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Magnolia Bostad2023 Annual Report
“ Newcrest has a team of
talented people, whose
passion, drive to innovate,
commitment to making a
positive difference and can-
do attitude has enabled us to
achieve outcomes for a better
future for our workforce,
investors and communities.”
Sherry Duhe
Interim Chief Executive Officer
See more in the Interim CEO’s Report,
Page 5
Cover Image:
Red Chris, Canada
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 best practices;
– developing a diverse workforce; and
– maintaining strong relationships with our communities
and governments.
We are committed to building a diverse and inclusive environment where
everyone can feel respected, valued and safe to bring their whole unique
self to work.
Our Purpose
We proudly produce for a better future
Our Vision
To be the Miner of Choice
Valued by our people and communities
Respected by our partners, customers, suppliers and peers
Celebrated by our owners
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183
Our reporting suite
Our 2023 Annual Report provides information on the Group’s
activities and performance during the 2023 financial year.
Contents
Mineral Resources and Ore Reserves reporting can be located
from page 21 of this report.
FY23 Highlights
Other documents in our reporting suite can be viewed on
our website.
See more, www.newcrest.com
2023 Annual Report
2023 Corporate Governance Statement
2023 Annual Report
2023 Corporate
Governance Statement
2023 Sustainability Report
2023 Modern Slavery Statement
2023 Sustainability Report
2023 Modern Slavery Statement
Users of this document should refer to the disclaimers on
pages 183 to 184 of this report.
Progress Against Our Aspirations
Chairman’s Report
Interim CEO’s Report
Safety and Sustainability
People
Our Business at a Glance
Operational Overview
Innovation and Creativity
The Board
Directors’ Report
Disclaimers
2
FY23 Highlights
Financial (1,2)
Returning cash to shareholders
(cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:26)(cid:24)(cid:23)(cid:22)(cid:21)(cid:20)(cid:19)(cid:23)(cid:29)(cid:18)(cid:23)(cid:20)(cid:19)(cid:21)(cid:27)(cid:30)(cid:19)(cid:18)(cid:17)(cid:16)(cid:30)(cid:27)(cid:20)
(US cents/share)
Underlying profit (2)
Net debt
AISC margin (2,3)
Return on
capital employed (2)
(cid:15)(cid:14)(cid:13)(cid:12)
(cid:11)(cid:10)(cid:9)(cid:8)
(cid:13)(cid:8)(cid:9)(cid:8)
(cid:13)(cid:8)(cid:9)(cid:8)
(cid:31)(cid:30)(cid:27)(cid:27)
(cid:27)(cid:29)(cid:28)
(cid:25)(cid:26)(cid:29)(cid:26)
$778m
FY22: $872m
$1,459m
FY22: $1,325m
$680/oz
FY22: $732/oz
9.0%
FY22: 11.4%
(cid:31)(cid:30)(cid:27)(cid:29)
(cid:31)(cid:30)(cid:27)(cid:26)
(cid:31)(cid:30)(cid:29)(cid:28)
(cid:31)(cid:28)(cid:29)(cid:26)
(cid:30)(cid:26)(cid:29)(cid:26)
(cid:27)(cid:29)(cid:28)
(cid:27)(cid:29)(cid:28)
(cid:31)(cid:27)(cid:29)(cid:28)
(cid:31)(cid:30)(cid:29)(cid:28)
(cid:25)(cid:24)(cid:23)(cid:22)(cid:21)(cid:20)(cid:19)
(cid:18)(cid:17)(cid:22)(cid:16)(cid:20)(cid:15)(cid:14)
(cid:31)(cid:20)(cid:24)(cid:15)(cid:14)
Statutory profit ($m)
778
872
(cid:31)(cid:30)(cid:29)(cid:28)
(cid:31)(cid:30)(cid:29)(cid:29)
Safety and Sustainability
Learnings shared
across the business following the
tragic fatality at Brucejack and
serious injury at Cadia
TRIFR (5)
(cid:31)(cid:30)(cid:29)(cid:28)
(cid:31)(cid:30)(cid:29)(cid:29)
2.97
4.01
Earnings per share
Dividends per share (4)
87.0cps
FY22: 103.4cps
55.0cps
FY22: 27.5cps
First renewable power generated from
the Rye Park Wind Farm in July 2023,
with early supply commencing under
Cadia’s Power Purchase Agreement
Series of training and awareness programs
launched aimed at fostering psychologically
safe and respectful workplaces
Newcrest Sustainability Fund contribution
to eight major projects and two emergency
response projects approved
Brucejack underground truck loading fleet
now fully battery electric
Operational
Quality portfolio includes
high margin gold and copper
assets with long reserve lives
FY23 Gold
production
2.1Moz
FY22: 1.96Moz
FY23 Copper
production
133.1kt
FY22: 120.7kt
Sherry Duhe assumed the role of
Interim Chief Executive Officer
effective 19 December 2022
We have made significant progress across our quality organic gold and copper growth portfolio:
8 November 2022
25 January 2023
6 April 2023
11 August 2023
Telfer West Dome Stage 8
approval, extending mine
life into early FY25 (6)
Lihir Phase 14A Feasibility
Study approved to full
implementation
Wafi-Golpu Framework MOU signed,
marking key milestone towards the signing
of a Mining Development Contract
Newcrest released its initial Mineral
Resources and Ore Reserves
statement for Brucejack
FY23
11 November 2022
Q2 2023
14 March 2023
15 May 2023
Cadia PC1-2
Feasibility Study
approved to execution
Cadia two-stage plant expansion
complete. Brucejack debottlenecking
study progressed to Pre-Feasibility.
Red Chris exploration success expands
East Ridge Exploration Target (7)
contributing additional mining potential
Binding agreement executed with
Newmont to acquire 100% of the
issued shares of Newcrest (8)
(1) All financial data presented in this Annual Report is quoted in US dollars unless otherwise stated.
(2) Non-IFRS Financial Information. See disclaimer on page 184 relating to Non-IFRS Financial Information.
(3) Newcrest’s AISC margin has been determined by deducting the AISC attributable to Newcrest’s operations from Newcrest’s realised gold price.
(4) Represents dividends determined in respect of the financial year (FY23: 55cps, FY22: 27.5cps).
(5) TRIFR is the total number of recordable injuries per million hours worked. It is a lagging indicator of safety performance.
(6) Subject to market and operating conditions and no unforeseen delays.
(7) Further information as to the Exploration Target is included in Newcrest’s release titled “Red Chris exploration success expands East Ridge Exploration Target delivering additional mining
potential” dated 14 March 2023 which is available at www.asx.com.au under the code “NCM” and on Newcrest’s SEDAR profile.
(8) Subject to a number of conditions, including various regulatory approvals, approval by the Federal Court of Australia and approval by Newcrest and Newmont shareholders.
Newcrest Annual Report 2023
Dividends per share (4)
55.0cps
FY22: 27.5cps
3
Progress Against Our Aspirations
Our Forging an even stronger Newcrest plan articulates our mission to deliver
superior returns to our shareholders from finding, developing and operating
gold/copper mines.
The plan also affirms our existing vision to be the Miner of Choice, and defines five pillars that
support us to be the preferred partner for investors, communities, governments and employees.
Our Aspirations
Progress in FY23 (1)
We are a safe
and sustainable
business
Everyone goes home safe
and healthy every day.
Communities trust
us because of our
environmental and
social performance.
We have the
best people
We have a high-performance,
inclusive culture where
everyone can thrive and excel.
We are outstanding
operators
We safely operate our
assets to their full potential.
We are a leader in
innovation and
creativity
We create lasting value
through audacious
breakthroughs.
We grow profitably
We have an industry-leading
portfolio that delivers superior
returns and growth.
NewSafe coaching reinvigorated to support
Leadership and Behavioural elements of the program
Electric light vehicle trial onboarding
commenced at Cadia
Red Chris achieved its lowest annual TRIFR
on record
Key trials and studies to implement the
Group Net Zero Emissions Roadmap progressed (2)
Lihir had zero recordable injuries in Q3 and Q4
Eight social investment programs underway funded
by the Newcrest Sustainability Fund
Recorded 1,184 Critical Control System Verifications,
(intended to verify that each applicable major hazard
critical control is implemented and effective), up from
742 in FY22
50% female representation on our Executive
Committee
Female representation across employees
globally 16.6%
Launched culture change training programs,
Upstander and FeelSafe, as part of our
Respect@Work program to promote and encourage
people to take action against disrespectful behaviour
and create a psychologically safe workplace
Front line leader program ManagingMatters updated
to incorporate Inclusive Leadership
Cadia PC2-3 first ore delivered to the mill in Q3
Red Chris expanded its Exploration Target for
East Ridge
Brucejack continued to progress its three-phase
transformation program and is on track to deliver
expected synergy benefits, with 50% of the expected
benefits delivered in FY23 (3)
Eight underground battery electric truck loading
fleet in operation at Brucejack
Ore sorting concept study at Brucejack complete
which aims to deliver more consistent mill feed grades
and lower cut-off grade
Lihir steep wall and seepage barrier options
developed for near shore Kapit extensions with the
potential to enable access to additional high grade
zones outside the current Ore Reserve
Trial of advanced 4G Long-Term Evolution and 5G
mobile technologies underground at Cadia
New technology, explosive chemistries and
robotic systems developed to enable safer mining
of Lihir’s hot ground zones and Newcrest’s deeper
underground environments
Initial Newcrest Ore Reserves and Mineral Resource
estimates for Brucejack announced
Lihir Phase 14A Feasibility Study approved to
full implementation
Wafi-Golpu Framework MOU signed
Cadia PC1-2 Feasibility Study approved to execution
Cadia two-stage plant expansion complete
Brucejack transformation debottlenecking study
progressed to Pre-Feasibility to further investigate
the potential to increase process plant capacity by
up to 30% (4)
West Dome Stage 8 cutback approved,
extending Telfer mine life into early FY25 (5)
(1) As at 30 June 2023 and reflects progress made since Newcrest’s FY22 Annual Report. Newcrest’s Forging an even stronger Newcrest plan was announced in February 2021.
(2) Includes Brucejack battery electric loading fleet. See our FY23 Sustainability Report for further details.
(3) Expected benefits of C$20-$30 million (US$16-$24 million) per annum. Indicative only and should not be construed as guidance. Subject to market and operating conditions, all necessary
approvals, regulatory requirements, further studies, and no unforeseen delays.
(4) Subject to further studies, all necessary approvals, permits, internal and regulatory requirements and further works and no unforeseen delays.
(5) Subject to market and operating conditions and no unforeseen delays.
4
Chairman’s Report
Total dividends per share
with respect to FY23
US 55.0 cents
FY22: US 27.5 cents
pursue a range of optimisation opportunities. We are particularly proud of
our technical and exploration capability.
In FY23, we made significant progress against our growth strategy
with key study milestones achieved at Cadia and Lihir, the signing
of the Framework Memorandum of Understanding at the world-class
Wafi-Golpu copper-gold deposit, and continued success was realised
through the Brucejack transformation program. Together with activities
underway to maximise the value of Telfer and Havieron, our global gold
and copper portfolio is very well placed for the future.
In May 2023, following several earlier approaches by Newmont, we
entered into a binding agreement for Newmont to acquire 100% of
Newcrest at a premium that recognises the quality of our assets and
growth pipeline (Newmont Transaction), subject to satisfaction or
waiver of conditions including Newcrest and Newmont shareholder
approvals, court approval and regulatory approvals.
We believe that this transaction with Newmont will bring forward
significant value to shareholders through the recognition of our strong
pipeline of organic growth projects. Combining the two companies’
premier portfolios will set a new benchmark in gold production while
benefiting from a material and growing exposure to copper, a critical
mineral in the energy transition.
Under the terms of the Newmont Transaction, eligible Newcrest
shareholders will be entitled to receive 0.400 Newmont shares for
each Newcrest share held. In addition, Newcrest expects to pay a
franked special dividend of US$1.10 per Newcrest share (1) prior to the
implementation of the scheme of arrangement.
The Newcrest Board has unanimously recommended that shareholders
vote in favour of the Newmont Transaction in the absence of a superior
proposal, and subject to the Independent Expert continuing to conclude
that the Newmont Transaction is in the best interests of shareholders.
If the Newmont Transaction is approved by Newcrest shareholders, and
all conditions precedent are satisfied or waived, implementation of the
Newmont Transaction is targeted to occur in November 2023.
Following the retirement of Sandeep Biswas in December 2022, Sherry
Duhe was appointed Interim Chief Executive Officer. Her appointment was
at a pivotal moment for our company, and we thank Sherry for the great
leadership she has shown through this period of change for our people.
Newcrest’s rich history is made up of many great stories of discovery,
overcoming challenges to achieve success, and most of all of the
camaraderie and team spirit that has led to a world class metals business.
As the next chapter of Newcrest’s story unfolds, our people can stand
proud of the exceptional business they have built together.
On behalf of the Board, I thank the Newcrest team for their dedication and
contribution to the company’s success, and to the Executive Committee for
their leadership, as we navigated a path towards what we believe will be
an exciting future for people, communities and shareholders. It has been a
great privilege to have served as a member of the Board since 2018 and to
represent our shareholders as Chairman since November 2021. I thank you
for your support.
Our total dividends of 55 cents per share
for the 2023 financial year were equal
to the highest annual dividend Newcrest
has ever determined, reflecting our
ongoing commitment to providing strong
shareholder returns.
In FY23 we delivered higher gold and copper production, with a statutory
and underlying profit of $778 million, free cash flow of $404 million, and
a fully franked final dividend of US 20 cents per share. This exceeds the
minimum payout targeted by our dividend policy and brings our total
dividends for FY23 to US 55 cents per share.
Safety is crucial for any mining company, ours included. Devastatingly,
we had two major incidents this year – the loss of our colleague at our
Brucejack mine on 22 October 2022 and then in June 2023, a colleague
at our Cadia mine sustained a life-changing injury. We are committed
to the safety of our people and ensuring safety remains at the forefront
of every activity across the business. We must believe that all incidents
are preventable and continue to share learnings, so that we can all work
towards such incidents never happening again.
During FY23, the NSW Environment Protection Authority (EPA) issued
Cadia with variations to its Environment Protection Licence, which largely
formalised the actions Cadia had developed in consultation with the EPA
and was already undertaking to address dust concerns. We continue to
work openly and transparently with the EPA and the local community to
meet our statutory obligations in a way that is aligned with our values.
Our assets produced over 2 million ounces of gold and 133,000 tonnes
of copper during the year. This was despite the impact of an extended
weather pattern which produced drought conditions at Lihir in particular.
We continued to invest in key expansion projects at Cadia, Red Chris and
Lihir and following our strong exploration performance, we significantly
expanded the Exploration Target at East Ridge, highlighting the exciting
opportunity for Red Chris as the Block Cave Feasibility Study continued to
(1) Newcrest expects to have sufficient franking credits available to frank a special dividend
up to an amount of US$1.10 per share. The franking of the special dividend amount is
subject to change based on timing of implementation of the scheme, business performance,
foreign exchange movements and an ATO Class Ruling.
Peter Tomsett
Chairman
Newcrest Annual Report 2023 Interim CEO’s Report
5
Gold production
with respect to FY23
2.1 Moz
FY22: 1.96 Moz
This year we produced 2.1 million ounces of gold and 133,000 tonnes
of copper, with a significantly improved free cash flow of $404 million
and Statutory and Underlying profit of $778 million. Our balance sheet
remains strong as we continued to invest in our organic portfolio of value
generating projects. Key study milestones were achieved at Cadia and
Lihir, a Framework Memorandum of Understanding was signed for the
world-class Wafi-Golpu copper-gold deposit, and continued success was
realised through the Brucejack transformation program.
Our strong exploration performance resulted in an expanded Exploration
Target at East Ridge, highlighting the exciting opportunity for Red Chris
as the Block Cave Feasibility Study continued to pursue a range of
optimisation opportunities. Together with activities underway to maximise
the value of Telfer and Havieron, our global gold and copper portfolio is
very well placed for the future.
Climate change is the greatest global challenge of our time, and we have a
role to play in reducing carbon emissions. In FY23, we progressed our Net
Zero Emissions Roadmap by continuing to invest in electric vehicles and
other new technologies to support our transition to a low-carbon future.
The underground truck loading fleet at Brucejack is now fully battery
electric and activities to procure and onboard trials of a high technology
readiness fleet are progressing at Cadia and Brucejack. Since then, the first
renewable power was generated from the Rye Park Wind Farm, with early
supply commencing under Cadia’s Power Purchase Agreement.
There were also changes to our Executive Committee this year. It has
been a great honour and privilege to lead this company following Sandeep
Biswas’ retirement in December 2022. This year, we welcomed Beth White
as Chief Sustainability Officer, Megan Collins as Chief People and Culture
Officer, and Dan O’Connell as Interim Chief Financial Officer. They have all
greatly contributed to our successes. We also farewelled Phil Stephenson,
Chief Operating Officer (Australasia) and Seil Song, Chief Development
Officer.
I very much look forward to seeing the future growth and development of
our enviable portfolio of world-class gold and copper assets, backed by our
first-rate team of operators, explorers and pioneers.
Sherry Duhe
Interim Chief Executive Officer
Newcrest has a team of talented people,
whose passion, drive to innovate,
commitment to making a positive difference
and can-do attitude has enabled us to
achieve outcomes for a better future for
our workforce, investors and communities.
In FY23, we delivered higher gold and copper production, and announced
a final dividend of 20 cents per share, bringing our total dividends for the
2023 financial year to 55 cents per share. This is equal to the highest total
annual dividend Newcrest has ever determined, reflecting our ongoing
commitment to providing strong shareholder returns. We also achieved
several major milestones across our pipeline of high-quality projects, made
strong progress in our initiatives to support our transition to a low-carbon
future, and maintained strong financial fundamentals.
As we reflect on the year’s performance, we remember the tragic loss of
life at our Brucejack mine in October 2022 and the life-changing injury
sustained by one of our colleagues while working at our Cadia mine.
These incidents are felt deeply across our business and, while our FY23
injury rates decreased by 26% (to a Total Recordable Injury Frequency
Rate of 2.97), they are a stark reminder of the importance of our people’s
health and safety. We remain resolute in our commitment to take action
which will help prevent such incidents occurring.
We want a workplace which people are proud to be part of and in
which they thrive. In the past year, we advanced our efforts to embrace
diversity as a strength and put respect at the core of the way we work.
Notably, Respect@Work Managers have been appointed at each of our
locations to help drive positive action towards eliminating unacceptable
behaviours from our workplace.
6
Newcrest Annual Report 2023
Safety and Sustainability
Climate Change goals
Net zero Scope 1 and Scope 2 carbon
emissions by 2050 goal
We also intend to work across our value chain to reduce
our Scope 3 emissions.
30% reduction in Scope 1 and
Scope 2 greenhouse gas emissions
intensity per tonne of ore milled by
2030 target compared to a baseline
of FY18 emissions
Learn more about Newcrest’s Sustainability
progress in our 2023 Sustainability Report,
www.newcrest.com/sustainability/sustainability-reports
Our Purpose
We proudly produce for a better future.
Safety
Safety and sustainability are core to
the operation of Newcrest’s business.
Newcrest is 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 developing and maintaining
strong relationships with our communities
and governments.
In October 2022, a tragic fatality involving a contractor occurred at
Newcrest’s Brucejack mine in British Columbia. During the suspension
of operations, Newcrest completed a safety review across all activities at
Brucejack to identify major hazards and corresponding critical control.
This review has helped Newcrest to establish additional control verification
mechanisms to monitor those critical controls.
(1) During FY23, the Upstander program was made available to staff and contractors at Brucejack,
Cadia, Lihir, Red Chris, Telfer and Corporate, and the FeelSafe program was made available to
staff and contractors at Telfer and Red Chris.
The New South Wales Resources Regulator is investigating two safety
incidents at Cadia. These are in response to a serious injury that occurred
to a team member from one of Cadia’s contracting partners in June 2023,
and a separate incident resulting in serious injuries to a team member that
occurred in October 2021. Newcrest remains committed to learning from
these devastating incidents to ensure that safety remains at the forefront
of every activity across the business.
The Newcrest Safety Transformation Plan was developed and
implemented with core components including NewSafe Leadership
(health and safety behavioural cultural program), field Critical Control
Management verifications and Process Safety, which combine to support
the intent of eliminating fatalities and injuries from Newcrest’s business.
During the 2023 financial year we renewed our commitment across all
sites to the Safety Transformation Plan, including:
– A launch or re-launch of the NewSafe Leadership program at all sites,
including the review and development of NewSafe behaviours for
many workgroups.
– Relaunch of the NewSafe coaching program for frontline supervisors
at all sites.
– Increased support for safety incident investigations, including
additional training and independent facilitators for high-level incidents,
resulting in improved quality of outcomes for all sites.
– Continuation of the SafeHands program which analysed manual tasks
and changing procedures, realising a 21% reduction in hand and finger
injuries compared to FY22.
– Delivery of the Eye on Risk program on every site which focussed on
hazard identification and critical control management.
– Launch of the FeelSafe and Upstander programs directed at supporting
psychologically safe workplaces. (1)
7
Sustainability
We are committed to making decisions
across our business that create
value today and for generations to come.
In FY22, Newcrest adopted an Integrated
Sustainability Framework (ISF) which
provides the framework for how we as a
company approach sustainability and what
it means to Newcrest.
The ISF is centred around four pillars:
– Improving people’s lives.
– Respecting the environment.
– Building a business for the future.
– Being a trusted company.
Further details are provided in our 2023 Sustainability Report,
www.newcrest.com/sustainability/sustainability-reports
(2) See Risk Factors discussed in Section 7 of the Operating and Financial Review on page 69
of this Annual Report.
Newcrest recognises that climate change is one of the most significant
challenges facing the world today. We acknowledge the climate change
science and support the Paris Agreement goals. The mining sector
has a role to play in reducing global greenhouse gas (GHG) emissions.
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. (2)
We are pro gressing multiple carbon emissions reduction initiatives as
part of our Group Net Zero Emissions Roadmap, including scoping and
planning key trials and studies.
Fleet electrification remains a focus across the business, with the
underground truck loaders at Brucejack now fully battery electric, the
battery electric load haul dump scoop trial continuing at Brucejack and
planning for other electric vehicle trials ongoing at Cadia. The Telfer/
Havieron renewables concept study is nearing completion and the Lihir
FY23 power technology assessment workplan was completed during the
last quarter of FY23 with several options selected for further assessment.
In FY23 Newcrest also launched the Newcrest Sustainability Fund with
A$10 million to invest in strategic social investments in support of the
United Nations Sustainable Development Goals. The Fund continues to
identify projects to contribute to the resilience of communities across
Newcrest’s geographic areas of interest. Contribution to eight major
projects and two emergency response projects were approved during
FY23 with a focus across health, education, biodiversity, reduction in
inequalities and economic growth outcomes.
8
People
Newcrest Annual Report 2023
Our aspiration is to have a high-performance, inclusive
culture where everyone can thrive and excel.
We have not set enterprise-wide targets for diversity for FY24 in light
of the Newmont transaction, and plan to work with each site to discuss
aspirations at a site level.
Our sites continue to implement local action plans aimed at attracting and
retaining a diverse workforce and creating a safe, respectful and inclusive
work environment.
– At Lihir, targeted development of local talent is a priority in FY24,
specifically planning to accelerate Level 1 and 2 Lihirian talent and
expanding numbers of Lihirian graduates, trainees and scholarships
to foster a local talent pipeline that is healthy and thriving.
– At Brucejack the Indigenous Cultural Alliance Committee has been
established with two (Indigenous) co-Chairs who are committed to
raising awareness of the value of diverse backgrounds for all our people.
– At Cadia, we have a focus on female talent in our early careers
programs. During FY23, 17 university vacation students (35% female),
15 new graduates (46% female), and 38 apprentices (26% female)
joined our Cadia team.
