s Share Registry by calling
1300 554 474 within Australia or +61 1300 554 474 from outside Australia.
More Share Registry contact details are set out in the Corporate Directory
section at the end of this Report.
ANNUAL REPORT
You can access a full copy of the Annual Report online at
www.newcrest.com. If you no longer wish to receive a hard copy of the
Annual Report, log into your shareholding or contact our Share Registry
to update your communication instructions.
192
Five Year Summary
For the 12 months ended 30 June (1)
2022
2021
2020
2019
2018
Gold Production (ounces)
Cadia
Lihir
Telfer
Brucejack (2)
Red Chris (3)
Fruta del Norte (4)
Gosowong (5)
Bonriko (6)
Total
560,702
687,445
407,550
114,421
42,341
143,723
–
–
764,895
737,082
416,138
–
45,922
129,285
–
–
843,338
775,978
393,164
–
38,933
16,422
103,282
–
912,777
932,784
451,991
–
–
–
190,186
–
599,717
955,156
425,536
–
–
–
251,390
114,555
1,956,182
2,093,322
2,171,118
2,487,739
2,346,354
Copper Production (tonnes)
Silver Production (ounces)
Molybdenum Production (tonnes)
All-In Sustaining Cost (US$ per ounce) (7)
120,650
1,021,719
277
1,043
142,724
944,521
–
911
Cash Flow (US$m)
Cash flow from operations
Capital expenditure
Exploration expenditure
Free cash flow (8)
Profit and Loss (US$m)
Sales revenue
Depreciation and amortisation
Income tax expense
Net profit after tax:
– Statutory profit (9)
– Underlying profit (10)
Earnings per share and dividends (US cents per share)
Earnings per share (EPS):
– Basic EPS on statutory profit
– Basic EPS on underlying profit
Dividends (11)
Financial Position (US$m)
Total assets
Total liabilities
Total equity
Ratios
Leverage ratio (times) (12)
Gearing (%) (13)
Return on Capital Employed (%) (14)
Issued Capital (million shares) at year end
Gold Inventory (million ounces) (15),(16)
Ore Reserves (15)
Measured and Indicated Mineral Resources (17),(18)
Inferred Mineral Resources (17),(18)
1,680
1,417
120
(868)
4,207
750
357
872
872
103.4
103.4
27.5
17,359
5,694
11,665
0.6
10.2
11.4
893
61
120
21
2,302
1,119
115
1,104
4,576
673
504
1,164
1,164
142.5
142.5
55.0
14,714
4,590
10,124
(0.1)
(1.8)
18.5
817
49
97
11
137,623
105,867
77,975
983,431
1,004,507
935,856
–
738
1,487
531
78
804
3,742
746
272
561
561
73.0
73.0
22.0
11,837
4,206
7,631
0.2
4.9
11.2
768
54
–
835
1,434
541
72
601
3,562
791
118
202
459
26.3
59.8
18.5
11,480
4,018
7,462
0.7
12.2
8.8
768
62
–
862
1,471
695
113
(621)
3,922
644
350
647
750
83.4
96.7
25.0
13,242
4,629
8,613
0.3
6.8
13.8
816
52
100
9.5
(1) All financial data presented in this summary is quoted in US dollars unless otherwise stated.
(2)
Newcrest completed the Pretium transaction on 9 March 2022. In accordance with accounting standards, the acquisition date has been determined to be
25 February 2022. All Brucejack figures relating to FY22 represent the period since Newcrest’s acquisition.
Represents Newcrest’s 70% share of the unincorporated Red Chris Joint Venture. Production outcomes for 2020 are reported from the date of acquisition (15 August 2019).
Represents Newcrest’s attributable share of 32%, through its 32% equity interest in Lundin Gold Inc.
Production from Gosowong is shown up to the divestment date of 4 March 2020.
Production from Bonikro is shown up to the divestment date of 28 March 2018.
Includes Newcrest’s 32% attributable share of Fruta del Norte through its 32% equity interest in Lundin Gold Inc.
Free cash flow is calculated as cash flows from operating activities less cash flows relating to investing activities.
Statutory profit is profit after tax attributable to the owners of the parent.
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10) Underlying profit is profit or loss after tax before significant items attributable to owners of the parent.
Newcrest Annual Report 2022 193
(11) Dividends declared/determined in respect of each financial year.
(12) Calculated as net debt divided by EBITDA of the preceding 12 months. Calculated as at 30 June.