Inclusion and Diversity
In FY23 our front line leader program
ManagingMatters was updated to include
Inclusive Leadership awareness and skills.
Inclusion is the foundation upon which our
leaders create the conditions for people
to feel they belong, feel valued and feel
psychologically safe at work. Facilitating
an inclusive culture is the role of a leader
and is fundamental to our approach
towards leadership development.
Over the course of FY23, we increased our overall global female
employee representation which is currently 16.6% (16.5% at the end of
FY22). For sites, we saw an increase in female representation at Telfer
and Red Chris, steady at Lihir, and a decrease at Cadia and Brucejack.
A longer-term target has been set for the Executive Committee of
30% female representation by the end of the 2024 financial year.
The Executive Committee currently exceeds this target as it includes
four female members out of seven as at the date of this Annual Report.
In June 2020, the Board adopted a target for Board composition of not less
than 30% of each gender by 30 June 2023. The current Board meets this
target as it includes three female Directors out of seven Directors.
9
Respect@Work and Reporting
We believe that everyone has the right
to feel and be safe at work while being
treated with respect and dignity.
Newcrest is committed to providing a safe, inclusive and respectful
workplace that is free of sexual assault and sexual harassment.
During FY23 we continued to deliver on our Respect@Work program
activities which align with our Respect@Work Prevention and Response
Framework. Key milestones include:
– Listened to our people through focus groups, one-on-one meetings,
and a Respect@Work Pulse Survey. This engagement told us that
there is a strong belief that Newcrest takes matters of sexual assault
and sexual harassment seriously, and that there is higher confidence
in reporting such incidents than in the past.
– Launched culture change training through Upstander and FeelSafe
programs. The Upstander program educates our workforce on how to
speak up in difficult situations, and the FeelSafe program focusses on
enhancing an inclusive and psychologically safe workplace.
– Risk assessments were completed at three sites and accommodation/
security audits were completed at all operating sites.
Sixty-three cases of sexual assault and sexual harassment were reported
globally in FY23, (1) an increase from the 50 cases reported in FY22.
We continue to investigate a number of these cases. Thirty-five cases
have been substantiated and include:
– five sexual assaults (2) which included unwanted touching of a
sexual nature, but no reports of rape or attempted rape; and
– thirty incidents of sexual harassment (3) which included inappropriate
comments, jokes and gestures, requests of a sexual nature and stalking.
Outcomes of substantiated matters included 26 people terminated/
removed from the Newcrest business, nine written warnings or other
disciplinary action, and counselling and education for others.
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.
Our Prevention and Response Framework outlines
what we are doing in the Respect@Work program
and can be viewed in our Sustainability Report
(1) Incidents involved a mix of contractors and employees.
(2) Newcrest considers sexual assault to be rape or attempted rape, forced or attempts to force
sexual activity, and unwanted touching of a sexual nature.
(3) Newcrest considers sexual harassment to be unwelcome sexual advances,
including touching, online sexual photos/comments/texts, requests for sexual favours,
and retaliation for not being sexually cooperative.
2023 Sustainability Report
2023 Sustainability Report
www.newcrest.com/sustainability/
sustainability-reports
10
Our Business at a Glance
Newcrest has an outstanding portfolio of long-life gold and copper assets, a material and increasing
exposure to copper, and a well-established organic growth pipeline.
Papua New Guinea
Australia
1 Juri (JV & FI)
2 Wilki (O & FI)
3 Antipa (EI)
4 Tennant East (100%)
5 Mt Coolon (O & FI)
6 Second Junction
Reefs Project (JV)
Lihir
New Ireland Province
100% Newcrest Ownership
Au
670koz
Wafi-Golpu JV
Morobe Province
50% Newcrest Ownership
Telfer
Pilbara, Western Australia
100% Newcrest Ownership
Au
349koz
Cu
17kt
1
32
Havieron JV & FI
Pilbara, Western Australia
70% Newcrest Ownership (1)
4
5
Our commodities in FY23
Gold
76%
of Net Revenue
2.1 Moz (2)
Produced
US$1,797/oz
Realised Price (3)
Copper
22%
of Net Revenue
133.1 kt
Produced
US$3.76/lb
Realised Price (3)
Au
597koz
Cu
98kt
6
Asset type
Producing assets
Advanced projects
Exploration projects
Exploration projects
FI Farm-In
JV Joint Venture
100% 100% Newcrest Tenement
O Option
EI Equity Investment
Mining method
Open pit mining
Underground mining
Cadia Orange, New South Wales100% Newcrest OwnershipNewcrest Annual Report 2023
11
Canada
1 Boomerang (100%)
USA
1 Mahogany (O & FI)
2 Appaloosa (O & FI)
3 Lodestar (O & FI)
4 Midas North (O & FI)
5 Spring Peak (O & FI)
6 Headwater Gold (EI)
7 Metallic Minerals (EI)
Red Chris JV (4)
(incl. the GJ property)
British Columbia
1
70% Newcrest Ownership
Au
39koz
Cu
18kt
Au
286koz
1
2 3
4 5 6
7
Fiji
Mexico
Namosi JV
Waisoi Project
Namosi Province
73.03% Newcrest Ownership
1 Azucar Minerals (EI)
1
Employees/Contractors (5)
Ecuador
1
2
SurNorte (Gamora,
Jackpot) (JV + FI)
SolGold (EI)
Fruta del Norte
Zamora-Chinchipe Province
32% Newcrest Ownership (6)
Au
164koz
1
2
13,637
Total
6,576
Employees
7,061
Contractors
See detail by location in our 2023
Sustainability Report Performance Data
www.newcrest.com/sustainability/
sustainability-reports
(1) The Havieron Project is operated by Newcrest under a Joint Venture Agreement with Greatland Gold. Newcrest has a 70%
interest in the Havieron Project (Greatland Gold Plc 30%).
(2) Group gold production includes 164,008 ounces relating to Newcrest’s 32% attributable share of Fruta del Norte through
its 32% equity interest in Lundin Gold Inc. The outcomes for Fruta del Norte have been sourced from Lundin Gold’s news
releases and have been aggregated to reflect the 12-month period ended 30 June 2023.
(3) Realised metal prices are the US$ 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).
(4) Production and financial outcomes represent Newcrest’s 70% share.
(5) As at 30 June 2023. Employees are directly employed by Newcrest (headcount). Contractor FTEs include labour hire and
project contractors, replacement labour and other contractors. Wafi-Golpu data not included as it is not under Newcrest’s
operational control.
(6) The production outcome shown represents Newcrest’s 32% attributable share, through its 32% equity interest in Lundin Gold Inc.
Brucejack British Columbia100% Newcrest Ownership
12
Operational overview
Cadia
Cadia is located 25km from Orange in central western New
South Wales, Australia.
Cadia is one of the world’s largest gold and copper mining operations with Ore
Reserves of 17Moz gold and 3.6Mt copper, and Measured and Indicated Mineral
Resources of 32Moz gold and 7.2Mt copper. (1,2)
FY23 Performance
Cadia’s higher gold and copper production in FY23 reflects an increase in mill
throughput following completion of the planned replacement and upgrade of the
SAG mill motor in FY22, and the ongoing benefits of recovery improvement projects
with the commissioning of the two-stage plant expansion project completed.
This was partially offset by the expected decline in grade.
AISC of $45 per ounce was higher than FY22 primarily driven by the impact of
a lower realised copper price, higher site production costs and an increase in
sustaining capital expenditure relating to construction activities on the Tailings
Storage Facilities. These impacts were partially offset by higher gold and copper
sales volumes and favourable FX movements. Cadia’s AISC remains around the
bottom of the first quartile in the gold industry. (3)
Free cash flow of $720 million was 17% higher than in FY22. This reflects lower
non-sustaining capital expenditure with commissioning of the two-stage plant
expansion completed together with increased earnings (EBITDA) in FY23,
partially offset by unfavourable working capital movements and increased
sustaining capital expenditure.
During the June 2023 quarter, the NSW Environment Protection Authority (EPA)
issued Cadia with variations to its Environment Protection Licence, a Prevention
Notice and Notices to Provide Information regarding the management of dust
emissions and other air pollutants from the Tailings Storage Facilities and ventilation
rises. The licence variations largely formalised the actions Cadia had developed in
consultation with the EPA and were already undertaking across a range of measures.
See further details in the Operating and Financial Review on pages 57–58 of this report.
In August 2023, the NSW EPA commenced proceedings in the state Land and
Environment Court against Cadia Holdings, alleging that air emissions from Cadia
in March 2022 exceeded the standard of concentration for total solid particles
permitted under applicable laws due to the use of surface exhaust fans at the mine.
The NSW EPA’s investigation regarding the management of air emissions from the
mine is ongoing.
Cadia expansions
The two-stage plant expansion project at Cadia is now complete. Construction of the
underground materials handling system for PC2-3 was finalised in FY23 and first ore
was delivered to the mill in the March 2023 quarter. This was a significant milestone
for Cadia’s next panel cave, with activities now focused on mine development.
In November 2022, the Newcrest Board approved progression of the Cadia PC1-2
Feasibility Study to Execution. The Feasibility Study demonstrated an optimised mine
footprint substantially increasing expected ore mined across the life of the project.
Key development activities for PC1-2 remain on track and first ore production from
PC1-2 is expected in FY26. (4,5)
(1) Ore Reserve and Mineral Resource estimates are as at 30 June 2023 based on the release
titled “Annual Mineral Resources and Ore Reserves Statement – as at 30 June 2023” dated
11 August 2023 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.
(2) For tonnes and grade breakdown by confidence category refer to Table 5 for Mineral
Resources on page 27 and Table 11 for Ore Reserves on page 31.
Long-life
world-class asset
Orange, New South Wales, Australia
Free cash flow (6)
AISC
$720m
FY22: $613m
$45/oz
FY22: $(124)/oz
Gold production
597koz
561koz
(cid:31)(cid:30)(cid:29)(cid:28)
(cid:31)(cid:30)(cid:29)(cid:29)
Copper produced
98kt
85kt
(cid:31)(cid:30)(cid:29)(cid:28)
(cid:31)(cid:30)(cid:29)(cid:29)
Site process
Mining
Processing
Output
Panel Cave (PC) mining from Cadia East (PC1, PC2 and
PC2-3), with underground crushing and conveyor to
surface
High pressure grinding rolls, SAG mills, ball mills,
flotation, coarse ore flotation and gravity concentration
Principally gold doré, copper/gold concentrate,
molybdenum concentrate
Reserves & Resources
Gold Reserve Life (7)
Gold Probable Ore Reserves (1,2)
Gold M&I Mineral Resources (1,2,8)
Copper Probable Ore Reserves (1,2)
Copper M&I Mineral Resources (1,2,8)
+25 years
17Moz
32Moz
3.6Mt
7.2Mt
(3) AISC per ounce is first quartile when compared to the Metals Focus Ltd “Q1 2023 Gold Mine
Cost Service” report dated 23 June 2023.
(4) Subject to market and operating conditions.
(5) The Cadia PC1-2 Feasibility Study has been prepared with the objective that its findings are
subject to an accuracy range of ±10–15%. The findings in the Study and the implementation
of the PC1-2 Project are subject to all the necessary approvals, permits, internal and
regulatory requirements and further works. The Study estimates are indicative only and are
subject to market and operating conditions. They should not be construed as guidance.
(6) Free cash flow is before interest, tax and intercompany transactions.
(7) Reserve life is indicative and calculated as Probable Gold Reserves (contained metal) as at
30 June 2023 divided by forecast average production rate as per the Life of Province Plan or stated
in a Feasibility Study. Estimated reserve life does not necessarily equate to operating mine life.
(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.
Newcrest Annual Report 2023 13
Significant
long-life asset
New Ireland Province, Papua New Guinea
Free cash flow (4)
AISC
$125m
FY22: $87m
$1,466/oz
FY22: $1,622/oz
Gold production
670koz
687koz
(cid:31)(cid:30)(cid:29)(cid:28)
(cid:31)(cid:30)(cid:29)(cid:29)
Site process
Mining
Processing
Open pit drill, blast, load and haul mining
Crushing, grinding, flotation, pressure oxidation,
NCA circuit
Output
Gold doré
Reserves & Resources
Gold Reserve Life (5)
Gold Proved & Probable Ore Reserves (1,2)
Gold M&I Mineral Resources (1,2,6)
~22 years
22Moz
41Moz
Lihir
Lihir is located on Aniolam Island, 900 km from Port
Moresby, Papua New Guinea, comprising of an open pit
mine. Lihir is one of the world’s largest producing gold
mines, with Ore Reserves of 22Moz gold and Measured and
Indicated Mineral Resources of 41Moz gold. (1,2)
FY23 Performance
Lihir’s performance in FY23 was impacted by lower feed grade, reduced mill
throughput and mill availability. The lower feed grade reflects a higher proportion of
low grade expit material being processed in the second half of FY23, with extreme
rainfall limiting pit access and causing material handling issues at the crushers.
Mill throughput was significantly constrained in the first half of FY23 due to drought
conditions experienced across the New Ireland Province which limited raw water
supply to the plant together with several unplanned downtime events impacting
mill availability. Despite the weather events, ore mined increased by 57% in FY23
reflecting the progression of stripping into higher grade ore.
AISC of $1,466 per ounce was lower than FY22 driven by lower production stripping
activity, lower sustaining capital expenditure and higher gold sales volumes.
Free cash flow of $125 million was 44% higher than FY22, primarily driven by
lower capital expenditure. This was partially offset by unfavourable working
capital movements.
Phase 14A Pre-Feasibility Study
In January 2023, the Newcrest Board approved the Lihir Phase 14A Feasibility Study,
endorsing the project into full implementation. Phase 14A is another step forward in
realising the full potential of Lihir with the cutback expected to deliver additional high
grade gold production over the next four years. Lihir is on track to deliver high grade
ore from Phase 14A in FY24. (3)
Newcrest continues to evaluate a range of options to unlock additional high grade
mineralisation outside the current Ore Reserve with the potential to extend the
elevated production profile at Lihir beyond FY31. (3)
(1) Ore Reserve and Mineral Resource estimates are as at 30 June 2023 based on the release titled “Annual Mineral Resources and Ore Reserves Statement – as at 30 June 2023” dated
11 August 2023 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.
(2) For tonnes and grade breakdown by confidence category refer to Table 5 for Mineral Resources on page 27 and Table 11 for Ore Reserves on page 31.
(3) Subject to market and operating conditions and no unforeseen delays.
(4) Free cash flow is before interest, tax and intercompany transactions.
(5) Reserve life is indicative and calculated as Proved and Probable Gold Reserves (contained metal) as at 30 June 2023 divided by forecast average production rate as per the Life of Province Plan.
Estimated reserve life does not necessarily equate to operating mine life.
(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.
14
Newcrest Annual Report 2023
Operational overview continued
Telfer
Telfer is located 400 km from Port Hedland, Western
Australia, comprising open pit and underground mines
with Ore Reserves of 2.4Moz gold and 0.10Mt copper, and
Measured and Indicated Mineral Resources of 5.8Moz gold
and 0.49Mt copper. (1,2)
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.
FY23 Performance
Telfer’s lower gold production in FY23 was driven by lower mill throughput and
lower grade.
In November 2022, the Newcrest Board approved expenditure of A$214 million
(~US$150 million) for the West Dome Stage 8 (WDS8) cutback. The cutback
underpins the continuity of operations at Telfer, with the mine now expected to
continue operations into early FY25. (3) First ore production in WDS8 was achieved
during the December 2022 quarter with mining rates in the cutback performing
above expectations in FY23.
AISC of $1,633 per ounce was higher than FY22 primarily due to lower gold sales
volumes, a lower realised copper price, an increase in production stripping activity
relating to WDS8 and additional costs relating to inflationary pressures. This was
partially offset by higher copper sales volumes and favourable FX movements.
Free cash flow of $9 million was 91% lower than FY22. This reflects lower earnings
(EBITDA) and increased production stripping activity, partially offset by favourable
working capital movements. Excluding hedge losses of $76 million in FY23, Telfer’s
free cash flow would have been $85 million.
Havieron
The Havieron Project is operated by Newcrest under a Joint Venture Agreement
with Greatland Gold Plc. Newcrest is the manager and holds a 70% interest in the
Havieron Project (Greatland holds a 30% interest). Havieron is located 45 km east
of Telfer.
Various workstreams to support the Feasibility Study continue to progress with several
value enhancing options underway to maximise value and de-risk the Havieron project.
The growth drilling program continued during the financial year with drilling results
continuing to identify extensions to the mineralisation.
Strategically
positioned in the
Paterson Province
Pilbara, Western Australia, Australia
Free cash flow (4)
AISC
$9m
FY22: $103m
$1,633/oz
FY22: $1,388/oz
Gold production
349koz
408koz
(cid:31)(cid:30)(cid:29)(cid:28)
(cid:31)(cid:30)(cid:29)(cid:29)
Copper produced
17kt
14kt
(cid:31)(cid:30)(cid:29)(cid:28)
(cid:31)(cid:30)(cid:29)(cid:29)
Site process
Mining
Open pit mining and Underground sub-level cave
and stope mining
Processing
Crushing, grinding, gravity concentration, flotation,
leaching circuit, dump leach
Output
Copper/gold concentrate and gold doré
Reserves & Resources
Gold Reserve life (5)
Gold Proved & Probable Ore Reserves (1,2)
Gold M&I Mineral Resources (1,2,6)
Copper Probable Ore Reserves (1,2)
Copper M&I Mineral Resources (1,2,6)
2 years
2.4Moz
5.8Moz
0.10Mt
0.49Mt
(1) Ore Reserve and Mineral Resource estimates are as at 30 June 2023 based on the release titled “Annual Mineral Resources and Ore Reserves Statement – as at 30 June 2023” dated
11 August 2023 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.
(2) For tonnes and grade breakdown by confidence category refer to Table 5 for Mineral Resources on page 27 and Table 11 for Ore Reserves on page 31. Figures shown include Havieron at 100%.
(3) Subject to market and operating conditions and no unforeseen delays.
(4) Free cash flow is before interest, tax and intercompany transactions.
(5) Reserve life is indicative and calculated as Proved and Probable Gold Reserves (contained metal) as at 30 June 2023 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.
(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.
Newcrest Annual Report 2023
15
Potential multi-
decade producer (4)
British Columbia, Canada
Free cash flow (6)
AISC
$(204)m
FY22: $(120)m
$3,733/oz
FY22: $1,349/oz
Gold production
39koz
42koz
(cid:31)(cid:30)(cid:29)(cid:28)
(cid:31)(cid:30)(cid:29)(cid:29)
Copper produced
18kt
21kt
(cid:31)(cid:30)(cid:29)(cid:28)
(cid:31)(cid:30)(cid:29)(cid:29)
Site process
Mining
Open pit mining, with block cave potential
Processing
Crushing, grinding, flotation
Output
Gold, copper and silver concentrate
Reserves & Resources
Gold Reserve life (7) Open Pit
Underground
Gold Proved & Probable Ore Reserves (2,3)
Gold M&I Mineral Resources (2,3,8)
Copper Probable Ore Reserves (2,3)
Copper M&I Mineral Resources (2,3,8)
5 years
~31 years
7.8Moz
12Moz
2.1Mt
3.5Mt
Red Chris
Red Chris is located in northwest British Columbia, Canada
with Ore Reserves of 7.8Moz gold and 2.1Mt copper, and
Measured and Indicated Mineral Resources of 12Moz gold
and 3.5Mt copper. (1,2)
Newcrest has a 70% interest in and operates the Red Chris mine and surrounding
tenements in a joint venture with Imperial Metals Corporation (30%).
FY23 Performance
Red Chris’ lower gold production in FY23 was driven by lower recovery, with the
lower copper production driven by lower grade.
AISC of $3,733 per ounce was higher than FY22, primarily due to higher site
production costs, a lower realised copper price and lower production driving lower
gold and copper sales volumes, partially offset by lower sustaining capital.
Free cash flow of negative $204 million was lower than FY22, primarily driven by
lower earnings (EBITDA) and unfavourable movements in working capital, partially
offset by lower capital expenditure.
Red Chris Block Cave
Newcrest continued development of the Red Chris exploration decline which has
now advanced well over three kilometres, with the installation of the first ventilation
rise largely complete. The Feasibility Study remains on track for completion in the
second half of CY23,(3) as optimisation opportunities continue to be assessed to
unlock further value. Newcrest is reviewing various options to offset any inflationary
cost pressures on future capital expenditure and operating costs.
Exploration
Newcrest is undertaking a brownfields exploration program which is focused on
searching for higher grade mineralisation relative to this deposit within the Red Chris
porphyry corridor. This program has been successful in discovering East Ridge, and
an Exploration Target (5) for East Ridge was defined during FY22. Newcrest continued
its drilling campaign at Red Chris during FY23 with drilling intersecting a new higher
grade zone of mineralisation east of the East Ridge Exploration Target, which has the
potential to become the fifth porphyry centre along the Red Chris porphyry corridor.
East Ridge is located immediately adjacent to East Zone and outside of Newcrest’s
initial Mineral Resource estimate.
(1) Ore Reserve and Mineral Resource estimates are as at 30 June 2023 based on the release titled “Annual Mineral Resources and Ore Reserves Statement – as at 30 June 2023” dated
11 August 2023 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.
(2) For tonnes and grade breakdown by confidence category refer to Table 5 for Mineral Resources on page 27 and Table 11 for Ore Reserves on page 31. Newcrest attributable share is 70%. All data
is reported on a 100% asset basis.
(3) Subject to market and operating conditions and no unforeseen delays.
(4) Subject to market and operating conditions, further drilling and studies, all necessary permits, regulatory requirements and Board approvals.
(5) Further information as to the Exploration Target is included in Newcrest’s release titled “Red Chris exploration success expands East Ridge Exploration Target delivering additional mining
potential” dated 14 March 2023 which is available at www.asx.com.au under the code “NCM” and on Newcrest’s SEDAR profile.
(6) Free cash flow is before interest, tax and intercompany transactions.
(7) Reserve life is indicative and calculated as Proved and Probable Gold Reserves (contained metal) as at 30 June 2023 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.
(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.
16
Newcrest Annual Report 2023
Operational overview continued
High-grade gold
mine in Tier 1
jurisdiction
British Columbia, Canada
Free cash flow (4,5)
AISC (5)
$115m
FY22: $88m
$1,157/oz
FY22: $1,125/oz
Gold production (7)
286koz
114koz
(cid:31)(cid:30)(cid:29)(cid:28)
(cid:31)(cid:30)(cid:29)(cid:29)
Site process
Mining
Processing
Underground
Crushing, grinding, gravity concentration,
sulphide flotation
Output
Gold-silver doré and flotation concentrate
Reserves & Resources
Gold Reserve life (6)
Gold Probable Ore Reserves (1,2)
Gold Indicated Mineral Resources (1,2,7)
10 years
3.7Moz
8.2Moz
Brucejack
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, with Ore Reserves of 3.7Moz gold,
and Indicated Mineral Resources of 8.2Moz gold. (1,2)
FY23 Performance
The financial and operating performance at Brucejack was impacted in FY23 by the
temporary suspension of operations following the tragic fatality in October 2022.
All mining and processing activities returned to full capacity in early December 2022,
although gold production in the second half of FY23 was lower than expectations
driven by lower gold head grade.
During the suspension of operations, Newcrest completed an extensive safety
review across all activities at Brucejack to identify major hazards and corresponding
critical controls, establishing additional control verification mechanisms to monitor
those critical controls. These learnings have been shared across Newcrest’s global
operations to help prevent fatalities and life-changing injuries going forward.
The outcomes presented on this page for FY23 reflect the 12 months to 30 June 2023,
with FY22 reflecting the period from 25 February 2022 (being the acquisition date) to
30 June 2022.
Transformation Program
Newcrest continued to successfully proceed with the three-phase transformation
program at Brucejack, with a range of initiatives well progressed. Brucejack
remains on track to deliver the expected synergy benefits of C$20–$30 million
(US$16–$24 million) per annum, (3) with over 50% of the benefits delivered in FY23.
The debottlenecking Pre-Feasibility Study to further investigate the potential to
increase process plant capacity by up to 30% (4) is progressing well. The processing
plant permit amendment application has been lodged with the regulator.
The ore sorting concept study is now complete, with detailed design on a trial
installation and procurement of long-lead items well advanced.
Exploration
The extensive drilling program continued to confirm the potential for resource growth
at the Valley of the Kings deposit and surrounding area. Further high-grade results
were returned from the 1080 HBx Zone and Golden Marmot during the period, with
1080 HBx Zone partially outside and Golden Marmot entirely outside of Newcrest’s
published Brucejack Mineral Resource estimate.
(1) Ore Reserve and Mineral Resource estimates are as at 30 June 2023 based on the release titled “Annual Mineral Resources and Ore Reserves Statement – as at 30 June 2023” dated
11 August 2023 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.
(2) For tonnes and grade breakdown by confidence category refer to Table 5 for Mineral Resources on page 27 and Table 11 for Ore Reserves on page 31.
(3) Indicative only and should not be construed as guidance. Subject to market and operating conditions, all necessary approvals, regulatory requirements, further studies, and no unforeseen delays.
Subject to further studies, all necessary approvals, permits, internal and regulatory requirements and further works and no unforeseen delays.
(4) Free cash flow is before interest, tax and intercompany transactions.
(5) 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.
(6) Reserve life is indicative and calculated as Probable Gold Reserves (contained metal) as at 30 June 2023 divided by forecast average production rate as per the reserves plan. Estimated reserve
life does not necessarily equate to operating mine life.
(7) Gold and Copper Indicated Mineral Resources. The Mineral Resources are reported inclusive of those Mineral Resources modified to produce the Ore Reserves.
Innovation and Creativity
17
Newcrest has a pipeline of growth projects
and strong technical and innovative
capability.
Newcrest has a proven track record of creating value and delivering
superior returns through implementation of deep mining and selective
processing capabilities. These skills become increasingly valuable as
projects become larger scale and lower grade. Our technical capabilities
are key to Newcrest maximising shareholder value across the existing
asset portfolio, as well as with respect to new investment opportunities.
Strong exploration capabilities also focus on growing Mineral Resource
and Ore Reserves to extend Newcrest’s long reserve life advantage.
Newcrest’s key competitive capabilities
Next Gen Mining
Robotics and Electrification
Deep cave mining
Battery electric trucks
Sites deployed:
Cadia, Red Chris
Lihir
Cadia
Brucejack
High-lift deep caving
– Cadia’s PC1-2 optimised block
cave mine design utilises several
innovations to enhance operator
safety and increase productivity
Transitioning Cadia knowledge to
other deep deposits and projects
including Red Chris East Ridge
–
Selective steep pits
–
Engineered steep wall and seepage
barrier options to deliver earlier
higher-grade ore from 14A in FY24–
FY26 and allow access to sustained
higher-grade Kapit scheduled from
FY26 (1)
Automation
– Fully developed autonomous
production system including support
functions that is capable of 24/7
production across a panel cave
– Reduces hazard exposure rates of
manual operators on the production
level with application to other sites
Electrification
– Eight underground truck
loading fleet now fully battery
electric and expected to deliver
productivity and environmental
improvements (1,2)
Coarse Flotation and Sustainable Tailings
Selective Processing
Coarse flotation
Ore sorting
Sites deployed:
Cadia, Red Chris
Brucejack
Lihir
Coarse flotation and tailings
Cadia Expansion Project utilises coarse particles flotation to treat all flotation tailings
from concentrator 1 (approximately 75%) resulting in:
–
– Reduced power demand and fine grinding
– Downstream impacts including tailings and water consumption
– Extended application of coarse ore studies in future projects with tailings
Increased recovery of gold and copper currently lost to tailings
reduction application including Cadia and Red Chris. (1)
Ore sorting
– Ore sorting trials at Brucejack
Selective oxidation
– Selective oxidation at Lihir
commenced following impressive
positive preliminary results. Concept
study now complete and detailed
design on a trial installation and
procurement of long-lead items well
advanced.
currently being used allowing for
higher sulphur ore feeds enabling
bottleneck rates, lower energy
transition in kWh/t and lower
unit costs.
(1) Subject to market conditions and no unforeseen delays
(2) The new fleet is expected to improve truck productivity, lower unit costs and abate CO2 emissions when compared to performance of the previous diesel fleet.
18
The Board
Peter Tomsett
Independent Chairman
Philip Aiken AM
Independent Non-Executive Director
Roger Higgins
Independent Non-Executive Director
Vickki McFadden
Independent Non-Executive Director
BEng (Mining) (Hons), MSc
(Mineral Production Management),
GAICD, 65
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, Minerals Council of
Australia, and International Council
for Mining and Metals.
BEng (Chemical), Advanced
Management Program (HBS), 74
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 Bank (Europe).
Current Listed Directorships
– Director of New Energy One
Acquisition Corporation Plc
(from 2022)
Other Current Directorships/
Appointments
– Director of BIAC (Business@
OECD) (from 2023)
– Business Ambassador,
Business Events Sydney Pty Ltd
(from 2016)
BE (Civil Engineering) (Hons),
MSc (Hydraulics), PhD (Water
Resources), Stanford Executive
Program, FIEAust, FAusIMM, 72
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 former Chairman, Non-Executive
Director and 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.
Former Listed Directorships
(last 3 years)
– Chairman of Balfour Beatty plc
(2015–2021)
Current Listed Directorships
– Director of Hillgrove Resources
Limited (from 2023)
– Director of Worley Limited
– Chairman of Aveva Group plc
(from 2019)
BComm, LLB, 64
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
– 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)
(2012–2023)
Other Current Directorships/
Appointments
– Chair of the Advisory Board,
PAX Republic (from 2019)
– Member of the Energy and
Resources Advisory Board,
University of Adelaide (from 2019)
– Member of the Sustainable Minerals
Institute Advisory Board, University
of Queensland (from 2016)
Former Listed Directorships
(last 3 years)
– Chairman of Minotaur Exploration
Limited (Director 2016–2022,
Chairman 2017–2022)
– Chairman of Demetallica Limited
(2022)
Newcrest Annual Report 2023 19
Sally-Anne Layman
Independent Non-Executive Director
Jane McAloon AM
Independent Non-Executive Director
Philip Bainbridge
Independent Non-Executive Director
BEng (Mining) (Hons), BComm,
CPA Australia, MAICD, 49
BEc (Hons), LLB, GDip CorpGov,
FAICD, 59
BSc (Mechanical Engineering)
(Hons), MAICD, 64
Mr Bainbridge was appointed to the
Board as a Non-Executive Director
in 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 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)
Former Listed Directorships
(last 3 years)
– Director of Beach Energy Limited
(2016–2023)
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)
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 Bluescope Steel
Limited (from 2022)
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)
Former Listed Directorships
(last 3 years)
– Director of Viva Energy Group
Limited (2018–2021)
– Director of United Malt Group
Limited (2020–2023)
– Director of Home Consortium
(2019–2022)
20
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 2023 Mineral Resources and Ore Reserves
21
Newcrest released its Annual Mineral Resource and Ore Reserve
Statement for the period ending 30 June 2023 on 11 August 2023 (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, audits, macroeconomic parameters and cost assumptions,
as well as mining and metallurgy performance to inform cut‑off values
and physical mining parameters since the previous estimate for the period
ending 30 June 2022, published on 19 August 2022.
Group Ore Reserves
As at 30 June 2023, Group Ore Reserves (1) were estimated to contain
approximately 64 million ounces of gold, 11 million tonnes of copper,
42 million ounces of silver and 0.096 million tonnes of molybdenum.
This represents increases, predominantly as a result of the inclusion of the
initial Newcrest Brucejack Ore Reserves, of approximately 3 million ounces
of gold (~5%) and 13 million ounces of silver (~46%) after mining depletion.
Copper Ore Reserves decreased by approximately 0.2 million tonnes
(~2%) and molybdenum decreased by 0.0036 million tonnes (~4%)
predominantly due to depletion compared with the estimate as at
30 June 2022. The Group Ore Reserve estimates as at 30 June 2023 are set
out in Tables 11 and 12 on a 100 per cent basis. Tonnes are reported as dry
metric tonnes. All Group Ore Reserves are classified as Probable Reserves
except for 57 million tonnes of Lihir Stockpiles that are Proved Reserves.
All tabulated tonnes, grade and metal information has been rounded to two
significant figures to reflect appropriate precision in the estimate, and this
may cause some apparent discrepancies in totals.
Feasibility Studies are progressing for Red Chris Block Cave and Havieron.
Outcomes of these studies will inform future Ore Reserves updates.
The Group Ore Reserves as at 30 June 2023 includes the following
changes as compared to 30 June 2022:
– Inclusion of the initial Newcrest Ore Reserves for Brucejack.
– Inclusion of the Telfer Stage 8 West Dome Open Pit Ore Reserves.
– Estimated mining depletion of approximately 2.4 million ounces of gold,
0.2 million tonnes of copper, 0.9 million ounces of silver and negligible
molybdenum.
Group Mineral Resources
As at 30 June 2023, Group Measured and Indicated Mineral Resources (2)
were estimated to contain approximately 130 million ounces of gold,
25 million tonnes of copper, 120 million ounces of silver and
0.17 million tonnes of molybdenum. This represents an increase of
approximately 5.3 million ounces of gold (~4%) and 20 million ounces
of silver (~20%) after mining depletion compared to the estimate as at
30 June 2022, predominantly due to the inclusion of the initial Newcrest
Brucejack Mineral Resources estimate. The minimal decrease in copper
and molybdenum metal tonnes is due to mining depletions.
Red Chris East Ridge studies are in progress to inform a future Mineral
Resources update.
The Group Measured and Indicated Mineral Resources and Inferred
Mineral Resources as at 30 June 2023 are set out in Tables 5 to 10 on
a 100 per cent basis.
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.
The Group Measured and Indicated Mineral Resources as at 30 June 2023
includes the following changes as compared to 30 June 2022:
– Inclusion of the initial Newcrest Mineral Resources for Brucejack.
– Minor adjustments at Telfer due to changes in Mineral Resources
shell design as a result of mining and increased cost assumptions.
– Reduction in O’Callaghans polymetallic tonnes due to an increase
in Net Smelter Return (NSR) cut‑off as an outcome of an internal
Scoping Study.
– Estimated mining depletion of approximately 2.5 million ounces of
gold, 0.2 million tonnes of copper, 0.9 million ounces of silver and
negligible molybdenum.
As at 30 June 2023, Group Inferred Mineral Resources (3) were estimated
to contain approximately 25 million ounces of gold, 4.8 million tonnes of
copper, 22 million ounces of silver and 0.012 million tonnes of molybdenum.
This represents an increase of 4 million ounces of both gold (~20%) and
silver (~23%) with no appreciable change for copper or molybdenum after
mining depletion compared with the estimate as at 30 June 2022.
The Group Inferred Mineral Resources as at 30 June 2023 include the
following changes as compared to 30 June 2022:
– Inclusion of the initial Newcrest Mineral Resources for Brucejack.
– Minor adjustments at Telfer due to updated Mineral Resources
estimates informed by remodelling, interpretation and classification
based on additional drilling.
– Reduction in O’Callaghans polymetallic tonnes due to an increase
in NSR cut‑off as an outcome of an internal Scoping Study.
(1) 100 per cent basis. Note 31 December 2021 and prior Group Ore Reserves Statements were reported on an attributable share basis. Refer to Tables 11 and 12 in this section of the Annual Report
for Ore Reserves detailed tonnage, grade and metal content categorised by confidence classification.
(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. Refer to Tables 5, 7 and 9 in this
section of the Annual Report for Measured and Indicated Mineral Resources detailed tonnage, grade and metal content categorised by confidence classification.
(3) 100 per cent basis. Note 31 December 2021 and prior Group Inferred Mineral Resources Statements were reported on an attributable share basis. Refer to Tables 6, 8 and 10 in this section of the
Annual Report for Inferred Mineral Resources detailed tonnage, grade and metal content.
22
Mineral Resources and Ore Reserves continued
Governance
Competent and Qualified Persons
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 and National Instrument 43‑101 – Standards of
Disclosure for Mineral Projects (NI 43‑101). 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 and 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 2023 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 otherwise agreed by the RRSC) or where there
is a new estimate or material change and endorsement of the Annual
Mineral Resources and Ore Reserves Statement by the RRSC prior to
release to the market.
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 by
Ms J Terry. Ms Terry is Newcrest’s Head of Mineral Resource Management
and a full‑time employee of Newcrest Mining Limited. She participates
in Newcrest’s executive equity long term incentive plan, details of which
are included in Newcrest’s 2023 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 1. 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 (QP) 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 2023 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 Members or Fellows
of the AusIMM or Members of the AIG or a Recognised Professional
Organisation. All Qualified 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.
Newcrest Annual Report 2023 23
Accountability
Competent and
Qualified Person
Professional
Membership
Mineral Resources
Mark Mori
MAIG
Ore Reserves
Ore Reserves
Geoff Newcombe
Geoff Newcombe
Mineral Resources
Peter Morgan
Ore Reserves
Ore Reserves
Brett Swanson
Brad Cook (CP) and
Mark Kaesehagen (QP)
Ore Reserve
Pasqualino Manca
Ore Reserves
Ore Reserves
Brett Swanson
Michael Sykes
Mineral Resources
Lauren Elliott
FAusIMM
FAusIMM
FAusIMM
MMSA (QP)
MAusIMM
FAusIMM
FAusIMM
FAusIMM
MMSA (QP)
FAusIMM
MAIG
Ore Reserves
Christopher Chiang
FAusIMM
Mineral Resources
Rob Stewart (CP) and
Barry McDonough (QP)
FAusIMM
EGBC (PGeo)
Ore Reserves
Mark Kaesehagen
Mineral Resources
David Finn
Ore Reserves
Pasqualino Manca
Mineral Resources
Greg Job (1)
Mineral Resources
Vik Singh
FAusIMM
MAIG
FAusIMM
FAusIMM
FAusIMM
Table 1
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, Satellites Deposits,
Camp Dome and O’Callaghans
Telfer Open Pit Stockpiles, and West Dome Open Pit
Telfer Underground
Havieron
Open Pit and Open Pit Stockpiles
Underground
Lihir
Open Pit and Stockpiles
Brucejack
Underground
WGJV
Golpu
Wafi and Nambonga
Namosi JV
Waisoi and Wainaulo
(1) Employed by Harmony Gold Mining Company Limited.
Red Chris
Open Pit, Open Pit Stockpiles and Underground
Mineral Resources
Rob Stewart
Mineral Resources and Ore Reserves Assumptions
Mining, metallurgical, and long‑term cost assumptions were developed with reference to performance data and studies. 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 and Short‑term metal prices and foreign exchange assumptions for Mineral Resources and Ore Reserves are presented in Table 2. These prices
and most assumptions remain unchanged from those used in the 30 June 2022 reporting period except CAD:USD exchange rate which has been adjusted
from 0.8 to 0.77.
Where appropriate, Mineral Resources are also spatially constrained within notional mining volumes based on metal prices of US$1,400/oz for gold,
US$4.00/lb for copper and US$30/oz silver and AUD:USD exchange rate of 0.80. This approach is adopted to eliminate mineralisation that does not have
reasonable prospects for eventual economic extraction from Mineral Resource estimates.
Mineral Resources and Ore Reserves cut‑off criteria are described in Table 3.
Ore Reserves metallurgical recovery assumptions are described in Table 4.
A discussion of the known legal, political, environmental, or other risks that could materially affect the potential development of the Ore Reserves and
Mineral Resources for each of Newcrest’s material properties (Cadia, Lihir, Wafi‑Golpu and Red Chris) can be found in the Technical Report for each
project (referred to below).
24
Mineral Resources and Ore Reserves continued
Table 2
Metal Price Assumptions
Mineral Resources Estimates
Gold – US$/oz
Copper – US$/lb
Silver – US$/oz
Molybdenum – US$/Ib
Ore Reserves Estimates
Gold – US$/oz
Copper – US$/lb
Silver – US$/oz
Molybdenum – US$/Ib
Exchange Rate
AUD : USD
USD : PGK
CAD : USD
(1) Operations with less than 5 years of reserve life.
Long Life
Assets
1,400.00
3.40
21.00
10.00
1,300.00
3.00
18.00
8.00
0.75
3.50
0.77
Short Life Assets(1)
(Telfer and
Red Chris Open Pit)
1,625.00
3.60
21.00
1,600.00
3.50
18.00
0.75
3.50
0.77
Some legacy Mineral Resources and Ore Reserves estimates have applied older, more conservative price and cost assumptions than stated in Table 2.
These have been tested for economic viability.
Table 3
Cut-Off Assumptions
Deposit
Mineral Resources Cut-Off Criteria
Ore Reserves Cut-Off Criteria
Cadia East Underground
Ridgeway Underground
Cadia Extended Underground
Cadia Hill Stockpiles
Big Cadia
Telfer West Dome Open Pit
Telfer Stockpiles
Telfer Underground
Havieron
Satellites Deposits
Camp Dome
O’Callaghans
NSR of approx. A$18.00/t milled.
NSR of approx. A$22.70/t milled.
NSR of A$12.50/t milled.
NSR of A$18.71/t milled.
NSR of A$12.81/t milled.
NSR of A$12.81/t milled.
NSR of A$22.50/t milled.
NSR of A$22.50/t milled.
NSR of A$22.40/t milled.
–
–
–
NSR of A$22.50/t milled.
NSR of A$22.50/t milled.
Variable NSR of A$46.55/t – A$147.96/t milled.
Variable NSR of A$46.55/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 and 0.56g/t gold for
transitional and fresh material.
0.13% copper based on dump leach processing.
NSR of A$80.0/t milled applied to visible high grade
mineralised skarn that has a minimum 5m height.
–
–
–
Red Chris Open Pit and Stockpiles
NSR of C$17.70/t milled.
NSR of C$20.33/t milled.
Red Chris Underground
Brucejack Underground
NSR of C$21.00/t milled.
NSR of C$246.00/t milled
Lihir Open Pit and Stockpiles
1.00g/t gold.
Variable NSR of C$22.00/t – 22.80/t milled.
NSR of C$246.00/t milled
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.
–
–
–
–
Newcrest Annual Report 2023 Table 4
Ore Reserves 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
Brucejack
Lihir Open Pit and Stockpiles
WGJV – Golpu
25
Recovery
Gold average – 81%
Copper average – 86%
Silver average – 67%
Molybdenum average – 72%
Gold average – 81%
Copper average – 87%
Silver average – 63%
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 – 96%
Silver average – 85%
Gold range 73 – 85%
Gold average – 68%
Copper average – 95%
JORC Code and ASX Listing Rules Requirements
This section of the Annual Report setting out Mineral Resources and Ore Reserves has been prepared in accordance with the JORC Code.
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 73.03%.
26
Mineral Resources and Ore Reserves continued
JORC and CIM Comparison
As a result of Newcrest’s listing on the Toronto Stock Exchange, Newcrest is subject to certain Canadian disclosure requirements and standards, including
the requirements of the CIM Definition Standards and NI 43‑101.
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 CIM Definition Standards. 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. Terminology differences are 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.
NI 43-101 Technical Reports
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.
Newcrest Annual Report 2023 27
Table 5
30 June 2023 Gold and Copper Measured and Indicated Mineral Resources (1)
Measured
Resources
Indicated
Resources
Jun 2023 Measured
and Indicated Resources
Jun 2022 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
Cadia East
Underground
Ridgeway
Underground
Cadia Extended
Underground
–
–
–
–
–
–
–
–
–
2,600
0.35
0.26
2,600
0.35
0.26
29
6.7
2,600
0.35
0.26
110
0.57
0.30
110
0.57
0.30
1.9
0.31
110
0.57
0.30
30
1.9
6.8
0.31
80
0.35
0.19
80
0.35
0.19
0.89
0.15
80
0.35
0.19
0.89
0.15
Cadia Hill Stockpiles
32
0.30
0.13
–
–
–
32
0.30
0.13
0.31
0.041
32
0.30
0.13
0.31
0.041
3.3
0.41
0.14
6.9
0.37
0.054
10
0.38
0.081
0.13 0.0083
21
0.37
0.068
0.26
0.014
0.75
0.053
0.75
0.053
0.93
0.020
0.65
0.064
39
29
28
0.44
63
39
29
28
0.44
0.51
–
0.44
0.30
63
1.9
3.2
2.9
–
1.9
3.2
2.9
–
0.44
0.51
1.8
2.9
0.13
0.14
76
35
28
–
0.040
–
0.44
0.30
–
0.19
69
–
0.040
0.29
–
0.20
1.6
2.0
2.9
0.049
0.16
0.14
–
0.46
0.51
1.8
3.2
2.9
–
8.6
0.17
0.25
–
–
–
220
0.31
0.37
220
8.6
0.31
0.17
0.37
0.25
2.2
0.82
0.048
0.021
240
9.5
0.30
0.15
0.36
0.24
2.4
0.88
0.047
0.023
670
0.46
0.40
670
0.46
0.40
10
2.7
670
0.46
0.40
10
2.7
490
21
2.3
1.4
19
13
–
–
–
490
78
2.3
1.7
19
13
690
110
0.71
1.7
1.1
–
690
110
0.71
1.7
–
–
–
1.1
–
1,800
0.11
0.35
1,800
Au
Cu
7,000
6,400
0.11
0.56
0.35
–
–
0.39
36
4.4
8.2
16
5.7
6.4
130
–
–
–
–
510
72
2.3
1.8
–
–
7.5
–
690
110
0.71
1.7
–
–
–
1.1
–
6.3
1,800
–
7,100
0.11
0.53
0.35
–
25
6,500
–
0.39
37
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) Some partially costed stockpiles have been removed due to revised cost assumptions.
(3) Reduction due to increased cost assumptions and revised pit designs.
(4) Newcrest attributable share 70%.
(5) Reduction due to increase in NSR cut‑off to align with internal Scoping Study outcomes.
(6) Newcrest attributable share 70%.
(7) Initial Mineral Resources estimate for Newcrest Mining Limited.
(8) In March 2021, the then 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. In December 2022 a number of villagers from the Huon Gulf coastal area commenced a separate judicial review application against the State of PNG also challenging the
grant of the project’s Environment Permit. Both reviews are still to be heard and determined. Newcrest attributable share 50%.
(9) Newcrest attributable share 73.03%.
(10) Mineralisation is not coincident therefore total tonnages differ for each metal reported.