(13) Calculated as net debt divided by net debt and total equity. Calculated as at 30 June.
(14) Calculated as EBIT expressed as a percentage of average total capital employed (net debt and total equity).
(15) Reserves and Resources are as at 30 June 2022 for 2022, 31 December 2020 for 2021, 31 December 2019 for 2020, 31 December 2018 for 2019 and 31 December 2017 for 2018.
(16) For confidence classification breakdown of tonnes and grades refer Table 5 for Mineral Resources on page 32, Table 6 for Inferred Resources on page 33 and Table 11 for
Ore Reserves on page 36.
(17) In August 2021, Newcrest announced an updated Ore Reserve and Mineral Resource estimate for Cadia East (refer 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 estimates quoted on this page (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.
(18) Measured and Indicated and Inferred Mineral Resource estimates are not stated under columns 2019 and 2018 as estimates for these years were prepared prior to
Newcrest’s secondary listing on the Toronto Stock Exchange in October 2020 and are not in accordance with NI 43-101. The Resource estimates as at 31 December 2019
were restated and republished in Newcrest’s release titled “Annual Mineral Resources and Ore Reserves Statement – as at 31 December 2020” dated 11 February 2021.
194
Disclaimers
Forward Looking Statements
Non-IFRS Financial Information
Newcrest’s results are reported under International Financial Reporting
Standards (IFRS). This document includes non-IFRS financial information
within the meaning of ASIC Regulatory Guide 230: ‘Disclosing non-IFRS
financial information’ published by ASIC and ‘non-GAAP information’
within the meaning of National Instrument 52-112 – Non-GAAP and Other
Financial Measures published by the Canadian Securities Administrator.
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’ (‘Return
on capital employed’ and calculated as EBIT expressed as a percentage
of average total capital employed (net debt and total equity)); ‘Interest
coverage ratio’ (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, 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 Newcrest 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 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.
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”, “believe”, “continue”, “objectives”, “targets”, “outlook” and
“guidance”, or other similar words and may include, without limitation,
statements regarding estimated reserves and resources, internal rates
of return, expansion, exploration and development activities and the
specifications, targets, results, analyses, interpretations, benefits, costs
and timing of them; certain plans, strategies, aspirations and objectives
of management, anticipated production, sustainability initiatives, dates
for projects, reports, studies or construction, expected costs, cash flow
or production outputs and anticipated productive lives of projects and
mines. Newcrest 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 Newcrest’s actual results,
performance and achievements or industry results 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 resources or reserves, political and social risks, changes to the
regulatory framework within which Newcrest 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
Newcrest’s results and performance, please see the risk factors included
in the Operating and Financial Review included in the Appendix 4E and
Financial Report for the year ended 30 June 2022 and included in the
Annual Information Form dated 6 December 2021 which are available
to view at www.asx.com.au under the code “NCM” and on Newcrest’s
SEDAR profile.
Forward looking statements are based on Newcrest’s current expectations
and reflect Newcrest’s good faith assumptions, judgements, estimates
and other information available as at the date of this document as to the
financial, market, regulatory and other relevant environments that will exist
and affect Newcrest’s business and operations in the future. Newcrest
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
Newcrest. 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 global events
such as geopolitical tensions, the inflationary environment and rising
interest rates and the ongoing COVID-19 pandemic. Forward looking
statements in this document speak only at the date of issue. Except as
required by applicable laws or regulations, Newcrest 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.
Newcrest Annual Report 2022 195
Reliance on Third Party Information
Competent Person’s Statement
The information in this document that relates to Group Mineral Resources,
Ore Reserves and related scientific and technical information has been
extracted from the release titled “Annual Mineral Resources and Ore
Reserves Statement – as at 30 June 2022” dated 19 August 2022 (the
original MR&OR release). The original MR&OR release 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
exploration releases and the original MR&OR release (the original releases)
and that all material assumptions and technical parameters underpinning
the estimates in the original releases 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 releases.
Technical and Scientific Information
The technical and scientific information contained in this document
relating to Red Chris and Wafi-Golpu was reviewed and approved by
Craig Jones, Newcrest’s Chief Operating Officer (Americas) FAusIMM
and a Qualified Person as defined in NI 43-101.
The technical and scientific information in this document relating to Cadia
and Lihir was reviewed and approved by Philip Stephenson, Newcrest’s
Chief Operating Officer (Australasia) FAusIMM and a Qualified Person as
defined in NI 43-101.