Telfer
Telfer Open Pit
Stockpiles (2)
West Dome Open Pit (3)
Telfer Underground
Havieron (4)
Satellites Deposits
O’Callaghans (5)
Red Chris
Red Chris Open Pit (6)
Red Chris Open Pit
Stockpiles (6)
Red Chris
Underground (6)
Lihir
Lihir Open Pit
Lihir Stockpiles
Brucejack
Brucejack
Underground (7)
Non-Operational Provinces
WGJV
Golpu (8)
Wafi (8)
Namosi JV
Waisoi (9)
Total Measured and
Indicated Mineral Resources(10)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
57
–
1.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
28
Mineral Resources and Ore Reserves continued
Table 6
30 June 2023 Gold and Copper Inferred Mineral Resources (1)
Jun 2023 Inferred Resources
Jun 2022 Inferred Resources
Tonnes
Grade
Contained
Metal
Tonnes
Grade
Contained
Metal
Mt
(Dry)
Au
(g/t)
Cu
(%)
Au
(MOz)
Cu
(Mt)
Mt
(Dry)
Au
(g/t)
Cu
(%)
Au
(MOz)
Cu
(Mt)
Operational Provinces
Cadia
Cadia East Underground
Ridgeway Underground
Big Cadia
Telfer
West Dome Open Pit
Telfer Underground (2)
Havieron (3)
Satellites Deposits
Camp Dome
O’Callaghans (4)
Red Chris
Red Chris Open Pit (5)
Red Chris Underground (5)
Lihir
Lihir Open Pit
Brucejack
Brucejack UG (6)
Non-Operational Provinces
WGJV
Golpu (7)
Wafi (7)
Nambonga (7)
Namosi JV
Waisoi (8)
Wainaulo (8)
Total Inferred
Mineral Resources (9)
500
41
11
1.6
14
57
4.4
14
6.5
7.6
180
1.5
1.4
1.1
–
–
0.26
0.32
500
41
11
1.5
10
57
4.4
14
9.0
8.5
180
1.5
1.4
1.1
–
–
0.25
0.32
0.24
0.38
0.70
0.17
0.40
0.52
3.8
0.50
0.25
0.85
0.17
0.058
0.85
0.044
0.045 0.00072
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
0.70
2.6
0.16
–
–
0.056
0.082
–
0.052
0.017
0.065
0.024
1.8
0.54
4.9
4.0
2.8
1.6
1.1
0.40
0.14
–
0.37
0.26
0.31
0.30
–
–
0.85
–
0.20
0.27
0.43
–
66
2.3
9.6
13
–
–
67
2.3
–
–
140
37
48
170
290
1,300
1,500
Au
Cu
0.63
1.4
0.69
0.081
–
0.60
1.2
–
0.094
0.45
0.46
–
25
–
1.2
–
4.8
0.63
1.4
0.69
0.081
–
0.50
140
37
48
170
290
1,300
1,500
–
0.32
–
0.32
0.46
0.14
–
0.37
0.24
0.30
0.30
–
–
0.85
–
0.20
0.27
0.43
–
0.47
2.6
0.16
–
–
0.047
0.082
–
0.052
0.022
0.069
0.026
1.8
0.54
4.9
–
2.8
1.6
1.1
–
–
1.2
–
0.094
0.45
0.46
–
21
–
1.2
–
4.8
(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 Resources estimate informed by remodelling, interpretation and classification based on infill and extensional drilling.
(3) Newcrest attributable share 70%.
(4) Reduction due to increase in NSR cut‑off to align with internal Scoping Study outcomes.
(5) Newcrest attributable share 70%.
(6) Initial Mineral Resources estimate for Newcrest Mining Limited.
(7) In March 2021, the then 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. In December 2022 a number of villagers from the Huon Gulf coastal area commenced a separate judicial review application against the State of PNG also challenging the
grant of the project’s Environment Permit. Both reviews are still to be heard and determined. Newcrest attributable share 50%.
(8) Newcrest attributable share 73.03%.
(9) Mineralisation is not coincident therefore total tonnages differ for each metal reported.
Newcrest Annual Report 2023 29
Table 7
30 June 2023 Silver and Molybdenum Measured and Indicated Mineral Resources (1)
Measured
Resources
Indicated
Resources
Jun 2023 Measured
and Indicated Resources
Jun 2022 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)
2,600
0.65
65
2,600
0.65
65
54
0.17
2,600
0.65
66
55
0.17
Operational Provinces
Cadia
Cadia East
Underground
Ridgeway
Underground
Brucejack
Brucejack
Underground (2)
Non-Operational Provinces
WGJV (3)
Golpu
Wafi
–
–
–
–
–
–
110
0.74
–
–
–
19
34
–
–
–
–
–
–
690
110
1.3
4.4
Total Measured and
Indicated Mineral Resources (4)
Ag
Mo
3,500
2,600
–
–
–
–
110
0.74
19
34
690
110
1.3
4.4
1.1
–
–
–
–
–
–
65
2.5
21
28
15
120
–
–
–
–
–
–
110
0.74
–
–
690
110
1.3
4.4
3,500
0.89
–
–
–
–
–
0.17
2,600
–
66
2.5
–
28
15
100
–
–
–
–
–
–
0.17
(1) All data reported here is on a 100% asset basis, with Newcrest’s attributable interest shown against each asset within footnotes.
(2) Initial Mineral Resources estimate for Newcrest Mining Limited.
(3) In March 2021, the then 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. In December 2022 a number of villagers from the Huon Gulf coastal area commenced a separate judicial review application against the State of PNG also challenging the
grant of the project’s Environment Permit. Both reviews are still to be heard and determined. Newcrest attributable share 50%.
(4) Mineralisation is not coincident therefore total tonnages differ for each metal reported.
Table 8
30 June 2023 Silver and Molybdenum Inferred Mineral Resources (1)
Jun 2023 Inferred Resources
Jun 2022 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
Cadia East Underground
Ridgeway Underground
Brucejack
Brucejack Underground (2)
Non-Operational Provinces
WGJV (3)
Golpu
Wafi
Total Inferred
Mineral Resources (4)
500
41
0.47
0.43
25
–
9.6
13
7.5
0.012
0.56
4.1
4.6
5.0
22
–
–
–
–
–
–
–
–
–
500
41
0.47
0.43
–
–
140
37
710
1.1
4.2
0.77
–
25
–
–
–
–
–
25
7.5
0.012
0.56
–
4.6
5.0
18
–
–
–
–
–
–
0.012
–
25
–
0.012
500
140
37
720
500
Ag
Mo
1.1
4.2
0.94
(1) All data reported here is on a 100% asset basis, with Newcrest’s attributable interest shown against each asset within footnotes.
(2) Initial Mineral Resources estimate for Newcrest Mining Limited.
(3) In March 2021, the then 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. In December 2022 a number of villagers from the Huon Gulf coastal area commenced a separate judicial review application against the State of PNG also challenging the
grant of the project’s Environment Permit. Both reviews are still to be heard and determined. Newcrest attributable share 50%.
(4) Mineralisation is not coincident therefore total tonnages differ for each metal reported.
30
Mineral Resources and Ore Reserves continued
Table 9
30 June 2023 Polymetallic Measured and Indicated Mineral Resources
Jun 2023 Polymetallic Measured
and Indicated Mineral Resources
Jun 2022 Polymetallic Measured
and Indicated 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)
–
63
63
–
0.36
0.36
–
0.56
0.56
–
0.28
0.28
–
0.23
0.23
–
0.36
0.36
–
0.18
0.18
–
69
69
–
0.34
0.34
–
0.53
0.53
–
0.26
0.26
–
0.24
0.24
–
0.36
0.36
–
0.18
0.18
O’Callaghans
Measured
Indicated (2)
Total Measured and
Indicated Mineral Resources
(1) WO3 Tungsten Trioxide.
(2) Reduction due to increase in NSR cut‑off to align with internal Scoping Study outcomes.
Table 10
30 June 2023 Polymetallic Inferred Mineral Resources
Jun 2023 Polymetallic Inferred Resources
Jun 2022 Polymetallic Inferred Resources
Tonnes
Grade
Contained Metal
Tonnes
Grade
Contained Metal
Mt
(Dry)
WO3
(1)
(%)
Zn
(%)
Pb
(%)
WO3
(Mt)
Zn
(Mt)
Pb
(Mt)
Mt
(Dry)
WO3
(%)
Zn
(%)
Pb
(%)
WO3
(Mt)
Zn
(Mt)
Pb
(Mt)
O’Callaghans
Inferred (2)
Total Inferred Mineral Resources
6.5
6.5
0.29
0.29
0.23
0.23
0.14
0.14
0.019
0.015 0.0088
0.019
0.015 0.0088
9.0
9.0
0.25
0.25
0.19
0.19
0.11
0.11
0.023
0.017 0.0097
0.023
0.017 0.0097
(1) WO3 Tungsten Trioxide.
(2) Reduction due to increase in NSR cut‑off to align with internal Scoping Study outcomes.
Newcrest Annual Report 2023 31
Table 11
30 June 2023 Gold and Copper Ore Reserves (1)
Proved Reserves
Probable Reserves
Jun 2023 Proved
and Probable Reserves
Jun 2022 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
Cadia East
Underground
Ridgeway
Underground (2)
Telfer
Telfer Open Pit
Stockpiles
West Dome Open Pit (3)
Telfer Underground (4)
Havieron (5)
Red Chris
Red Chris Open Pit (6)
Red Chris Open Pit
Stockpiles (6)
Red Chris
Underground (7)
Lihir
Lihir Open Pit (8)
Lihir Stockpiles (8)
Brucejack
Brucejack
Underground (9)
Non-Operational Provinces
Wafi-Golpu
WGJV – Golpu (10,11)
Total Ore Reserves (12)
–
–
–
–
–
–
–
–
–
–
57
–
–
–
–
–
–
–
–
–
–
–
–
1.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,200
0.42
0.29
1,200
0.42
0.29
16
3.4
1,200
0.42
0.29
16
3.5
80
0.54
0.28
80
0.54
0.28
1.4
0.23
80
0.54
0.28
1.4
0.23
1.6
0.43
0.097
1.6
0.43
0.097
0.022 0.0015
8.2
0.43
0.087
0.11 0.0071
23
2.0
14
42
7.9
0.83
0.066
2.1
3.7
0.40
0.16
0.69
0.54
0.47
0.24
23
2.0
14
42
7.9
0.83
0.066
2.1
3.7
0.40
0.16
0.69
0.54
0.47
0.24
0.62
0.14
0.015
0.014
1.6
0.073
0.54
0.20
0.040
0.019
20
2.5
14
53
9.5
0.60
0.060
1.7
3.7
0.39
0.15
0.68
0.54
0.45
0.24
0.39
0.14
0.012
0.017
1.6
0.073
0.68
0.24
0.047
0.023
410
0.55
0.45
410
0.55
0.45
7.2
1.8
410
0.55
0.45
7.2
1.8
220
26
2.5
1.3
14
8.4
–
–
–
220
83
2.5
1.7
14
8.4
–
–
–
–
400
0.86
1.2
Au
Cu
400
2,500
2,100
0.86
0.81
1.2
–
–
0.50
18
4.5
3.7
11
64
–
–
–
–
230
72
2.4
1.8
–
–
–
–
–
4.9
400
–
11
2,500
2,200
0.86
0.76
1.2
–
–
0.49
18
4.2
–
11
61
–
–
–
–
4.9
–
11
(1) All data reported is on a 100% asset basis, with Newcrest’s attributable interest shown against each asset within footnotes.
(2) Ridgeway is currently on care and maintenance subject to further studies, all necessary approvals, permits, internal and regulatory requirements and further works.
(3) New pit designs to include additional staged mining areas.
(4) Mining depletion partially offset by Ore Reserves increase due to Mineral Resources model update.
(5) A Feasibility Study for Havieron is currently in progress. Newcrest attributable share 70%.
(6) Reduction due to removal of waste stripping and changes to mine design. Newcrest attributable share 70%.
(7) Red Chris Block Cave Feasibility Study is in progress and due for completion in H2 CY23. Newcrest attributable share 70%.
(8) Changes are aligned with the FY23 Life of Province Plan.
(9) Initial Ore Reserves estimate for Newcrest Mining Limited.
(10) In March 2021, the then 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. In December 2022 a number of villagers from the Huon Gulf coastal area commenced a separate judicial review application against the State of PNG also challenging the
grant of the project’s Environment Permit. Both reviews are still to be heard and determined. Newcrest attributable share 50%.
(11) Golpu Ore Reserves is based on the 2018 Feasibility Study Update which used a gold price of US$1,200/oz and USD:PGK foreign exchange of 3.13.
(12) Mineralisation is not coincident therefore total tonnages differ for each metal reported.
32
Mineral Resources and Ore Reserves continued
Table 12
30 June 2023 Silver and Molybdenum Ore Reserves (1)
Proved Reserves
Probable Reserves
Jun 2023 Proved
and Probable Reserves
Jun 2022 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
Cadia East
Underground
Ridgeway
Underground (2)
Brucejack
Brucejack
Underground (3)
Total Ore Reserves (4)
–
–
–
–
–
–
–
–
–
1,200
0.69
81
1,200
0.69
81
26
0.096
1,200
0.70
80
0.66
14
32
–
–
80
0.66
14
Ag
Mo
1,300
1,200
32
1.0
–
–
–
–
1.7
14
42
–
–
–
80
0.66
–
–
1,300
0.69
81
–
0.096
1,200
–
82
–
–
–
82
27
0.099
1.7
–
29
–
–
–
–
0.099
(1) All data reported here is on a 100% asset basis, with Newcrest’s attributable interest shown against each asset within footnotes.
(2) Ridgeway is currently on care and maintenance subject to further studies, all necessary approvals, permits, internal and regulatory requirements and further works.
(3) Initial Ore Reserves estimate for Newcrest Mining Limited.
(4) Mineralisation is not coincident therefore total tonnages differ for each metal reported.
Newcrest Annual Report 2023 33
Directors’ Report
Directors’ Report
Operating and Financial Review
Remuneration Report
Consolidated Financial Statements
Independent Auditor’s Report
34
39
82
116
174
34
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 2023.
Directors
The Directors of the Company during the year ended 30 June 2023, 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
Philip Aiken AM
Philip Bainbridge
Roger Higgins
Sally-Anne Layman
Jane McAloon AM
Vickki McFadden
Sandeep Biswas
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Managing Director and Chief Executive Officer (1)
(1) Ceased as Managing Director and Chief Executive Officer on 18 and 19 December 2022 respectively.
Principal Activities
The principal activities of the Group during the year were exploration,
mine development, mine operations and the sale of gold and gold/copper
concentrate. There were no significant changes in those activities during
the year.
Consolidated Result
The profit after tax attributable to Newcrest shareholders (‘Statutory
Profit’) for the year ended 30 June 2023 was US$778 million
(2022: US$872 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.
Significant Changes in the State of Affairs
and Future Developments
In May 2023, Newcrest entered into a binding Scheme Implementation
Deed (‘SID’) with Newmont Corporation (‘Newmont’) in relation to a
proposal for Newmont to acquire 100% of the issued shares in Newcrest
by way of a scheme of arrangement (‘Scheme’) under the Corporations Act
2001 (Cth) (‘the Newmont Transaction’).
Under the terms of the Newmont Transaction, Newcrest shareholders
will be entitled to receive 0.400 Newmont shares for each Newcrest
share held on the scheme record date. In addition, Newcrest expects to
pay a franked special dividend of US$1.10 per Newcrest share prior to
implementation of the scheme, subject to the scheme becoming effective.
Refer Note 32 for further information.
Refer to the Operating and Financial Review for information on the other
significant changes in the state of affairs of the Group and for likely
developments and future prospects of the Group.
Dividends
Subsequent Events
The following dividends of the Company were paid during the year:
– Final dividend for the year ended 30 June 2022 of US 20 cents per
share, amounting to US$179 million, was paid on 29 September 2022.
This dividend was fully franked.
– Interim dividend for the year ended 30 June 2023 of US 15 cents per
share, amounting to US$134 million, was paid on 30 March 2023.
This dividend was fully franked.
– Special dividend for the year ended 30 June 2023 of US 20 cents per
share, amounting to US$179 million, was paid on 30 March 2023.
This dividend was fully franked.
The Directors have determined to pay a final dividend for the year
ended 30 June 2023 of US 20 cents per share, which will be fully franked.
The dividend will be paid on 18 September 2023.
Subsequent to year end, the Directors have determined to pay
a final dividend for the year ended 30 June 2023 of US 20 cents
per share, which will be fully franked. The dividend will be paid on
18 September 2023. The total amount of the dividend is US$179
million. This dividend has not been provided for in the 30 June 2023
financial statements.
A New South Wales Legislative Council Committee has commenced
an inquiry into current and potential community impacts of the gold,
silver, lead and zinc mining industries in the state. Newcrest will
provide a submission to the committee.
There have been no other matters or events that have occurred
subsequent to 30 June 2023 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 2023 35
Options
Currency
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.
Non-Audit Services
During the year, Ernst & Young (external auditor to the Company), has
provided other services in addition to the statutory audit, as disclosed
in Note 37 to the financial statements. These services included:
– Investigating Accountant services in connection with the Newmont
Transaction; and
– Assurance and agreed-upon-procedure services relating
to sustainability related assurance services and audit related
assurance services.
The Directors are satisfied that the provision of non-audit services
and assurance and agreed-upon procedures 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 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 Interim
Chief Financial Officer has informed the Chairman of all audit-related or
other assurance services with an estimated cost below US$100,000;
– none of the services undermine the general principles relating to
auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants, as they did not involve reviewing or auditing
the auditor’s own work, acting in a management or decision-making
capacity for the Company, acting as an advocate for the Company or
jointly sharing economic risks and rewards; and
– Ernst & Young has individually confirmed, prior to each service
commencing, that the service does not create any independence issues
with respect to the Corporations Act 2001. They have also provided
a copy of their Auditor’s Independence Declaration, as required by the
Corporations Act 2001, for inclusion in the Annual Report.
Auditor Independence
A copy of the Auditor’s Independence Declaration, as required by the
Corporations Act 2001, is included after this report.
All references to dollars in the Directors’ Report and the Financial Report
are references to US dollars ($ 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.
Environmental Regulation and Performance
The Interim Chief Executive Officer 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 2023 financial year and 2022 comparative year is shown in the
following table.
Category
Level 2
Level 3
Level 4
2023 – Number of incidents (1)
2022 – Number of incidents
21
19
0
0
0
0
(1)
The majority of environmental incidents during the 2023 financial year related to dust or
noise emissions at Cadia and low-level spills within the footprints of our mines.
36
Directors’ Report continued
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.
Information on Directors
Details of the Directors’ qualifications, experience and special
responsibilities are set out on pages 18 to 19 of this Annual Report. These
details have been updated since 11 August 2023.
Information on Former Director (1)
Sandeep Biswas
Managing Director and Chief Executive Officer
BEng (Chem) (Hons), FAusIMM, 60
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)
(1)
Information provided is as at the date of cessation as a Director of the Company.
Newcrest Annual Report 2023 37
Information on Company Secretary and Deputy Company Secretary
Maria (Ria) Sanz Perez
Chief Legal, Risk & Compliance Officer and Company Secretary
BComm, LLB, HDipTax, AMP (Harvard)
Ms Sanz Perez has extensive experience in the mining and resources, manufacturing, construction, private healthcare and banking sectors. She is a
seasoned executive who has advised public boards, Chief Executives and Executive Committees on governance, risk, sustainability, compliance, mergers
and acquisitions, litigation, regulatory and commercial legal matters.
Joining Newcrest as Chief Legal, Risk and Compliance Officer in July 2020, Ms Sanz Perez has previously led international teams and has regulatory
expertise across Africa, the Americas, Australia and the United Kingdom.
Current Directorships/Appointments
– Director of Australian Resources and Energy Employer Association (AREEA) (from 2022)
Claire Hannon
Head of Secretariat
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.
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
Philip Aiken AM
Philip Bainbridge
Roger Higgins
Sally-Anne Layman
Jane McAloon AM
Vickki McFadden
Former Directors
Sandeep Biswas (2)
Number of
Ordinary
Shares
43,799
19,940
9,910
13,675
10,510
6,132
12,208
Nature of
Interest
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Number of
Rights Over
Ordinary
Shares (1)
Nature of
Interest
–
–
–
–
–
–
–
–
–
–
–
–
–
–
821,048
Direct and
Indirect
545,751
Direct
(1) Represents unvested performance rights granted pursuant to the Company’s Long Term Incentive plans in the 2021 and 2022 financial years for Sandeep Biswas.
(2) Numbers as at his cessation date of 18 December 2022. Subsequently, 355,574 performance rights were forfeited following his cessation as Key Management Personnel on 19 December 2022
and his retirement on 18 March 2023.
38
Directors’ Report continued
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:
Committees of the Board
Director
Directors’ Meetings
Audit & Risk
Human Resources &
Remuneration
Safety &
Sustainability
Nominations
Special Board
Committees (2)
Peter Tomsett
Philip Aiken AM
Philip Bainbridge
Roger Higgins
Sally-Anne Layman
Jane McAloon AM
Vickki McFadden
Former Directors
A
21
21
21
21
21
19 (1)
21
Sandeep Biswas (3)
5
B
21
21
21
21
21
21
21
6
A
–
–
–
–
7
7
7
–
B
–
–
–
–
7
7
7
–
A
–
5
–
5
–
5
5
–
B
–
5
–
5
–
5
5
–
A
–
5
5
5
5
–
–
–
B
–
5
5
5
5
–
–
–
A
2
2
–
–
–
–
2
–
B
2
2
–
–
–
–
2
–
A
2
–
2
–
2
3
4
1
B
2
–
2
–
2
3
4
1
Column A – Indicates the number of meetings attended whilst a Director/Committee member.
Column B – Indicates the number of meetings held whilst a Director/Committee member.
(1) Meetings missed were out of session meetings held on short notice which the Director was unable to attend due to prior commitments.
(2) These are out of session Committee meetings and include meetings of the Board Executive Committee, the Due Diligence 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.
(3) Sandeep Biswas ceased as a Director effective 18 December 2022 and ceased as Chief Executive Officer effective 19 December 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.
Remuneration Report
The Remuneration Report is set out on pages 82 to 113 and forms part of this Directors’ Report.
This report is signed in accordance with a resolution of the Directors.
Peter Tomsett
Chairman
11 August 2023
Melbourne
Newcrest Annual Report 2023 39
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 2022.
Section 1 Endnotes are located at the end of the section.
1. Summary of Results for the 12 months ended 30 June 2023 (1,2,3,4,5,6)
Key points
– Gold production of 2.1 million ounces (7) and copper production of 133.1 thousand tonnes
– Statutory profit (8) and Underlying profit (9) of $778 million
– All-In Sustaining Cost (AISC) (7,9,10) of $1,093 per ounce, delivering an AISC margin (11) of $680 per ounce
– Free cash flow (9) of $404 million
Safety and sustainability
– Extensive safety review completed at Brucejack following the tragic fatality in October 2022
– Improved annual TRIFR (12) of 2.97 with learnings shared across the business following the tragic fatality at Brucejack and serious injury at Cadia
– Transition to electric vehicles continues with Brucejack truck loading fleet now fully battery electric and activities to procure and onboard trials of high
technology readiness fleet progressing at Cadia and Brucejack
– First renewable power generated from the Rye Park Wind Farm in July 2023, with early supply commencing under Cadia’s Power Purchase Agreement
– Newcrest Sustainability Fund driving social investments with contribution to eight major projects and two emergency response projects approved
Quality organic gold and copper growth portfolio
– Cadia confirmed its position as a world class, long-life gold and copper producer with the PC1-2 Feasibility Study approved to execution and
completion of the two-stage plant expansion project
– Lihir Phase 14A Feasibility Study demonstrated attractive financial returns as further studies evaluate the potential extension of Lihir’s elevated
production profile beyond FY31 (13)
– Telfer mine life extended into early FY25 with the West Dome Stage 8 cutback now underway (13)
– Wafi-Golpu Framework Memorandum of Understanding (MOU) signed with all parties working to progress the Mining Development Contract
Strong balance sheet supports organic growth and increased shareholder returns
– Fully franked final dividend of US 20 cents per share, bringing total FY23 dividends to US 55 cents per share
– Balance sheet remains well within financial policy targets, with net debt of $1.5 billion, leverage ratio of 0.7 times (9) and a gearing ratio of 11.1%
– Significant liquidity with $2.3 billion in cash and committed undrawn bank facilities
Binding agreement executed with Newmont to acquire 100% of the issued shares of Newcrest (14)
– Transaction expected to establish a clear global leader in gold production by combining two of the world’s largest producers, with a significant and
growing exposure to copper
– Newcrest Board unanimously recommends shareholders vote in favour of the transaction in the absence of a Superior Proposal, (15) and subject to the
Independent Expert concluding and continuing to conclude that the transaction is in the best interests of Newcrest shareholders
– Newcrest expects to pay a franked special pre-completion dividend of US$1.10 per Newcrest share (16)
– Scheme Meeting expected to be held in October 2023 with implementation targeted for November 2023 (20)
40
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
1. Summary of Results for the 12 months ended 30 June 2023 (1,2,3,4,5,6) continued
For the 12 months ended 30 June
TRIFR
Group production – gold
Group production – copper
Revenue
EBITDA
EBIT
Statutory profit
Underlying profit
Cash flow from operating activities
Free cash flow before M&A activity
Free cash flow*
EBITDA margin
EBIT margin
All-In Sustaining Cost
All-In Sustaining margin
Realised gold price
Realised copper price
Average exchange rate
Average exchange rate
Average exchange rate
Closing exchange rate
Earnings per share (basic)
Earnings per share (diluted)
Dividends paid per share
Cash and cash equivalents
Net debt
Leverage ratio
Gearing
ROCE
Interest coverage ratio
Total equity
Endnote
12,17
7
9
9
8
9
9
9
7,9,10,18
11
19
19
9
9
9
UoM
mhrs
oz
t
US$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
2023
2.97
2,105,068
133,149
2022
4.01
1,956,182
120,650
4,508
2,063
1,172
778
778
1,605
447
404
45.8
26.0
1,093
680
1,797
3.76
0.6735
0.2833
0.7468
0.6630
87.0
86.8
55.0
586
1,459
0.7
11.1
9.0
30.4
11,712
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
Change
Change %
(1.04)
(26%)
148,886
12,499
301
9
(132)
(94)
(94)
(75)
218
8%
10%
7%
0%
(10%)
(11%)
(11%)
(4%)
95%
1,272
>100%
(3.0)
(5.0)
50
(52)
–
(0.60)
(0.0525)
(0.0010)
(0.0435)
(0.0259)
(16.4)
(16.3)
7.5
21
134
0.1
0.9
(2.4)
(7.2)
47
(6%)
(16%)
5%
(7%)
–
(14%)
(7%)
(0%)
(6%)
(4%)
(16%)
(16%)
16%
4%
10%
17%
9%
(21%)
(19%)
0%
* Free cash flow in the prior period includes the payment for the acquisition of Pretium Resources Inc. (Pretium) of $1,084 million (net of cash acquired).