This document contains information that has been obtained from third
parties and has not been independently verified, including estimates and
actual outcomes that relate to production and AISC for Fruta del Norte.
No representation or warranty is made to the accuracy, completeness or
reliability of the information. This document should not be relied upon as a
recommendation or forecast by Newcrest.
Long Term Outlook
Newcrest released an indicative longer-term outlook in October 2021
based on the findings of the Cadia PC1-2 Pre-Feasibility Study dated
19 August 2021, and the Red Chris Block Cave, Havieron Stage 1
and Lihir Phase 14A Pre-Feasibility Studies dated 12 October 2021.
The Pre-Feasibility Study findings are indicative only, subject to an
accuracy range of ±25% and should not be construed as guidance.
Newcrest is currently progressing the studies through the Feasibility Stage,
which will reflect inflationary expectations and updated project economics.
As a result, it is expected that the indicative longer-term outlook will be
updated on completion of the retrospective studies during FY23.
Ore Reserves, Mineral Reserves and Mineral Resources
Requirements
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 Reserves and
Mineral Resources 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
– Standards of Disclosure for Mineral Projects (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, Red Chris
and Wafi-Golpu. Copies of the NI 43-101 Reports for Cadia, Lihir and
Wafi-Golpu, which were released on 14 October 2020, and Red Chris,
which was released on 30 November 2021, are available at
www.newcrest.com and on Newcrest’s SEDAR profile.
Company Events
Annual General Meeting
9 November 2022 at 10:30am
(Melbourne time)
The Pavilion
Arts Centre Melbourne
100 St Kilda Road
Melbourne, Victoria 3004
Visit our website at www.newcrest.com
to view our: key dates; current share price;
market releases; annual, quarterly and
financial reports; operations, project and
exploration information; corporate, shareholder,
employment and sustainability information.
196
Corporate Directory
Investor Information
Share Registries
Registered and Principal Office
Australia
Newcrest Mining Limited
Level 8, 600 St Kilda Road
Melbourne, Victoria 3004
Australia
T: +61 (0)3 9522 5333
F: +61 (0)3 9522 5500
E: investor.relations@newcrest.com.au
www.newcrest.com
Company Secretaries
Maria Sanz Perez and Claire Hannon
Newcrest Mining Limited
Level 8 600 St Kilda Road
Melbourne, Victoria 3004
Australia
T: +61 (0)3 9522 5333
F: +61 (0)3 9522 5500
E: ria.sanz@newcrest.com.au
claire.hannon@newcrest.com.au
Investor Relations
Tom Dixon
Head of Investor Relations
Newcrest Mining Limited
Level 8, 600 St Kilda Road
Melbourne, Victoria 3004
Australia
T: +61 (0)3 9522 5570
E: tom.dixon@newcrest.com.au
Vlada Cvijetinovic
Vice President Legal &
Investor Relations – Americas
Newcrest Canada Services
2300 – 1055 Dunsmuir Street
Four Bentall Centre, PO Box 49334
Vancouver, British Columbia V7X1L4
T: +1 (604) 566-8781
E: vlada.cvijetinovic@newcrest.com.au
Stock Exchange Listings
Australian Securities Exchange (Ticker NCM)
Toronto Stock Exchange (Ticker NCM)
PNGX Markets Limited (Ticker NCM)
New York ADRS (Ticker NCMGY)
Link Market Services
Tower 4, 727 Collins Street
Docklands, Victoria 3008
Australia
Locked Bay A14
Sydney South, New South Wales 1235
Australia
T: 1300 554 474 (toll free within Australia)
E: registrars@linkmarketservices.com.au
www.linkmarketservices.com.au
Canada
TSX Trust Company
PO Box 700, Station B
Montreal, QC H3B 3K3
T: 1-800-387-0825
or outside Canada and U.S.
416-682-3860
F: 1-888-249-6189
or outside Canada and U.S.
514-985-8843
E: shareholderinquiries@tmx.com
www.tsxtrust.com
PNG Registries Limited
Level 4, Cuthbertson House
Cuthbertson Street
Port Moresby, NCD
Papua New Guinea
PO Box 1265 Port Moresby, NCD
Papua New Guinea
T: +675 321 6377/78
F: +675 321 6379
E: pngregistries@linkgroup.com
American Depositary Receipts (ADRS)
BNY Mellon Shareowner Services
PO Box 505000
Louisville, KY 40233-5000
USA
T: + 1 888 BNY ADRS or +1888 269 2377
(toll free within the US)
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Newcrest Annual Report 2022