Newcrest Annual Report 2023 41
Under the terms of the Newmont Transaction, Newcrest shareholders will
be entitled to receive 0.400 Newmont shares for each Newcrest share held
on the scheme record date. In addition, Newcrest expects to pay a franked
special dividend of US$1.10 per Newcrest share prior to implementation of
the scheme, subject to the scheme becoming effective. (16)
The Newcrest Board unanimously recommends that shareholders vote in
favour of the Newmont Transaction in the absence of a Superior Proposal
(as defined in the SID), and subject to the Independent Expert concluding
and continuing to conclude that the Newmont Transaction is in the best
interest of shareholders.
The scheme of arrangement is subject to a number of conditions,
including approval by Newcrest shareholders at a Scheme Meeting which
is expected to be held in October 2023. If the Newmont Transaction is
approved by Newcrest shareholders and the other conditions precedent
are satisfied or waived, implementation of the Newmont Transaction is
targeted to occur in November 2023. (20)
Newcrest’s gold production of 2.1 million ounces(7) was 8% higher than
the prior period. This reflects the inclusion of 12 months of production from
Brucejack (the prior period included four months of production), higher gold
production at Cadia following the completion of the planned replacement
and upgrade of the SAG mill motor in November 2021, together with higher
gold production at Fruta del Norte. This was partially offset by lower gold
production at Telfer (driven by lower mill throughput and head grade) and
Lihir. Lihir’s production performance in the current period was impacted
by several extreme weather events together with a number of unplanned
downtime events which impacted mill availability. Drought conditions
experienced across the New Ireland Province in the first half of the current
period constrained mill throughput, with extreme rainfall in the second half
restricting pit access which limited the delivery of high grade ore to the mill.
Copper production of 133.1 thousand tonnes was 10% higher than the
prior period driven by higher copper production at Cadia following
the completion of the planned replacement and upgrade of the SAG
mill motor in November 2021.
Statutory profit and Underlying profit were both $778 million in the
current period.
Underlying profit of $778 million was $94 million lower than the prior period
primarily due to a lower realised copper price, higher depreciation, higher
operating costs (including the impact of inflationary pressures which were
in line with expectations), a decrease in Newcrest’s share of profits from its
associates, and an increase in finance costs with a higher level of debt and
higher interest rates in the current period.
These impacts to Underlying profit were partially offset by the addition
of Brucejack, a higher contribution of low cost Cadia production,
the favourable impact on operating costs (including depreciation) from the
weakening of the Australian dollar and the Canadian dollar against
the US dollar, favourable fair value movements recognised on Newcrest’s
investment in the Fruta del Norte finance facilities, a lower income tax
expense as a result of the Company’s decreased profitability in the current
period, and higher molybdenum revenue with increased sales volumes.
Full year results
In October 2022, a tragic fatality involving a contractor occurred at
Newcrest’s Brucejack mine in British Columbia. During the suspension
of operations, Newcrest completed an extensive safety review across
all activities at Brucejack to identify major hazards and corresponding
critical controls, establishing additional control verification mechanisms
to monitor those critical controls. These learnings have been shared
across Newcrest’s global operations to help prevent fatalities and
life-changing injuries going forward. The New South Wales Resources
Regulator is investigating two safety incidents at Cadia. These are
in response to a serious injury that occurred to a team member from
one of Cadia’s contracting partners in June 2023, and a separate
incident resulting in serious injuries to a team member that occurred
in October 2021. Newcrest remains committed to learning from these
devastating incidents to ensure that safety remains at the forefront of
every activity across the business.
In the current period, Newcrest reported a Total Recordable Injury Frequency
Rate (TRIFR) of 2.97 per million hours worked, which was 26% lower than the
prior period. Additionally, in the current period Red Chris achieved its lowest
TRIFR on record and Lihir delivered two consecutive quarters (March and
June 2023) with zero recordable injuries, with the March 2023 quarter being
the first quarter with zero recordable injuries in ten years.
Newcrest continued to progress its Net Zero by 2050 goal during the
current period with the scoping and planning of key trials and studies
to implement the Group Net Zero Emissions Roadmap continuing.
Fleet electrification remains a key focus across the business, with the
underground truck loaders at Brucejack now fully battery electric, the
battery electric load haul dump scoop trial continuing at Brucejack
and planning for other electric vehicle trials ongoing at Cadia. The
Telfer/Havieron renewables concept study is nearing completion
and the Lihir FY23 power technology assessment workplan was
completed during the current period with several options selected for
further assessment.
In July 2023, the first renewable power was generated from the Rye Park
Wind Farm, with early supply commencing under Cadia’s Power Purchase
Agreement (PPA) with Tilt Renewables. As previously announced,
Newcrest has a 15-year renewable PPA to secure a significant portion
of Cadia’s future projected energy requirements from 2024. The wind farm
is expected to be fully operational in mid-2024. (13)
Newcrest launched a A$10 million Newcrest Sustainability Fund in July 2022
to support programs that contribute to the resilience of communities
across Newcrest’s geographic areas of interest and support the United
Nations Sustainable Development Goals. Contribution to eight major
projects and two emergency response projects were approved during the
current period with a focus across health, education, biodiversity, reduction
in inequalities and economic growth outcomes.
In May 2023, Newcrest entered into a binding Scheme Implementation
Deed (SID) with Newmont Corporation (Newmont) in relation to a
proposal for Newmont to acquire 100% of the issued shares in Newcrest
by way of a scheme of arrangement (Newmont Transaction). The
Newmont Transaction will bring forward significant value to Newcrest
shareholders through the recognition of Newcrest’s outstanding portfolio
of long-life assets, material and increasing exposure to copper, and
well-established organic growth pipeline. The combined group will
create a clear global leader in gold production, with increased flexibility
in project sequencing and growth optionality, and a market leading
position in safety and sustainability.
42
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
1. Summary of Results for the 12 months ended 30 June 2023 (1,2,3,4,5,6) continued
Newcrest’s AISC of $1,093 per ounce (7,10) was 5% higher than the
prior period primarily due to a lower realised copper price and higher
operating costs. These impacts were partially offset by a higher
contribution of low cost Cadia production following the replacement
and upgrade of the SAG mill motor in the prior period, the addition of
Brucejack, the favourable impact on costs from the weakening of the
Australian dollar and the Canadian dollar against the US dollar, and lower
production stripping activity.
Newcrest’s Free cash flow of $404 million was higher than the prior
period primarily due to the acquisition of Pretium which occurred in the
prior period. ‘Free cash flow before M&A activity’ of $447 million was
95% higher than the prior period reflecting reduced spend on major capital
projects at Cadia with the completion of the two-stage plant expansion in
the current period, an increase in interest received driven by Lundin Gold’s
early repayment of the Fruta del Norte gold prepay credit facility in January
2023, and the receipt of $30 million in dividends from Lundin Gold. This is
partially offset by a lower realised copper price, unfavourable net working
capital movements, and an increase in income taxes paid.
In November 2022, the Newcrest Board approved the progression of
the Cadia PC1-2 Feasibility Study to Execution, marking a key strategic
milestone to maintain Cadia’s gold and copper production profile for
decades to come. The Feasibility Study demonstrated strong financial
returns with an optimised mine footprint substantially increasing expected
ore mined across the life of the project. Key development activities remain
on track with development metres increasing in the June 2023 quarter.
First ore production from PC1-2 is expected in FY26. (13,21)
Additionally in November 2022, the Newcrest Board approved expenditure
of A$214 million (~US$150 million) for the West Dome Stage 8 cutback
(WDS8). The cutback underpins the continuity of operations at Telfer, with
the mine now expected to extend operations into early FY25. (13) First ore
production in WDS8 was achieved during the December 2022 quarter
with mining rates in the cutback performing above expectations in the
current period. Following the approval of the WDS8 cutback, Newcrest
has completed further hedging of a portion of Telfer’s planned production
to June 2024 to secure margins and support investments in cutbacks and
mine development.
In January 2023, the Newcrest Board approved the Lihir Phase 14A
Feasibility Study, endorsing the project into full implementation. Phase 14A is
another step forward in realising the full potential of Lihir with the cutback
expected to deliver additional high grade gold production over the next
four years. (13) Lihir is on track to deliver high grade ore from Phase 14A
in FY24. (13) Newcrest continues to assess a range of options to unlock
additional high grade mineralisation outside the current Ore Reserve with
the potential to extend the elevated production profile beyond FY31. Work
to assess the application of steep wall technologies in the northern and
eastern extents of the Kapit orebody, including a lower cost and simpler
seepage barrier design is on track for completion in CY23. (13)
In April 2023, Newcrest and its Wafi-Golpu Joint Venture partner Harmony
Gold (through their respective PNG subsidiaries) signed a Framework
Memorandum of Understanding (MOU) with the Independent State of
Papua New Guinea. The MOU represents a substantial step forward
in progressing towards the signing of a Mining Development Contract
for Wafi-Golpu and confirms the parties’ intent to proceed with the
project, subject to finalising the permitting process and approvals of both
the Newcrest and Harmony Gold Boards. The MOU is a pivotal milestone
towards the development of one of the world’s premier undeveloped copper-
gold deposits, with its development expected to result in fair and equitable
benefits for landowners, communities, local level governments, the Morobe
Provincial Government and the Independent State of Papua New Guinea,
while also delivering strong returns for the developers.
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 2023 was $1,459 million. This
comprises of $586 million of cash holdings, less $1,637 million of capital
market debt, $298 million in bilateral bank debt facilities and lease
liabilities of $110 million.
As at 30 June 2023, Newcrest had liquidity coverage of $2,288 million,
comprising $586 million of cash and cash equivalents and $1,702 million in
committed undrawn bilateral bank debt facilities with tenors ranging from
2024 to 2026.
Newcrest Annual Report 2023 43
Newcrest’s financial policy metrics and its performance against them are as follows:
Metric
Policy ‘looks to’
As at 30 June 2023
As at 30 June 2022
Credit rating (S&P/Moody’s)
Leverage ratio (Net debt to EBITDA)
Gearing ratio
Cash and committed undrawn bank facilities
Investment grade
Less than 2.0 times
Below 25%
At least $1.5bn, of which ~1/3
is in the form of cash
BBB/Baa2
0.7
11.1%
BBB/Baa2
0.6
10.2%
$2.29bn ($586m cash)
$2.42bn ($565m cash)
Gold hedging
Approximately 90% of Newcrest’s gold sales in the period were unhedged and therefore benefitted from the strong gold prices in the period.
Telfer is a large scale, low grade mine and its profitability and cash flow are sensitive to the realised Australian dollar gold price. In November 2022,
following the approval of the WDS8 cutback, Newcrest hedged a portion of Telfer’s future planned production to June 2024 in the form of Australian dollar
gold zero cost collars to secure margins and support investment in cutbacks and mine development. Zero cost collars consist of a call (sold by Newcrest)
at the collar price cap and a put (bought by Newcrest) at the collar price floor. The option premium paid on the bought put options and received on the
sold call options net out to zero.
As at 30 June 2023, the total outstanding volume and prices of the Australian dollar gold zero cost collars implemented for Telfer are:
Financial Year Ending
30 June 2024
Gold Ounces
Hedged
Floor Price
A$/oz
Cap Price
A$/oz
308,755
2,500
2,886
The put and call options for the current period included 123,723 ounces at an average price of A$2,847 per ounce against a cap of A$2,773 per ounce,
representing a net realised revenue loss of $9 million for the current period. As at 30 June 2023, based on gold forward curves, the unrealised
mark-to-market loss of the remaining options was $24 million.
Newcrest had previously put in place hedging instruments in the form of Australian dollar gold forward contracts to secure margins on a portion
of planned production to June 2023, which have now matured.
The current period included 137,919 ounces of Telfer gold forward sales hedged at an average price of A$1,942 per ounce, representing a net realised
revenue loss of $67 million on the Australian dollar gold forward contracts for the current period.
44
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
1. Summary of Results for the 12 months ended 30 June 2023 (1,2,3,4,5,6) continued
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. Acknowledging the
cyclical nature of the industry, Newcrest has a flexible dividend policy that allows it to balance cash returns to shareholders and investment in the business,
with the intention of maximising long-term shareholder value.
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 Monday, 18 September 2023, demonstrating Newcrest’s commitment to providing strong shareholder returns. The record date
for entitlement is Monday, 21 August 2023.
The financial impact of the FY23 final dividend amounting to $179 million has not been recognised in the Consolidated Financial Statements for the year.
Suspension of the Dividend Reinvestment Plan
The Dividend Reinvestment Plan (DRP) will not apply to the final dividend as the Newcrest Board has determined to suspend the DRP with effect from
11 August 2023.
Guidance (3,22)
Newcrest provides the following guidance for FY24, subject to market and operating conditions.
Newcrest has determined, in consideration of the binding agreement entered into with Newmont Corporation on 15 May 2023 and the upcoming Scheme
vote (expected to be held in October 2023), that guidance for the 12 months ending 30 June 2024 will be provided on a Group-level basis. The Company
has followed its standard Group budget reporting process in preparing this guidance range based on Newcrest continuing on a standalone basis.
If the Scheme of Arrangement with Newmont is approved by shareholders and the other conditions precedent are satisfied or waived, Newmont will
assume management control of Newcrest and the Group level guidance set out below will not apply.
Guidance for the 12 months ending 30 June 2024
Production
Gold – koz
Copper – kt
All-In-Sustaining Cost (AISC)
AISC ($m)
Includes sustaining capital expenditure
Capital Expenditure
Sustaining capital expenditure ($m)
Includes production stripping (sustaining) and sustaining capital
Non-sustaining capital expenditure ($m)
Includes production stripping (non-sustaining) and major projects
Exploration and Depreciation
Exploration expenditure ($m)
Depreciation and amortisation ($m)
Includes depreciation of production stripping
Group (a)
2,000 – 2,300
120 – 140
2,200 – 2,600
560 – 640
610 – 735
130 – 150
820 – 870
(a)
Group gold production and AISC includes Newcrest’s 32% attributable share of Fruta del Norte through its 32% equity interest in Lundin Gold Inc. For H1 of FY24, Newcrest has derived its
guidance range for Fruta del Norte by taking the mid-point of Lundin Gold’s CY23 guidance range of 425koz to 475koz for gold production and $870/oz to $940/oz for AISC. For H2 of FY24,
Newcrest has derived its guidance range for Fruta del Norte by taking the mid-point of Lundin Gold’s CY24 guidance range of 450koz to 500koz for gold production and $780/oz to $850/oz for
AISC. The mid-points for both calendar years were then divided by two and multiplied by Newcrest’s 32% attributable interest. Lundin Gold’s guidance ranges were sourced from their website
(www.lundingold.com).
Newcrest Annual Report 2023 45
Review of Operations (23)
UoM
Cadia
Lihir
Telfer
Brucejack
Red Chris
Norte (7)
Other
Group
For the 12 months ended 30 June 2023
Fruta del
Operating
Production
Gold
Copper
Silver
Molybdenum
Sales
Gold
Copper
Silver
Molybdenum
Financial
Revenue
EBITDA
EBIT
Net assets/(liabilities)
Operating cash flow
Investing cash flow
Free cash flow*
AISC (10)
AISC Margin
koz
kt
koz
t
koz
kt
koz
t
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$/oz
US$/oz
597
98
592
660
612
101
604
789
1,897
1,306
1,072
3,569
1,202
670
–
31
–
674
–
31
–
1,237
455
117
4,215
416
349
17
208
–
352
17
208
–
672
124
24
(72)
114
(482)
(291)
(105)
720
28
45
1,752
125
988
1,466
331
9
576
1,633
164
286
–
460
–
269
–
371
–
493
220
72
2,575
233
(118)
115
312
1,157
640
39
18
94
–
40
19
104
–
209
(5)
(59)
1,166
(15)
(189)
(204)
149
3,733
(1,936)
164
–
–
–
166
–
–
–
–
–
–
–
–
–
–
136
819
–
–
–
–
–
–
–
–
–
–
(37)
(54)
259
(345)
(16)
(361)
122
–
–
2,105
133
1,385
660
2,114
136
1,318
789
4,508
2,063
1,172
11,712
1,605
(1,201)
404
2,311
1,093
680
* Free cash flow for ‘Other’ includes a net inflow of $113 million relating to other investing activities (comprising net receipts from the Fruta del Norte finance facilities of $116 million and net proceeds
of $10 million relating to proceeds from contingent consideration, partially offset by investments in Lundin Gold, Metallic Minerals, Headwater Gold and Antipa Minerals totalling $13 million), income
tax paid of $359 million, corporate costs of $108 million, other capital expenditure of $68 million, exploration expenditure of $66 million, business development costs of $19 million, and business
integration transaction costs of $6 million, partially offset by net interest received of $99 million, dividends received of $30 million, and other inflows of $23 million.
46
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
1. Summary of Results for the 12 months ended 30 June 2023 (1,2,3,4,5,6) continued
Operating
Production
Gold
Copper
Silver
Molybdenum
Sales
Gold
Copper
Silver
Molybdenum
Financial
Revenue
EBITDA
EBIT
Net assets
Operating cash flow
Investing cash flow
Free cash flow*
AISC (18)
AISC Margin
UoM
Cadia
Lihir
Telfer
Brucejack
Red Chris
Norte (7)
Other
Group
For the 12 months ended 30 June 2022
Fruta del
koz
kt
koz
t
koz
kt
koz
t
US$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 integration transaction costs of $23 million, net interest paid of $5 million, and other outflows of $91 million.
Newcrest Annual Report 2023
47
(1) All figures in this document relate to businesses of the Newcrest Mining Limited Group (Newcrest or the Group) for the 12 months ended 30 June 2023 (current period) compared with the
12 months ended 30 June 2022 (prior period), except where otherwise stated. All references to ‘the Company’ are to Newcrest Mining Limited.
(2) Technical and scientific information: The technical and scientific information contained in this document relating to Cadia, Lihir and Red Chris was reviewed and approved by Craig Jones,
Newcrest’s Interim Chief Operating Officer, FAusIMM and a Qualified Person as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101).
(3) Disclaimer: This document includes forward looking statements and forward looking information within the meaning of securities laws of applicable jurisdictions, including within the meaning
of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. We intend the forward-looking statements contained in this communication to be
covered by the safe harbor provisions of such securities laws. All statements other than statements of historical fact in this communication or referred to or incorporated by reference into this
communication are “forward looking statements” for purposes of these sections. 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 such activities; 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. 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 to differ
materially from any future results, performance or achievements, 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. In addition, with respect to the Newmont Transaction, relevant factors may include, among others: (1) the risk that the Newmont Transaction may not be completed
in a timely manner or at all, (2) the failure to receive, on a timely basis or otherwise, the required approvals of the Newmont Transaction by Newmont stockholders or Newcrest shareholders or
the required approval of the scheme of arrangement by the Australian court, (3) the possibility that any or all of the various conditions to the consummation of the Newmont Transaction may
not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on
such approvals), (4) the possibility that competing offers or acquisition proposals for Newcrest or Newmont will be made, (5) the occurrence of any event, change or other circumstance that
could give rise to the termination of the SID, including in circumstances which would require Newcrest to pay a termination fee, (6) the effect of the announcement or pendency of the Newmont
Transaction on Newcrest’s ability to retain and hire key personnel, its ability to maintain relationships with its customers, suppliers and others with whom it does business, or its operating results
and business generally, (7) risks related to diverting management’s attention from Newcrest’s ongoing business operations, (8) the risk of litigation in connection with the Newmont Transaction,
including resulting expense or delay, and (9) (A) those risks discussed in Section 7 of this document and the Annual Information Form dated 13 December 2022, and (B) those risks discussed
in other documents Newcrest files with the ASX and the Canadian Securities Administrators. For further information as to the risks which may impact on Newcrest’s results and performance,
please see the risk factors discussed in Section 7 of this document and the Annual Information Form dated 13 December 2022 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 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. 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.
(4) 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.
(5) 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.
(6) 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 (PFS) 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 released the Cadia PC1-2 Feasibility Study on 11 November 2022 and the Lihir Phase 14A Feasibility Study on 25 January 2023. Newcrest is
currently progressing the other 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 remaining studies.
(7) 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 2023. Refer to Section 6.7 for further details.
– Gold production in the current period includes 164,008 ounces relating to Newcrest’s 32% attributable share of the 512,526 ounces reported by Lundin Gold for the twelve-month period
ended 30 June 2023; and
– Group AISC in the current period includes a reduction of $23 per ounce, which represents 43,805 ounces of Newcrest’s 32% attributable share of the 134,640 ounces sold resulting in an
AISC of $807 per ounce as reported by Lundin Gold for the September 2022 quarter, 38,365 ounces of Newcrest’s 32% attributable share of the 119,890 ounces sold resulting in an AISC of
$865 per ounce as reported by Lundin Gold for the December 2022 quarter, 43,101 ounces of Newcrest’s 32% attributable share of the 134,691 ounces sold resulting in an AISC of $728 per
ounce as reported by Lundin Gold for the March 2023 quarter, 41,267 ounces of Newcrest’s 32% attributable share of the 128,958 ounces sold for the June 2023 quarter at an estimated AISC
of $882 per ounce. The AISC estimate for the June 2023 quarter represents the mid-point of Lundin Gold’s CY23 AISC guidance.
(8) Statutory profit is profit after tax attributable to owners of the Company.
(9) 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.
(10) Subsequent to the release of Newcrest’s June 2023 Quarterly Report, AISC for the current period was restated following the finalisation of the FY23 financial statements.
(11) 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. Refer to Section 6.7 for
further details.
(12) Total Recordable Injury Frequency Rate (injuries per million hours).
(13) Subject to market and operating conditions and no unforeseen delays.
(14) Subject to conditions including Newcrest and Newmont shareholder and regulatory approvals.
(15) As defined in the Scheme Implementation Deed.
(16) Newcrest expects to have sufficient franking credits available to frank a special dividend up to an amount of US$1.10 per share. The franking of the special dividend amount is subject to change
based on timing of implementation of the scheme, business performance, foreign exchange movements and an ATO Class Ruling.
(17) Subject to the release of the Operating and Financial Review for the year ended 30 June 2022, the Total Recordable Injury Frequency Rate was restated following an internal review of injury
classifications.
(18) 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.
48
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
1. Summary of Results for the 12 months ended 30 June 2023 (1,2,3,4,5,6) continued
(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) These dates are indicative and may be subject to change due to a range of factors, including (but not limited to) the expected timing of necessary regulatory approvals.
(21) The Cadia PC1-2 Feasibility Study has been prepared with the objective that its findings are subject to an accuracy range of ±10–15%. The findings in the Study and the implementation of the
PC1-2 Project are subject to all the necessary approvals, permits, internal and regulatory requirements and further works. The Study estimates are indicative only and are subject to market and
operating conditions. They should not be construed as guidance.
(22) The guidance stated assumes weighted average copper price of $3.90 per pound, AUD:USD exchange rate of 0.69 and CAD:USD exchange rate of 0.77 for FY24.
(23) 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%.
(24) Spend is shown net of Greatland Gold’s 30% contributions to the Havieron joint venture.
(25) Additional operational and financial information can be viewed via the Interactive Analyst Centre TM 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.
(26) AISC per ounce is first quartile when compared to the Metals Focus Ltd “Q1 2023 Gold Mine Cost Service” report dated 23 June 2023.
(27) Indicative only and should not be construed as guidance. Subject to market and operating conditions, all necessary approvals, regulatory requirements, further studies, and no unforeseen
delays.
(28) Subject to further studies, all necessary approvals, permits, internal and regulatory requirements and further works and no unforeseen delays.
Newcrest Annual Report 2023 49
2. Discussion and Analysis of Operations and the Income Statement
2.1. Profit overview
Statutory profit and Underlying profit were both $778 million in the current period.
Underlying profit of $778 million was $94 million lower than the prior period primarily due to a lower realised copper price, higher depreciation, higher
operating costs (including the impact of inflationary pressures which were in line with expectations), a decrease in Newcrest’s share of profits from its
associates, and an increase in finance costs with a higher level of debt and higher interest rates in the current period.
These impacts were partially offset by the addition of Brucejack, a higher contribution of low cost Cadia production, the favourable impact on costs
(including depreciation) from the weakening of the Australian dollar and Canadian dollar against the US dollar, favourable fair value adjustments
recognised on Newcrest’s investment in the Fruta del Norte finance facilities, a lower income tax expense as a result of the Company’s decreased
profitability in the current period, and higher molybdenum revenue with increased sales volumes.
US$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)
For the 12 months ended 30 June
2023
3,500
1,130
29
43
(194)
4,508
(2,408)
(874)
(3,282)
(138)
(76)
19
141
(96)
(298)
778
2022
3,194
1,149
22
3
(161)
4,207
(2,122)
(731)
(2,853)
(138)
(76)
45
119
(75)
(357)
872
Change
Change %
306
(19)
7
40
(33)
301
(286)
(143)
(429)
–
–
(26)
22
(21)
59
(94)
10%
(2%)
32%
1,333%
(20%)
7%
(13%)
(20%)
(15%)
–
–
(58%)
18%
(28%)
17%
(11%)
Revenue
$301m
Operating Costs
($286)m
Depreciation &
Amortisation
($143)m
161
7
40
(33)
(409)
306
872
(180)
123
(181)
38
(26)
22
(21)
59
778
FY22
COPPER
PRICE
GOLD
SALES
VOLUME
COPPER
SALES
VOLUME
SILVER
REVENUE
MOLYB-
DENUM
REVENUE
REVENUE
DEDUCT-
IONS
OPERATING
COSTS
FX ON
OPERATING
COSTS
DEPREC-
IATION
FX ON
DEPREC-
IATION
SHARE OF
PROFIT OF
ASSOC-
IATES
OTHER
INCOME/
(EXPENSES)
NET
FINANCE
COSTS
INCOME
TAX
EXPENSE
FY23
50
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
2. Discussion and Analysis of Operations and the Income Statement continued
2.2. Revenue
Total sales revenue for the current period of $4,508 million included deductions for treatment and refining costs of $194 million. Newcrest’s sales revenue
continues to be predominantly attributable to gold, being 76% of total net sales revenue in the current period (75% in the prior period).
US$m
Total gross revenue for the 12 months ended 30 June 2022
Changes in revenues from volume:
Gold
Copper
Silver
Molybdenum
Total volume impact
Change in revenue from price:
Gold
Copper
Silver
Molybdenum
Total price impact
Total gross revenue for the 12 months ended 30 June 2023
Less: treatment and refining deductions
Total net revenue for the 12 months ended 30 June 2023
306
161
7
30
–
(180)
–
10
4,368
504
(170)
4,702
(194)
4,508
Gold revenue in the current period of $3,448 million included deductions for gold treatment and refining costs of $52 million. Excluding these deductions,
total gold revenue increased by 10% compared to the prior period, primarily driven by the inclusion of twelve months of gold sales volumes from Brucejack
(compared to four months in the prior period) and higher gold sales volumes at Cadia due to the completion of the planned replacement and upgrade of
the SAG mill motor in the prior period. This was partially offset by lower gold sales volumes at Telfer and Red Chris (driven by lower production).
Copper revenue in the current period of $997 million included deductions for copper treatment and refining costs of $133 million. Excluding these
deductions, total copper revenue decreased by 2% compared to the prior period, driven by a 14% decrease in the realised copper price ($3.76 per pound
in the current period compared to $4.36 per pound in the prior period), and lower copper sales volumes at Red Chris. This was partially offset by higher
copper sales volumes at Cadia and Telfer.
2.3. Cost of sales
US$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
2023
2,264
120
91
(59)
(8)
2,408
874
3,282
2022
1,915
125
82
20
(20)
2,122
731
2,853
Change
Change %
349
(5)
9
(79)
12
286
143
429
18%
(4%)
11%
(>100%)
60%
13%
20%
15%
Cost of sales of $3,282 million were $429 million (or 15%) higher than the prior period.
Site production costs of $2,264 million were $349 million higher than the prior period primarily due to the inclusion of twelve months of operating costs
from Brucejack in the current period (compared to four months in the prior period), increased mining and milling activity at Cadia, upfront costs relating
to embedding business improvement initiatives at Red Chris and continued inflationary pressures on costs (which were in line with expectations).
These impacts were partially offset by the favourable impact on operating costs from the weakening of the Australian dollar and Canadian dollar against
the US dollar.
Newcrest Annual Report 2023
51
The decrease in royalties primarily reflects the impact of a lower realised copper price and lower sales volumes at Telfer and Red Chris, partially offset
by the addition of Brucejack and higher sales volumes at Cadia.
Selling costs increased in the current period driven by higher sales volumes at Cadia and the addition of Brucejack.
The favourable movement in ore inventory in the current period primarily reflects a capitalisation of costs to the balance sheet driven by an increase
in stockpiles at Lihir with mining continuing while the mill was constrained due to the limited raw water supply in the first half of the current period.
Depreciation expense was higher than the prior period which primarily reflects the addition of Brucejack, higher production volumes at Cadia, and higher
amortisation of production stripping at Lihir. This was partially offset by the benefit of a weakening Australian dollar and Canadian dollar against the
US dollar, and lower production volumes at Telfer.
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
Brucejack
Red Chris
Group*
USD
20%
10%
25%
–
20%
15%
AUD
80%
90%
30%
–
–
50%
PGK
–
–
45%
–
–
15%
CAD
–
–
–
100%
80%
20%
* 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
2023
2022
Change
Change %
(138)
(76)
19
141
(54)
(138)
(76)
45
119
(50)
–
–
(26)
22
(4)
–
–
(58%)
18%
(8%)
Corporate administration expenses of $138 million in the current period comprised corporate costs of $108 million, depreciation of $17 million and
equity-settled share-based payments of $13 million.
Exploration expenditure of $76 million was expensed in the current period, which was in-line with the prior period.
The share of profit of associates of $19 million represents Newcrest’s share of profits or losses relating to its equity accounted associates, comprising
Lundin Gold, SolGold, Azucar Minerals, Antipa Minerals, Metallic Minerals and Headwater Gold.
Other income/(expenses) of $141 million comprised:
US$m
Net fair value movements on concentrate receivables
Net foreign exchange gain
Net fair value gain on Fruta del Norte finance facilities
Net fair value gain on Power Purchase Agreement (PPA)
Business acquisition and integration costs
Business development costs
Insurance settlement for the Cadia NTSF embankment slump (net of associated costs)
Gain on sale of royalty portfolio
Other items
Other income/(expenses)
For the 12 months ended 30 June
2023
2022
Change
Change %
4
7
143
5
(6)
(23)
–
–
11
141
(51)
68
62
–
(42)
–
65
11
6
119
55
(61)
81
5
36
(23)
(65)
(11)
5
22
>100%
(90%)
131%
–
86%
–
(100%)
(100%)
83%
18%
52
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
2. Discussion and Analysis of Operations and the Income Statement continued
2.4. Corporate, Exploration and Other items continued
Newcrest is exposed to changes in commodity prices during the quotational period for the sale of concentrate. The measurement of fair value for
Newcrest’s outstanding concentrate debtors is recognised as a net fair value gain (or loss) on gold and copper derivatives in other income and is driven
by the movement in gold, copper and molybdenum 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 $143 million in the net fair value of Newcrest’s investment in the Fruta del Norte finance facilities following Lundin Gold’s
early repayment of the gold prepay credit facility in January 2023, an increase in the gold price assumptions used in the fair value calculations, and
application of updated life of mine plans;
– an adjustment of $5 million relating to hedge ineffectiveness associated with the fair value movement of the renewable PPA at Cadia;
– $6 million in business acquisition and integration costs relating to systems integration at Brucejack; and
– $23 million in business development costs relating to legal and advisory costs, and the acceleration of open equity-settled long term incentive plans,
associated with the proposed Newmont transaction. Newcrest expects to incur additional external advisory fees, subject to the completion of the
proposed Newmont transaction.
2.5. Net finance costs
US$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
Finance costs
Net finance costs
For the 12 months ended 30 June
2023
2022
Change
Change %
13
28
41
(103)
(5)
(13)
(16)
(137)
(96)
19
6
25
(75)
(4)
(12)
(9)
(100)
(75)
(6)
22
16
(28)
(1)
(1)
(7)
(37)
(21)
(32%)
367%
64%
(37%)
(25%)
(8%)
(78%)
(37%)
(28%)
Net finance costs of $96 million were $21 million (or 28%) higher than the prior period driven by an increase in drawdowns on the bilateral bank debt
facilities and higher interest rates in the current period, and an increase in the discount unwind on provisions with the addition of Brucejack. This was
partially offset by an increase in interest income earned on cash balances.
2.6. Income tax expense
Income tax on Statutory and Underlying profit was $298 million, resulting in an effective tax rate of 28% which is lower than the Australian company
tax rate of 30%. This is primarily due to the effective tax rate in some jurisdictions in which Newcrest operates being lower than 30% together with the
recognition of net deferred tax assets.
2.7. Significant items
There were no significant items reported in the current or prior period.
Newcrest Annual Report 2023 53
3. Discussion and analysis of cash flow
Free cash flow was $404 million for the current period.
‘Free cash flow before M&A activity’ of $447 million was 95% higher than the prior period reflecting reduced spend on major capital projects at Cadia with
the completion of the two-stage plant expansion project in the current period, an increase in interest received driven by Lundin Gold’s early repayment
of the Fruta del Norte gold prepay credit facility in January 2023, and the receipt of $30 million in dividends from Lundin Gold. This is partially offset by a
lower realised copper price, unfavourable net working capital movements, and an increase in income taxes paid.
In the current period, Newcrest received cash flows of $262 million (net of withholding taxes) from the Fruta del Norte financing facilities. This is reflected
in the cashflow statement as $146 million in operating cashflow (interest received) and $116 million in investing cashflow (primarily principal repayments
received). Newcrest has received $480 million (net of withholding taxes) from these financing facilities since they were acquired for $460 million in April 2020,
including cash flows of $325 million (net of withholding taxes) from the gold prepay credit facility.
For the 12 months ended 30 June
US$m
Cash flow from operating activities
Business acquisition and integration costs*
Business development 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)
Business acquisition and integration costs*
Business development costs*
Brucejack integration capital
Acquisition of Pretium (net of cash acquired)
Payment for purchase of put option*
Payments for investment in associates
Proceeds from contingent consideration
Net proceeds from sale of royalty portfolio
Free cash flow
2023
1,605
6
19
(651)
(515)
7
(143)
116
3
447
(6)
(19)
(15)
–
–
(13)
10
–
2022
1,680
23
–
(644)
(773)
11
(120)
51
1
229
(23)
–
–
(19)
(7)
–
36
Change
Change %
(75)
(17)
19
(7)
258
(4)
(23)
65
2
218
17
(19)
(15)
19
(6)
10
(36)
1,272
(4%)
(74%)
–
(1%)
33%
(36%)
(19%)
127%
200%
95%
74%
–
–
100%
100%
(86%)
–
(100%)
>100%
(1,084)
1,084
* Included within Cash flow from operating activities. Business and integration costs reported in Section 2.4 includes the acceleration of the open equity-settled long term incentive plans which are
non-cash. In the prior period, 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.
404
(868)
54
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
3. Discussion and analysis of cash flow continued
3.1. Cash at the end of the period
US$m
Cash flow from operating activities
Cash flow from investing activities
Free cash flow
Cash flow from financing activities
Net movement in cash
Cash and cash equivalents at the beginning of the period
Effects of exchange rate changes on cash held
Cash and cash equivalents at the end of the period
3.2. Cash flow from operating activities
US$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
Dividends received
Net interest received/(paid)
Income taxes paid
Net cash from operating activities
* Includes adjustments for non-cash items.
For the 12 months ended 30 June
2022
1,680
(2,548)
(868)
(427)
(1,295)
1,873
(13)
565
Change
Change %
(75)
1,347
1,272
48
1,320
(1,308)
9
21
(4%)
53%
>100%
11%
>100%
(70%)
69%
4%
For the 12 months ended 30 June
2022
2,054
76
(125)
2,005
6
(38)
(35)
(9)
(76)
–
(5)
(244)
1,680
Change
Change %
9
–
(72)
(63)
(21)
(63)
84
(31)
(31)
30
104
(115)
(75)
0%
–
(58%)
(3%)
(>100%)
(166%)
>100%
(344%)
(41%)
–
>100%
(47%)
(4%)
2023
1,605
(1,201)
404
(379)
25
565
(4)
586
2023
2,063
76
(197)
1,942
(15)
(101)
49
(40)
(107)
30
99
(359)
1,605
Net cash from operating activities of $1,605 million was $75 million (or 4%) lower than the prior period. The decrease is driven by a lower realised copper
price, higher operating costs, unfavourable net working capital movements, and higher income taxes paid. These impacts were partially offset by the
addition of Brucejack, a higher contribution of low cost Cadia production, the favourable impact on costs from the weakening of the Australian dollar and
Canadian dollar against the US dollar, an increase in interest received driven by Lundin Gold’s early repayment of the gold prepay credit facility in January
2023, and dividends received from Lundin Gold.
Newcrest Annual Report 2023 3.3. Cash flow from investing activities
US$m
Production stripping
Telfer
Lihir
Red Chris
Total production stripping
Sustaining capital
Cadia
Telfer
Lihir
Brucejack
Red Chris
Corporate
Total sustaining capital
Major projects (non-sustaining)
Cadia
Telfer
Lihir
Brucejack
Red Chris
Wafi-Golpu
Havieron (24)
Total major projects (non-sustaining) capital
Brucejack integration 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 contingent consideration
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 outflow from investing activities
55
For the 12 months ended 30 June
2023
2022
Change
Change %
54
125
27
206
207
35
102
24
65
12
445
277
3
59
42
78
5
51
515
15
1,181
(7)
–
–
13
(10)
–
3
(116)
143
(3)
31
132
50
213
141
33
156
15
72
14
431
23
(7)
(23)
(7)
66
2
(54)
9
(7)
(2)
14
544
(267)
–
77
16
81
5
50
773
–
1,417
(11)
3
(18)
26
(3)
–
1
(258)
15
(236)
4
1,084
(1,084)
19
7
–
(36)
1,074
(51)
120
(1)
(19)
6
(10)
36
(1,071)
(65)
23
(2)
1,201
2,548
(1,347)
74%
(5%)
(46%)
(3%)
47%
6%
(35%)
60%
(10%)
(14%)
3%
(49%)
–
(23%)
163%
(4%)
–
2%
(33%)
–
(17%)
36%
(100%)
(100%)
86%
–
100%
(100%)
(127%)
19%
(200%)
(53%)
Net cash outflow from investing activities of $1,201 million was $1,347 million (or 53%) lower than the prior period. Excluding the acquisition of Pretium (which
occurred in the prior period), investing activities were $263 million lower in the current period due to a reduction in major projects expenditure, and an
increase in net receipts from the Fruta del Norte finance facilities, this was partially offset by higher exploration expenditure and Brucejack integration capital.
Capital expenditure of $1,181 million in the current period included the following:
– Production stripping of $206 million was $7 million (or 3%) lower than the prior period primarily due to lower waste stripping in Phase 7 at Red Chris
(as the Phase nears the production stage) and lower production stripping in Phases 15 and 16 at Lihir. This was largely offset by the commencement
of stripping in WDS8 at Telfer and increased mining activity in Phase 17 at Lihir.
– Sustaining capital expenditure of $445 million was $14 million (or 3%) higher than the prior period due to increased expenditure at Cadia (primarily
relating to construction activities on the Tailings Storage Facilities), together with the addition of Brucejack. This was largely offset by lower spend
at Lihir (reclassification of Phase 14A expenditure as non-sustaining in the current period) and Red Chris.
– Major project, or non-sustaining, capital expenditure of $515 million was $258 million (or 33%) lower than the prior period with commissioning of the
two-stage plant expansion project at Cadia now complete and the Lihir Front End Recovery Project nearing completion. This was partially offset by
the inclusion of twelve months of expenditure from Brucejack compared to four months in the prior period.
– Capital expenditure also benefitted from the weakening of the Australian dollar and Canadian dollar against the US dollar.
56
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
3. Discussion and analysis of cash flow continued
3.3. Cash flow from investing activities continued
Exploration activity of $143 million was $23 million (or 19%) higher than the prior period, comprising the following:
US$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
2023
2022
Change
Change %
53
53
37
143
40
6
83
14
143
69
27
24
120
57
1
41
21
120
(16)
26
13
23
(17)
5
42
(7)
23
(23%)
96%
54%
19%
(30%)
500%
102%
(33%)
19%
In the current period, Newcrest continued its search for new discoveries with greenfield and brownfield expenditure across Newcrest’s key search areas.
Exploration activity was focused in and around fertile gold and copper districts including Newcrest’s existing operations, the broader Paterson Province
(Western Australia), Drummond Basin (Queensland, Australia), the Northern Territory (Australia), the Golden Triangle of British Columbia (Canada),
Ontario (Canada), the Great Basin in Nevada/Oregon (USA), Chile and Ecuador.
Brownfield, Resource Definition and North American expenditures were higher during the current period with the impact of a full year of exploration
activities at Brucejack, the continuation of the mineralisation assessment at the East Ridge Exploration Target at Red Chris and the addition of several
new greenfield option and earn-in agreements as part of Newcrest’s high grade epithermal search in the Great Basin (USA). Expenditure in Australia
decreased in the current period which primarily reflects the conclusion of the current surface drilling program at Havieron.
In the current period, Newcrest signed option and earn-in agreements with respect to seven new greenfield exploration projects in Nevada (USA),
Oregon (USA) and Queensland (Australia).
3.4. Cash flow from financing activities
US$m
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 outflow from financing activities
For the 12 months ended 30 June
2023
(155)
49
–
477
8
–
379
2022
(143)
43
140
372
14
1
427
Change
Change %
(12)
6
(140)
105
(6)
(1)
(48)
(8%)
14%
(100%)
28%
(43%)
(100%)
(11%)
Net cash outflow from financing activities of $379 million for the current period comprised:
– Net draw down on the bilateral bank debt facilities of $155 million;
– Repayment of lease principal totalling $49 million;
– Dividends paid to Newcrest shareholders of $477 million, which were $105 million (or 28%) higher than those paid in the prior period (including the
special dividend of US 20 cents that was paid in March 2023); and
– Payment for treasury shares of $8 million represents shares purchased on market to satisfy obligations under employee incentive plans.
Newcrest Annual Report 2023
57
For the 12 months ended 30 June
UoM
2023
2022
Change
Change %
ounces
tonnes
ounces
tonnes
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$/oz
596,879
98,191
612,061
100,701
560,702
85,383
543,029
83,888
1,897
825
1,306
1,072
1,202
207
277
484
720
28
45
1,744
695
1,229
1,049
1,296
141
544
685
613
(67)
(124)
36,177
12,808
69,032
16,813
153
130
77
23
(94)
66
(267)
(201)
107
95
169
6%
15%
13%
20%
9%
19%
6%
2%
(7%)
47%
(49%)
(29%)
17%
>100%
>100%
4. Review of Operations (25)
4.1. Cadia
Measure
Operating
Gold production
Copper production
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 596,879 ounces for the current period, and copper production was 98,191 tonnes.
Cadia’s higher gold and copper production in the current period reflects an increase in mill throughput following completion of the planned replacement
and upgrade of the SAG mill motor in the prior period and the ongoing benefits of recovery improvement projects with the commissioning of the two-stage
plant expansion project completed. This was partially offset by lower gold head grade which was in line with expectations.
EBIT of $1,072 million was 2% higher than the prior period reflecting higher gold and copper sales volumes and the favourable impact on costs from
a weakening Australian dollar against the US dollar. These benefits were partially offset by a lower realised gold and copper price, and an increase in
Cost of Sales (including depreciation) which reflects increased mining and milling activity, costs relating to transformation activities and environmental
management, and higher depreciation.
AISC of $45 per ounce was higher than the prior period primarily driven by the impact of a lower realised copper price, higher site production costs and an
increase in sustaining capital expenditure relating to construction activities on the Tailings Storage Facilities. These impacts were partially offset by higher
gold and copper sales volumes, and the favourable impact on costs from a weakening Australian dollar against the US dollar. Cadia’s AISC remains within
first quartile performance for the gold industry. (26)
Free cash flow of $720 million was 17% higher than the prior period reflecting lower non-sustaining capital expenditure with commissioning of the
two-stage plant expansion completed together with higher EBITDA in the current period. This was partially offset by unfavourable working capital
movements relating to timing of receivables and payables, and higher sustaining capital expenditure. Capital expenditure in the current period includes
the development of PC2-3 and PC1-2, the two-stage Cadia Expansion Project and construction activities relating to Tailings Storage Facilities.
In November 2022, the Newcrest Board approved the progression of the Cadia PC1-2 Feasibility Study to Execution, marking a key strategic milestone to
maintain Cadia’s gold and copper production profile for decades to come. The Feasibility Study demonstrated strong financial returns with an optimised
mine footprint substantially increasing expected ore mined across the life of the project. Key development activities for PC1-2 remain on track with
development metres increasing in the June 2023 quarter. First ore production is expected in FY26. (13,21)
During the June 2023 quarter, the NSW Environment Protection Authority (EPA) issued Cadia with variations to its Environment Protection Licence, a
Prevention Notice and Notices to Provide Information regarding the management of dust emissions and other air pollutants from the Tailings Storage
Facilities and ventilation rises. The licence variations largely formalised the actions Cadia had developed in consultation with the EPA and were already
undertaking across a range of measures.
58
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
4. Review of Operations (25) continued
4.1. Cadia continued
Cadia received a letter from the EPA in June 2023 requiring it to immediately comply with specific statutory requirements and licence conditions
relating to a ventilation rise. Adjustments were implemented underground, including a reduction in mining rates, modifications to the ventilation circuit
and the installation of additional dust sprays and spray curtains.
Four dust filtration units are currently in place, with commissioning of the remaining three units expected to be progressively completed in the December 2023
quarter. No material impacts to production are expected, (13) with mill feed supplemented by surface stockpiles until that time.
Cadia continues to work openly and transparently with the EPA and the local community to meet its statutory obligations in a way that is aligned with
Newcrest values.
A New South Wales Legislative Council Committee has commenced an inquiry into current and potential community impacts of the gold, silver, lead and
zinc mining industries in the state. Newcrest will provide a submission to the committee.
4.2. Lihir
Measure
Operating
Gold production
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
All-In Sustaining Cost
For the 12 months ended 30 June
UoM
2023
2022
Change
Change %
ounces
ounces
670,013
674,080
687,445
665,993
(17,432)
8,087
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
1,237
1,120
455
117
416
125
102
59
286
125
988
US$/oz
1,466
1,223
1,078
446
145
453
132
156
77
365
87
1,080
1,622
14
42
9
(28)
(37)
(7)
(54)
(18)
(79)
38
(92)
(156)
(3%)
1%
1%
4%
2%
(19%)
(8%)
(5%)
(35%)
(23%)
(22%)
44%
(9%)
(10%)
Gold production was 670,013 ounces for the current period.
Lihir’s performance in the current period was impacted by lower feed grade, reduced mill throughput and mill availability. The lower feed grade in the
current period reflects a higher proportion of low grade expit material being processed in the second half of the current period with extreme rainfall limiting
pit access and causing material handling issues at the crushers. Mill throughput was significantly constrained in the first half of the current period due to
drought conditions experienced across the New Ireland Province which limited raw water supply to the plant together with several unplanned downtime
events impacting mill availability. Lihir continues to progress options to improve its water management resilience, including improving its internal water
recycling and identifying additional water sources and storage options. Despite the weather events, ore mined increased by 57% in the current period
reflecting the progression of stripping into higher grade ore.
EBIT of $117 million was 19% lower than the prior period reflecting an increase in amortisation relating to production stripping, partly offset by higher gold
sales volumes.
AISC of $1,466 per ounce was 10% lower than the prior period driven by lower production stripping activity, lower sustaining capital expenditure, and
higher gold sales volumes. The decrease in sustaining capital was primarily due to the reclassification of Phase 14A to non-sustaining capital in the current
period, with the lower production stripping expenditure driven by reduced activity in Phase 15 and 16, partially offset by increased activity in Phase 17.
Free cash flow of $125 million was 44% higher than the prior period, primarily driven by lower total capital expenditure. This was partially offset by
unfavourable working capital movements which reflects an increase in stockpiles and timing of payments to suppliers.
In January 2023, the Newcrest Board approved the Lihir Phase 14A Feasibility Study, endorsing the project into full implementation. Phase 14A is another
step forward in realising the full potential of Lihir with the cutback expected to deliver additional high grade gold production over the next four years, (13)
Lihir is on track to deliver high grade ore from Phase 14A in FY24. (13)
Newcrest continues to assess a range of options to unlock additional high grade mineralisation outside the current Ore Reserve with the potential to
extend the elevated production profile beyond FY31. Work to assess the application of steep wall technologies in the northern and eastern extents of the
Kapit orebody, including a lower cost and simpler seepage barrier design is on track for completion in CY23. (13)
Newcrest Annual Report 2023 59
For the 12 months ended 30 June
UoM
2023
2022
Change
Change %
ounces
tonnes
ounces
tonnes
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$/oz
348,823
16,665
352,388
16,667
407,550
13,904
407,094
14,277
(58,727)
2,761
(54,706)
2,390
672
648
124
24
114
54
35
3
92
9
576
1,633
751
673
203
78
180
31
33
–
64
103
565
1,388
(79)
(25)
(79)
(54)
(66)
23
2
3
28
(94)
11
245
(14%)
20%
(13%)
17%
(11%)
(4%)
(39%)
(69%)
(37%)
74%
6%
–
44%
(91%)
2%
18%
4.3. Telfer
Measure
Operating
Gold production
Copper production
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 (10)
Gold production was 348,823 ounces for the current period, and copper production was 16,665 tonnes.
Lower gold production in the current period was driven by lower mill throughput (lower utilisation partially offset by higher milling rates) and lower grade
which reflects an increase in the proportion of stockpile material processed. The higher copper production in the current period was driven by higher grade.
EBIT of $24 million was 69% lower than the prior period driven by lower gold production driving lower gold sales volumes, and a lower realised copper
price. This was partially offset by the favourable impact on operating costs from a weakening Australian dollar against the US dollar, higher copper sales
volumes, lower depreciation in line with lower sales, and a higher realised gold price.
AISC of $1,633 per ounce (10) was 18% higher than the prior period primarily due to lower gold sales volumes, a lower realised copper price, an increase in
production stripping activity relating to WDS8, and additional costs relating to inflationary pressures on earth-moving equipment parts and higher diesel
prices. This was partially offset by higher copper sales volumes, and the benefit of a weakening Australian dollar against the US dollar.
Free cash flow of $9 million was 91% lower than the prior period. This reflects lower EBITDA and increased production stripping activity, partially offset
by favourable working capital movements. Excluding the hedge losses of $76 million in the current period, Telfer’s free cash flow would have been
positive $85 million.
In November 2022, the Newcrest Board approved expenditure of A$214 million (~US$150 million) for the WDS8 cutback. The cutback underpins the
continuity of operations at Telfer, with the mine now expected to continue operations into early FY25. (13) First ore production in WDS8 was achieved during
the December 2022 quarter with mining rates in the cutback performing above expectations in the current period. Following the approval of the WDS8
cutback, Newcrest has completed further hedging of a portion of Telfer’s planned production to June 2024 to secure margins and support investments
in cutbacks and mine development.
60
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
4. Review of Operations (25) continued
4.4. Brucejack
Measure
Operating
Gold production
Gold sales
Financial
Revenue
Cost of Sales (including depreciation)
EBITDA
EBIT
Operating cash flow
Sustaining capital
Non-Sustaining capital
Integration capital
Total capital expenditure
Free cash flow
All-In Sustaining Cost
All-In Sustaining Cost
For the 12 months ended 30 June
UoM
2023
2022
Change
Change %
ounces
ounces
286,003
269,356
114,421
120,056
171,582
149,300
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$/oz
493
421
220
72
233
24
42
15
81
115
312
1,157
226
185
109
41
122
15
16
–
31
88
135
1,125
267
236
111
31
111
9
26
15
50
27
177
32
150%
124%
118%
128%
102%
76%
91%
60%
163%
–
161%
31%
131%
3%
The outcomes presented in the table above reflect the 12 months to 30 June 2023, with the comparative column reflecting the period from 25 February 2022
(being the acquisition date) to 30 June 2022.
The financial and operating performance at Brucejack was impacted in the current period by the temporary suspension of operations following the tragic
fatality in October 2022. All mining and processing activities returned to full capacity in early December 2022, although gold production in the second half
of the current period was lower than expectations driven by lower gold head grade.
Newcrest continued to successfully progress the three-phase transformation program during the current period with a range of initiatives well progressed.
(27) with over 50% of the benefits
Brucejack remains on track to deliver the expected synergy benefits of C$20–$30 million (US$16–$24 million) per annum,
delivered in the current period.
The debottlenecking Pre-Feasibility Study (PFS) to further investigate the potential to increase process plant capacity by up to 30% is progressing well.
The processing plant permit amendment application has been lodged with the regulator and the PFS is expected to be completed in the December 2023
quarter. (28) The ore sorting project is also progressing following positive preliminary results in the initial bench scale trials, with the concept study now
complete and detailed design on a trial installation and procurement of long-lead items well advanced.
Newcrest Annual Report 2023 61
For the 12 months ended 30 June
UoM
2023
2022
Change
Change %
ounces
tonnes
ounces
tonnes
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$/oz
39,342
18,293
39,838
18,842
209
268
(5)
(59)
(15)
27
65
78
170
(204)
149
3,733
42,341
21,363
40,921
21,313
263
222
98
41
102
50
72
81
203
(120)
55
1,349
(2,999)
(3,070)
(1,083)
(2,471)
(54)
46
(103)
(100)
(117)
(23)
(7)
(3)
(33)
(84)
94
2,384
(7%)
(14%)
(3%)
(12%)
(21%)
21%
(>100%)
(>100%)
(>100%)
(46%)
(10%)
(4%)
(16%)
(70%)
171%
177%
4.5. Red Chris (23)
Measure
Operating
Gold production
Copper production
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
Gold production was 39,342 ounces for the current period, and copper production was 18,293 tonnes.
In the current period, Newcrest continued to focus on operational improvements at Red Chris with the optimisation of the flotation circuit and upgrade to
the materials handling system. The lower gold production in the current period was primarily due to lower recovery with the completion of mining in the
East Zone and mill feed transitioning to Phase 7 (Main Zone) which has higher levels of pyrite which impacted recovery performance. Copper production
was 14% lower than the prior period driven by lower grade.
EBIT of negative $59 million was lower than the prior period reflecting higher Cost of Sales (including depreciation), a lower realised gold and copper price and
lower gold and copper sales volumes, partially offset by the favourable impact on operating costs from a weakening Canadian dollar against the US dollar.
Cost of Sales (including depreciation) was 21% higher than the prior period, primarily due to higher site production costs driven by the upfront cost of
embedding business improvement initiatives, and inflationary pressures on consumables. Cost of sales was further impacted by lower production stripping
activity due to timing of the Phase 7 stripping campaign which reduced costs capitalised to the balance sheet.
AISC of $3,733 per ounce was higher than the prior period, primarily due to higher site production costs, a lower realised copper price, and lower
production driving lower gold and copper sales volumes, partially offset by lower sustaining capital.
Free cash flow of negative $204 million was lower than the prior period, primarily driven by lower EBITDA and unfavourable movements in working capital,
partially offset by lower total capital expenditure.
62
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
5. Discussion and Analysis of the Balance Sheet
5.1. Net assets and total equity
Newcrest had net assets and total equity of $11,712 million as at 30 June 2023.
US$m
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Current tax asset
Property, plant and equipment
Goodwill
Other intangible assets
Deferred tax assets
Investment in associates
Other assets
Total assets
Liabilities
Trade and other payables
Current tax liability
Borrowings
Lease liabilities
Other financial liabilities
Provisions
Deferred tax liabilities
Total liabilities
Net assets
Equity
Equity attributable to owners of the parent
Total equity
As at 30 June
2023
2022
Change
Change %
586
363
1,731
411
58
565
314
1,609
595
5
12,996
12,902
686
32
50
483
125
704
37
56
487
85
17,521
17,359
(693)
(37)
(1,935)
(110)
(33)
(687)
(2,314)
(5,809)
11,712
11,712
11,712
(675)
(136)
(1,779)
(111)
(68)
(657)
(2,268)
(5,694)
11,665
11,665
11,665
21
49
122
(184)
53
94
(18)
(5)
(6)
(4)
40
162
(18)
99
(156)
1
35
(30)
(46)
(115)
47
47
47
4%
16%
8%
(31%)
1,060%
1%
(3%)
(14%)
(11%)
(1%)
47%
1%
(3%)
73%
(9%)
1%
51%
(5%)
(2%)
(2%)
0%
0%
0%
Newcrest Annual Report 2023 63
5.2. Financial metrics
5.2.1. Net debt and gearing
Net debt (comprising total borrowings and lease liabilities less cash and cash equivalents) as at 30 June 2023 was $1,459 million (or $134 million higher
than the prior period). All of Newcrest’s borrowings are US dollar denominated.
The gearing ratio (net debt as a proportion of net debt and total equity) as at 30 June 2023 was 11.1%, an increase from 10.2% as at 30 June 2022.
Notwithstanding this increase from 30 June 2022, a gearing ratio of 11.1% remains comfortably within Newcrest’s financial policy target of being less than 25%.
Components of the movement in net debt and gearing are outlined in the table below.
US$m
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
Total equity
Total capital (Net debt and total equity)
Gearing (Net debt/total capital)
2023
298
1,650
(13)
1,935
110
2,045
(586)
1,459
11,712
13,171
11.1%
As at 30 June
2022
143
1,650
(14)
1,779
111
1,890
(565)
1,325
11,665
12,990
10.2%
Change
Change %
155
–
1
156
(1)
155
(21)
134
47
181
0.9
108%
–
7%
9%
(1%)
8%
(4%)
10%
0%
1%
9%
5.2.2. Leverage Ratio and Interest Coverage Ratio
Newcrest’s net debt to EBITDA (leverage ratio) of 0.7 times as at 30 June 2023 (an increase of 0.1 times compared to 30 June 2022) remains comfortably
within its financial policy target of being less than 2.0 times EBITDA on a trailing 12 month basis.
US$m
Net debt
EBITDA (trailing 12 months)
Leverage ratio (times)
As at 30 June
2023
1,459
2,063
0.7
2022
1,325
2,054
0.6
Change
Change %
134
9
0.1
10%
0%
17%
Newcrest’s interest coverage ratio decreased to 30.4 times as at 30 June 2023 (compared to 37.6 times as at 30 June 2022).
For the 12 months ended 30 June
US$m
EBITDA
Less facility fees and other costs
Less discount unwind on provisions
Adjusted EBITDA
Net finance costs
Less facility fees and other costs
Less discount unwind on provisions
Net Interest Payable
Interest Coverage ratio
2023
2,063
(13)
(16)
2022
2,054
(12)
(9)
2,034
2,033
96
(13)
(16)
67
75
(12)
(9)
54
Change
Change %
9
(1)
(7)
1
21
(1)
(7)
13
0%
(8%)
(78%)
0%
28%
(8%)
(78%)
24%
(19%)
30.4
37.6
(7.2)
64
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
5. Discussion and Analysis of the Balance Sheet continued
5.2. Financial metrics continued
5.2.3. Liquidity coverage
Newcrest had $2,288 million of cash and committed undrawn bank facilities as at 30 June 2023.
US$m
As at 30 June 2023
Cash and cash equivalents
Bilateral bank debt facilities
Liquidity coverage
As at 30 June 2022
Cash and cash equivalents
Bilateral bank debt facilities
Liquidity coverage
Facility
utilised
Available
liquidity
Facility
limit
n/a
298
298
n/a
143
143
586
1,702
2,288
565
1,857
2,422
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 Administrators.
Such information includes:
– ‘Underlying profit’ (profit or loss after tax before significant items attributable to owners of the Company);
– ‘EBITDA’ (earnings before interest, tax, depreciation and amortisation, and significant items);
– ‘EBIT’ (earnings before interest, tax and significant items);
– ‘EBITDA Margin’ (EBITDA expressed as a percentage of revenue);
– ‘EBIT Margin’ (EBIT expressed as a percentage of revenue);
– ‘ROCE’ is ‘Return on capital employed’ and is calculated as EBIT expressed as a percentage of average total capital employed (net debt and total equity);
– ‘Interest coverage ratio’ is calculated as EBITDA adjusted for facility fees and discount unwind on provisions, divided by net interest payable
(interest expense adjusted for facility fees, discount unwind on provisions and interest capitalised);
– ‘Leverage ratio (net debt to EBITDA)’ (calculated as net debt divided by EBITDA for the preceding 12 months);
– ‘Free cash flow’ (calculated as cash flow from operating activities less cash flow 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 cash flow from investing activities in Section 3.3; and
– Free cash flow is reconciled to the cash flow statement in Section 3.
Newcrest Annual Report 2023 65
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$m
Underlying profit
Income tax expense
Net finance costs
EBIT
Depreciation and amortisation
EBITDA
For the 12 months
ended 30 June
2023
2022
778
298
96
1,172
891
2,063
872
357
75
1,304
750
2,054
6.3. Reconciliation of All-In Sustaining Cost and All-In Cost
‘All-In Sustaining Cost’ and ‘All-In Cost’ are non-IFRS measures which Newcrest has adopted since the guidance was released by the World Gold Council
in June 2013.
The World Gold Council released an updated guidance note in November 2018, which Newcrest fully applied from 1 July 2019.
The AISC and gold sales outcomes presented in the table below are from Newcrest’s operations only and do not include Newcrest’s 32% attributable
share of Fruta del Norte (through its 32% equity interest in Lundin Gold).
Gold sales (koz)
Cost of sales
Depreciation and amortisation
By-product revenue
Gold concentrate treatment and refining deductions
Corporate costs
Sustaining exploration
Sustaining leases
Sustaining production stripping
Underground mine development
Sustaining capital expenditure
Rehabilitation accretion and amortisation
All-In Sustaining Cost
Growth and development expenditure
Non-sustaining capital expenditure*
Non-sustaining production stripping
Non-sustaining exploration
Non-sustaining leases
All-In Cost
Reference
6.3.1
6.3.2
6.3.3
6.3.4
6.3.7
6.3.5
6.3.5
6.3.6
6.3.4
6.3.6
6.3.5
6.3.7
For the 12 months ended 30 June
2023 (10)
2022
US$m
1,948
3,282
(874)
(1,060)
52
112
18
44
128
(3)
445
31
2,175
9
508
78
125
8
US$/oz
1,685
(449)
(544)
27
57
9
23
66
(2)
228
17
1,117
5
261
40
64
3
US$m
1,777
2,853
(731)
(1,057)
44
110
10
30
163
4
431
35
1,892
9
762
50
110
12
US$/oz
1,605
(411)
(594)
25
62
5
17
92
2
243
19
1,065
5
428
28
62
7
2,903
1,490
2,835
1,595
* Represents spend on major projects that are designed to increase the net present value of the applicable mine and are not related to current production. Significant projects in the current period
include key projects at Cadia (including the development of PC1-2 and PC2-3 and the Expansion Project), the Front-End Recovery Project at Lihir, Red Chris Block Cave FS and Early Works and
Havieron Early Works. Non-sustaining capital expenditure for AISC purposes is shown net of Capitalised leases (refer Section 6.3.6).
66
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
6. Non-IFRS Financial Information continued
6.3. Reconciliation of All-In Sustaining Cost and All-In Cost continued
6.3.1. Cost of sales
US$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
2023
3,282
2022
2,853
For the 12 months
ended 30 June
2023
874
2022
731
For the 12 months
ended 30 June
2023
1,130
(133)
997
29
(5)
24
43
(4)
39
2022
1,149
(115)
1,034
22
(2)
20
3
–
3
1,060
1,057
For the 12 months
ended 30 June
2023
2022
138
(17)
(9)
112
138
(19)
(9)
110
For the 12 months
ended 30 June
2023
2022
128
(3)
78
203
(3)
206
203
163
4
50
217
4
213
217
Newcrest Annual Report 2023 6.3.6. Capital expenditure
US$m
Payments for plant and equipment, development and feasibility studies per the statements of cash flows
in the consolidated financial statements
Information systems development per the statement of cash flows in the consolidated financial statements
Total capital expenditure
Sustaining capital expenditure (per section 3.3 of the Operating and Financial Review)
Non-sustaining capital expenditure (per section 3.3 of the Operating and Financial Review)
Brucejack integration capital (per section 3.3 of the Operating and Financial Review)
Capitalised Leases (per section 3.3 of the Operating and Financial Review)
Total capital expenditure
6.3.7. Exploration expenditure
US$m
Exploration and evaluation expenditure per the consolidated financial statements
Sustaining exploration (per section 6.3 of the Operating and Financial Review
Non-sustaining exploration (per section 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
67
For the 12 months
ended 30 June
2023
2022
961
7
968
445
515
15
(7)
968
1,181
12
1,193
431
773
–
(11)
1,193
For the 12 months
ended 30 June
2023
2022
143
18
125
143
120
10
110
120
For the 12 months
ended 30 June
2023
87.0
86.8
2022
103.4
103.1
For the 12 months
ended 30 June
2023
492
2022
388
894,230,732
893,123,247
55.0
47.5
68
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
6. Non-IFRS Financial Information continued
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 2021
Total capital (net debt and total equity) – as at 30 June 2022
Total capital (net debt and total equity) – as at 30 June 2023
Average total capital employed
Return on Capital Employed
For the 12 months
ended 30 June
2023
1,172
–
12,990
13,171
13,081
9.0%
2022
1,304
9,948
12,990
–
11,469
11.4%
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) (7)
Gold Production
Gold production – Newcrest operations
Gold production – Fruta del Norte (32%)
Gold production
All-In Sustaining Cost (7,10,18)
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
For the 12 months
ended 30 June
UoM
2023
2022
oz
oz
oz
1,941,060
164,008
1,812,459
143,723
2,105,068
1,956,182
For the 12 months
ended 30 June
2023
2,175
136
2,311
2022
1,892
107
1,999
1,947,723
165,818
1,777,092
139,409
2,113,541
1,916,502
1,117
819
1,093
For the 12 months
ended 30 June
2023
1,797
1,117
680
1,065
766
1,043
2022
1,797
1,065
732
UoM
$m
$m
$m
oz
oz
oz
$/oz
$/oz
$/oz
UoM
$/oz
$/oz
$/oz
Newcrest Annual Report 2023 69
7. Risk Management
Newcrest recognises that risk is inherent in its business and effective risk management is essential to protecting business value and securing the growth
of the Company.
Our Risk management framework comprises seven elements: Risk Strategy & Appetite, Risk Governance, Risk Culture, Risk Assessment & Measurement,
Risk Management & Monitoring, Risk Reporting & Insights, and Data & Technology.
Data & Technology
Risk management data translated into meaningful
risk information for stakeholders
Risk Strategy & Appetite
Applying risk management to ensure the achievement
of business plan, goals and strategic objectives
Risk & reporting Insights
Reporting of information to provide insight
into strengths and weaknesses of risk
management activities
Risk
Management
Framework
Risk Governance
Structure through which the
organisation directs, manages and
reports management activities
Risk Management & Monitoring
Management’s response to manage,
mitigate, or accept risk
Risk Culture
Values and behaviours that shape
decision-making on risk
Risk Assessment & Measurement
Activities in place that allow the organisation to identify,
assess and quantify known and emerging risks
7.1. Risk Strategy and Appetite
The Board recognises that risk management and internal controls are
fundamental to sound management, and that oversight of such matters is
a key responsibility of the Board.
7.2. Risk Governance
The Board reviews and confirms that systems are in place which facilitate
the effective identification, management and mitigation of any significant
financial and non-financial risks to which the Company is exposed.
The Board works with management to develop a strategic plan for the
Company, including the identification of risks and opportunities that shape
strategic decision-making. The Board reviews performance of the plan
on a regular basis, including internal and external factors that may impact
on performance.
The broad range of skills, expertise and experience of the Board assists in
providing a diverse view on risk management. The Board also considers
the skills and experience in relation to risk management that is contained
at management level and receives information and advice on specific risk
areas from management and expert advisers, where required.
Newcrest categorises risk according to a group Risk Architecture that
reflects the Company’s value chain. This provides the structure to identify
and review our top down enterprise risks, including our highest priority
risk areas (referred to as ‘Risks in Focus’), and creates the platform for
strengthening our risk appetite approach.
In FY23, Newcrest’s risk appetite program involved the development of
risk appetite statements for a selection of risk categories on our group Risk
Architecture. Our risk appetite statements, which are yet to be approved
by the Board, and define the amount of risk we seek to take in pursuing
our strategic objectives.
Each risk appetite statement is supported by key risk indicators, with set
limits, which help management monitor performance against appetite and
take action based on early warning signals that a limit may be exceeded.
The Audit and Risk Committee (ARC) assists the Board to fulfil its
responsibilities in relation to risk. Its role in relation to risk is to:
a) review the overall adequacy and effectiveness of the risk framework,
risk identification and assessment process and methodology (including
processes for the identification of new and emerging risks) and risk
culture of the Company; and
b) oversee identification, management and mitigation of risks relating
to the ARC Areas, and report to the Board.
Responsibility for monitoring some elements of the risk framework, risk
identification and assessment process and methodology may be allocated
to other Board Committees from time to time. For example, the Safety and
Sustainability Committee (SSC) oversees the identification, management
and mitigation of safety and sustainability risks.
The Risk and Assurance function is accountable for designing, maintaining
and governing the risk management framework, policy and standard. The
function is led by the Head of Risk and Assurance, who reports to the Chief
Legal, Risk and Compliance Officer.
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Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
7. Risk Management continued
7.2. Risk Governance continued
At the management level, risk is embedded in the Company’s operating
model and Three Lines Model for assurance. That sets clear ownership
and accountabilities across the Company for managing risks and the
checks required to confirm that the risk management framework and
processes, and risk controls, are in place and operating effectively.
Outcomes of assurance activities are reported to management, the ARC
and the SSC. Those outcomes are used to develop action plans to address
deficiencies in risk controls and enhance our risk management framework
and processes.
A more detailed discussion of our approach to Corporate Governance
that supports risk governance can be found in the Company’s Corporate
Governance Statement: https://www.newcrest.com/about-newcrest/
corporate-governance.
7.3. Risk Culture
The implementation of our risk management framework and processes
is supported by a Code of Conduct which embeds the Company’s core
values. We see risk culture as part of the overall culture of the Company
that is overseen by the Board, owned at management level, and integrated
into business activities through our leader-led culture program and
comprehensive range of group policies and standards.
There is both planned and unplanned (as required) communication on risk
matters across the Company and at local management level. That includes
management updates to employees on programs and initiatives related to
our highest priority enterprise level risks and opportunities.
Dedicated risk roles that comprise our Risk Community of Practice
have objectives related to the implementation of the risk management
framework, policy and standard and the processes that support delivery
of our strategic objectives. Business and technical management and
specialists across the Company may have responsibilities for managing
risks and implementing risk controls that are incorporated into personal
objectives and performance incentives.
7.4. Risk Assessment and Measurement
Regular risk assessments are conducted at all levels of the organisation
using approved methods from our risk management standard and
procedures to identify risks, understand causes and impacts, determine
controls, and rate risks. Specialist risk analysis methods may be applied at
the enterprise, operation or project level to suit the nature and technical
complexity of the activity.
Identified risks are either material risks or non-material risks. Materiality is
determined by the maximum credible impact if that risk event were to occur,
assuming all risk controls are ineffective. The material risk process operates
Company-wide and actively engages key operational and functional
employees, risk owners, control owners and subject matter experts.
In FY23 we conducted the third annual enterprise risk review with the
Executive Committee and with the Board to identify and review current
and emerging risks that may have an impact on the group. The outcomes
of that review include verifying our Risks in Focus. These are areas of risk
that have the potential to be particularly disruptive or damaging to the
Company in terms of production, financial impact and/or the Company’s
reputation with regulators, investors and host communities.
Our group Risk Architecture enables us to classify enterprise risks
top-down across the Company. We apply the Risk Architecture as an input
to the identification of enterprise risks and during the annual review of
local material risk profiles. Similar material risks are mapped to common
risk categories on our group Risk Architecture to provide visibility over the
aggregate risk exposure for the group.
Scenario analysis and stress testing is routinely applied to assess the
resilience of our balance sheet and robustness of our capital management
plan in line with our risk appetite. That planning process includes modelling
a series of macroeconomic scenarios and using a range of assumptions.
7.5. Risk Management and Monitoring
Enterprise risks, including Risks in Focus, are managed through top-down
group programs and initiatives. The aggregate exposure for an area of risk
may also be managed bottom up through the material risk process.
Material risks are documented and monitored with the implementation
of preventative and mitigating processes and controls. Risk owners and
control owners are required to understand and actively manage their
material risks and have measures in place aimed at preventing their
occurrence, including clear management plans for each material risk.
A key component of the material risk process is the work conducted by
control owners to monitor and verify the effectiveness of controls. Material
risks are required to be evaluated by the risk owner at least once a year
to determine overall control effectiveness and whether the residual risk
is within the Company’s risk appetite (as referred to through measures of
residual risk acceptance defined in our risk management standard). Where
outside appetite, improvement actions are required to reduce the residual
risk. A higher than target residual risk may be accepted by management
only where it is determined that no further improvement action is warranted.
Under our Three Lines Model for assurance, subject matter experts
from 2nd Line functions may conduct reviews and verifications of the
management of risk by the sites. In addition, our Internal Audit program is
designed to align to the group risk profile and test the effectiveness of risk
management and internal controls for material risks.
Risk management information is reported to, and discussed with,
Management and the Board and Board Committees to ensure regular
oversight and involvement in risk management is maintained at a high level
within the Company.
In FY23 we built on previous work to better understand the emerging risks
that are relevant to the Company. That is in recognition of a significant
increase in the external influences we now face but cannot control and
the added uncertainties and threats that brings to the business. In FY23,
Newcrest conducted a detailed review of external data sources to support
the identification of emerging risks (for monitoring) and the review of
current risks (for management).
Newcrest Annual Report 2023 71
7.6. Risk Reporting and Insights
Dedicated risk roles at the site/regional level report routinely to their
local management on the management of material risk, including control
effectiveness and improvement actions to reduce residual risk. The Risk
and Assurance function routinely reports to the Executive on the aggregate
of that site information, plus data for the management of material risks
owned by group functions.
In FY23 an internal audit was completed of Newcrest’s risk management
framework. The audit evaluated Newcrest’s Risk Management Framework
using a global Enterprise Risk Management (ERM) maturity model and
assessment approach. The assessment found that Newcrest’s Risk
Management Framework is overall at the higher end of the ERM maturity
scale (“Sustainable” heading towards “Mature”) and confirms that risk
management capabilities and activities are integrated and coordinated
across corporate and remote operations and business entities.
The Risk and Assurance function reports to the ARC and SSC on the
effectiveness of the risk management framework and processes,
the management of enterprise Risks in Focus, and the highest priority
operational material risks. Risk reports may include updates on the risk
management framework including framework effectiveness, changes
in the material risk profile, and risk management priorities. In FY23, the
annual risk review report was supported by an opinion from the Head
of Risk and Assurance.
The Executive Committee and the Board and Board Committees also
receive reports from other teams to support their review and monitoring of
the effectiveness of the Company’s systems for financial and non-financial
risk management. These include reports from other 2nd Line functions on
programs and initiatives related to enterprise risks, legal reports, ethics
and compliance reports, investigations reports, and internal audit reports.
7.7. Data and Technology
Material risk data is stored in the Company’s risk management
system according to a standard design and data workflow across
the organisation. A risk dashboard provides automated and real time
reporting of material risk data at an enterprise and local level. The
dashboard supports the escalation of key risk management information by
highlighting overdue and extended actions and by filtering by residual risk
rating. By implementing these technologies, Newcrest seeks to enable the
business to manage risks more effectively, with increased transparency.
Qualitative risk analytics is available through the material risk dashboard
including actions by residual risk rating, residual risks by impact type, and
actions extended/closed late. This includes trend analysis that looks
across the past 12 months to the change in action completion metrics
during this time. Further deep dive analysis is conducted as required.
72
Directors’ Report continued
OPERATING AND FINANCIAL REVIEW continued
8. Risks in focus
Newcrest refers to its highest priority enterprise risks areas as Risks in
Focus. These are seen as top-down aggregate areas of enterprise risk;
either current or emerging. A Risk in Focus may link to individual material
risk events where they are defined at the local operating level.
This section provides details on why each Risk in Focus is important to
Newcrest, the potential threats and opportunities associated with each,
and the key mitigations and actions taken to manage them.
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 including material risks that are not highest
priority enterprise risks, risks and uncertainties not presently known
to Management and the Board, or risks that Management and the Board
currently believe to be immaterial or manageable, may adversely affect
Newcrest’s business.
The mitigations and actions described are not exhaustive, since they
exclude reference to other processes and controls designed to support
effective risk management; for example, through our Ethics and Compliance
framework, by implementing group standards that set the mandatory
minimum performance requirements, and through our material risk process.
Implemented processes and controls may not prevent a risk 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.
Major project execution
The risk of failure to execute on a major project according to time, cost or scope. This is considered at the enterprise
level (the strategic), whereas the project management process considers the risks within individual projects that could
impact on delivery (the tactical).
Why it is important
to Newcrest?
Newcrest’s ability to sustain or increase its current level of production in the future is in part dependent on the development
of new projects and the expansion of existing operations. We need to deliver our organic growth portfolio to provide additional
gold and copper production to offset production drop-off from existing operations and increase production spread.
Potential threats
and opportunities
for Newcrest
Newcrest is planning for higher capital expenditure over the next few years in connection with the development of new
projects. This project development and increased capital spend cycle is likely to coincide with a period of ongoing challenges
with cost escalation, supply chain issues and people resourcing and capability gaps.
A number of major projects comprising our global organic growth portfolio are at various stages of development.
In October 2021, the Newcrest Board approved the progression of the Red Chris Block Cave Pre-Feasibility Study to the
Feasibility Stage. The project will leverage Newcrest’s industry-leading block caving expertise with the intention that
the asset would become a significant component of Newcrest’s portfolio for the medium to long term.
As multiple factors influence the successful delivery of major projects (for example, project management expertise, detailed
project planning and execution, rigorous project/cost control and change control, understanding latent technical conditions,
performance of engineering partners, obtaining regulatory approvals and permits in a timely manner), Newcrest is exposed
to a broad range of major project execution risks. A number of major projects across our global organic growth portfolio are
at various stages of development. Failure to execute on any one or more of the major projects on time, at cost or as per the
approved scope may affect Newcrest’s market value and adversely impact returns to investors.
For example, a delay in expansion of an existing asset could require us to amend the existing mine plan in a way that leads
to higher operating costs due to the need to mine sub-optimal grade material for longer. Impacts could be exacerbated
by external factors, including inflationary pressures on the cost of goods and services, supply chain disruptions, labour
shortages, or permitting delays.
Newcrest has joint venture interests, including its interests in the Red Chris mine in Canada. These operations are subject to
the risks normally associated with the conduct of joint ventures. That includes (but is not limited to) disagreement with joint
venture partners on how to develop and operate the mines or projects efficiently, and the inability of joint venture partners to
meet their financial and other joint venture commitments. 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.
On time and on budget delivery of our projects, at the same time as delivering local social value (for example, through local
business opportunities), may see Newcrest as a preferred developer of new projects. Acceleration of organic growth options
may strengthen our portfolio and protect and grow value over the long term. The opportunity through delivery of our global
organic growth portfolio, including the Red Chris Block Cave project, is to increase our exposure to copper and thereby
participate further in the potential opportunities presented by the global shift to decarbonisation.
Newcrest Annual Report 2023 73
Mitigations implemented
and/or action taken
Newcrest has defined a set of controls for the enterprise level material risk ‘Failure of Project Delivery’:
– In line with our Project Management System and Investment Management System, we have defined standards for the
activities associated with Studies and Projects and the work associated with each project gate, and to promote the
sensible investment of capital.
– The Project Delivery Group comprising competent and experienced project professionals executes major capital projects
and provides support and governance for other capital projects across the business.
– A stage gate process operates for project and study approvals including Readiness Review and Competent Independent
Reviews involving internal and external subject matter experts.
– The Capital Review Committee oversees all significant investment decisions for these projects at each specific gate.
For example, a focus in FY23 was the Red Chris Block Cave project. For the Red Chris Block Cave Feasibility Study, escalation
and global supply chain interruptions continue to be assessed as part of the Feasibility Study and value engineering and
optimisation opportunities are under evaluation with the objective to offset inflationary cost pressures. The Project Delivery
Group is also planning to undertake additional engineering and market engagement during the Feasibility Study to Execution
bridging period to further improve confidence in the project schedule and capital cost estimate.
Production planning
and forecasting
Risks that are associated with the assumptions and uncertainties regarding production plans and forecasts, including
energy supply and market declarations.
Why it is important
to Newcrest?
Production planning and forecasting is important to generate timely and reliable plans that enable the business to predictably
achieve and exceed its objectives and realise its value potential. Newcrest’s production planning and forecasting process
applies our latest knowledge to generate a view of future business performance and informs corporate strategy and market
guidance. The production planning and forecasting process also plays a significant role in helping us to identify and manage
business threats and opportunities and allow us to deliver on our commitments to the Board and external stakeholders.
Potential threats
and opportunities
for Newcrest
Our production plans and forecasts underpin our commitments to investors, regulators and host communities regarding
our short to medium term business operations and outcomes. Where actual performance differs from planned outcomes
and external market guidance is not achieved, there is potential for damage to our financial and reputational performance,
loss of stakeholder trust, and reduction in share price leading to our inability to effectively raise capital to pursue strategic
growth options.
Our mining operations are subject to variability and uncertainty with respect to a range of factors including ore quality,
delivery, metal grade, metal recovery, availability of utilities (e.g., power and water), equipment reliability, workforce
availability and natural hazards. Many of our operations are located in remote areas and the availability of parts, equipment,
labour, infrastructure and key inputs, such as power and water, at a reasonable cost, cannot be assured. Even a temporary
interruption in supply of goods, services or utilities could materially affect our operations and ability to achieve our plans
and forecasts. Examples of potential threats to delivering planned outcomes include:
– Unfavourable ore variability/quality, mine production, process plant throughput and/or metallurgical performance
resulting from emerging or altered inputs to the initial plan, spatial compliance deviation and/or failure to achieve planned
mobile and fixed plant productivities.
– Changing and challenging geotechnical and hydrogeological conditions that may limit our ability to access ore, which
may include pit wall stability, landslides or slope failure, seismic events or mine induced subsidence, inrush of water
or other materials.
– Unplanned and/or unexpected electrical or mechanical failure of key equipment such as autoclaves, SAG mills or material
handling systems.
– Unplanned and/or unexpected events that impact production.
– Uncertainty around water supply and security, with sites experiencing both drought and flood conditions within a
relatively short period of time.
– Difficulty mobilising labour and/or equipment to sites, resulting in lost productivities that cannot be recovered during the year.
– Disruption to power or gas supplies to operate processing plants, equipment and camps.
Examples of potential opportunities to expediate delivery of planned outcomes include:
– Application of alternative mining methods and techniques such as steep wall mining, hot-ground mining and
semi-autonomous underground mining with unprecedented cave heights to remove personnel exposure to major hazards
and potentially prolong cave life.
– Trialling new process plant technology such as predictive control, Coarse Ore Flotation or ultrafine particle recovery
to recover metal that would otherwise have been lost to tailings.
– Integration of the Edge program which is designed to realise the full potential of our assets through productivity
improvements and capital and cost reductions, while leveraging step-change innovation.
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OPERATING AND FINANCIAL REVIEW continued
8. Risks in focus continued
Mitigations implemented
and/or action taken
Our forecasts are intended to represent plans that safely deliver our ‘most likely’ production, cost and capital outcomes.
They reflect planned improvements, growth or ramp-down (where relevant), reassessment of inflationary cost pressures,
minimising overheads at operations and the centre, while ensuring governance, risk management and strategy
considerations are not compromised. The following mitigations are intended to address the threats and exploit potential
opportunities in our plans:
– Plan input assumptions are set based on agreed plan confidence, reviewed by Site and by group subject matter experts,
and approved by Management.
– Risk assessment of plan delivery to identify threats, opportunities and risk mitigation activities with resourcing.
– Data collection to meet an improved confidence level of orebody knowledge, as well as laboratory test work and pilot
plant programs to develop metallurgical test work data in support of new technologies or methodologies prior to plant
implementation.
– More frequent reviews and updates to planning models (e.g., geology, geometallurgical and recovery models) to ensure
that they are representative of current knowledge and conditions for forecasts of future production.
– Mine value chain reconciliation (MVCR) to provide quantifiable feedback on anticipated compared to actual production
performance over a period of time and to identify corrective actions required.
– Long-term water and power security strategies and initiatives.
– Independent reviews and audits on the Mineral Resources and Ore Reserves estimates and respective input assumptions
to identify gaps, opportunities and potential risks and alternatives mitigation measures.
People and culture
Includes:
– Risks associated with maintaining Newcrest’s ability to attract and retain top talent for competitive advantage, as
well as develop talent pools for future prosperity.
– Risks associated with maintaining the desired organisational culture, including diversity and inclusion and tone from
the top.
Key focus in FY23 was on talent retention and development and our Respect@Work program.
Why it is important
to Newcrest?
Newcrest seeks to attract and retain employees and third-party contractors with the appropriate skills and experience
necessary to operate and grow our business. This is at a time of low rates of unemployment, coupled with increased
competition across the sector for critical skills and talent.
Potential threats
and opportunities
for Newcrest
Conventional approaches to recruitment, employee development and succession planning have been impacted by
the decreasing number of tertiary graduates entering the industry. The reasons for this are varied and include the poor
perception amongst young people of the mining industry as a place to work, including misalignment with their values related
to social responsibility and sustainability.
Newcrest sees organisational culture as a key part of the Company’s employee value proposition. At Newcrest, there is no
place for any behaviours that cause people physical or psychological harm. Everyone has the right to be and feel safe at work,
and to always be treated with dignity and respect. Safety at Newcrest is more than just eliminating incidents and injuries. It is
also about eliminating and preventing unacceptable behaviours that do not align with our core values.
Failure to attract and/or retain appropriately skilled and experienced personnel could result in disruptions to Newcrest’s
activities and/or affect our operations and financial condition. We need to maintain fair and competitive remuneration and
benefits packages which are compliant with relevant legislative requirements and policies. Newcrest undertakes periodic
reviews of compliance with relevant legislative requirements and policies, including one currently being undertaken. Any
non-compliance or breaches could have a financial and/or reputational impact. If we do not maintain an inclusive and high
performing culture where everyone feels safe and is supported to thrive, that may impact our ability to attract and retain the
best talent.
The Australian Human Rights Commission’s Respect@Work: Sexual Harassment National Inquiry Report, issued in 2020,
found that almost two in five women (39%) and just over one in four men (26%) had experienced sexual harassment in the
workplace in the previous five years. In the mining sector, it found this was the experience of three in four women (74%) and
one in three men (32%). Instances of sexual assault and sexual harassment are still prevalent across our industry.
Newcrest Annual Report 2023 75
Mitigations implemented
and/or action taken
Newcrest has policies, procedures, frameworks and initiatives in place to mitigate risks related to attracting and retaining
talent – including performance reward and recognition, diversity and inclusion initiatives, employee feedback surveys,
leadership development programs, and our Respect@Work program.
We seek to build a future supply of industry labour by actively promoting mining and the resources industry, within Australia,
PNG and Canada, and through universities and other educational institutions, as a compelling and attractive career
proposition. We aspire to increase the diversity of our workforce, by employing more women in management and professional
roles, and including more Indigenous and First Nations employees across our operations globally. Progress is monitored and
periodically reported to management. In FY24 we plan to work with each site to discuss aspirations at a site level.
Our diversity and inclusion targets for FY23 and performance for the 2022 financial year are included in our FY23 Corporate
Governance Statement. Newcrest also 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. Newcrest is actively
engaged in promoting, progressing and supporting our diverse and high potential talent to access career and development
opportunities. This includes striving to have diverse representation on our talent and succession plans, focusing on
promoting internal talent, and supporting our early career talent and emerging leaders.
Commencing in 2021, our people leaders, including our Executive Committee, have been in engaged in an Inclusive
Leadership program to develop their skills in self-awareness, empathy, curiosity, courage and vulnerability. This program is
now integrated into our frontline people leader program ManagingMatters which is the foundation leadership program
at Newcrest for new and emerging leaders.
In FY23 we furthered our Respect@Work program to strengthen our approach to lower the risk of instances of sexual assault
and sexual harassment across our operations. Newcrest has an established Respect@Work program to protect people’s
safety through a strong framework that aims to eliminate and prevent sexual assault and sexual harassment across our
company. This is part of our determination to make Newcrest a company where sexual harassment and sexual assault is
not tolerated and does not happen.
Market Risk
Risks associated with commodity price fluctuations as well as macroeconomic risks, such as (but not limited to) boom
and bust cycles. That includes cost inflation, foreign exchange fluctuations, interest rates and commodity price.
Why it is important
to Newcrest?
Newcrest’s revenue is principally derived from the sale of gold and copper based on prevailing market prices. Lower gold
and/or copper prices may adversely affect Newcrest’s financial condition and performance.
Potential threats
and opportunities
for Newcrest
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.
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.
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 our ability to deliver the capital project portfolio. It is noted that this threat
is heightened due to the connections it has to risk areas such as labour and supply chain vulnerabilities.
– 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.
– Result in changes in the estimation of the recoverable amount of Newcrest’s assets when assessing potential accounting
impairment of those assets.
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OPERATING AND FINANCIAL REVIEW continued
8. Risks in focus continued
Mitigations implemented
and/or action taken
Newcrest maintains exposure to commodity prices, it manages the impact of adverse movements in commodity prices and
macroeconomic factors by seeking to be a low-cost producer, maintaining a strong balance sheet, and having sufficient liquid
funds and committed bank facilities available to meet the Group’s financial commitments over time.
Newcrest implements capital and financial management policies and significant capital and financial risk management
activities, including undertaking scenario analysis to stress test our portfolio. Protections to manage our exposure to
inflationary pressures include:
– pricing formula structures to manage higher costs for labour and consumables;
– long-term fixed price contracts to reduce exposure to near-term volatility in the cost of maintenance and parts;
– fixed price electricity contract for Cadia and hedging contracts in place for Lihir site fuel costs; and
– long term vessel charters to reduce exposure to sharp rises in container/cargo ship costs.
Newcrest is predominantly an unhedged producer, although Newcrest has hedges over a portion of Telfer’s future planned
gold production to June 2024 to secure margins and support investment in cutbacks and mine development. Telfer is a large-
scale, low-grade mine and its profitability and cash flow are sensitive to the realised Australian dollar gold price.
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 as appropriate.
Tailings Management
Risks associated with tailings storage facility (TSF) management and Deep Sea Tailings Placement (DSTP).
Why it is important
to Newcrest?
Tailings are produced as part of the mining process. Tailings storage facilities (TSFs) are constructed progressively
throughout the life of the mine to support increasing capacity requirements. Newcrest uses deep sea tailings placement
(DSTP) at its Lihir mine and has selected this method for tailings management at the proposed Wafi-Golpu mine.
At Brucejack, lacustrine deposition was selected and permitted.
Potential threats
and opportunities
for Newcrest
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.
Mitigations implemented
and/or action taken
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.
Tailings Management Framework
Newcrest maintains a framework to manage tailings performance and critical controls applied to Newcrest’s operations
(including water storage dams).
As a member of the ICMM we are committed to conforming with Global Industry Standard on Tailings Management (GISTM)
for all facilities and continue to work towards conformance, whilst prioritising dam integrity improvements.
Responsible Tailings Facility Engineers (RTFE) are appointed at Red Chris, Cadia and Telfer for all eligible TSFs and water
storage dams. An Accountable Executive is appointed, who has ongoing direct engagement with the RTFE, Engineer of
Record (EoR) and Independent Tailings Review Board (ITRB) for Telfer, Cadia and Red Chris. Twice yearly (minimum) reporting
to the Safety and Sustainability Committee of the Board is scheduled to communicate progress and to ensure accountability.
EoRs have been appointed for most TSFs across Newcrest. A set of inactive facilities at Telfer (TSF 1-6) do not have an EoR
appointed, a program of investigations and studies are planned to address gaps and enable an EoR to be appointed. ITRB
are in place for Cadia and Red Chris. Telfer is transitioning from a Senior Independent Tailings Reviewer to an ITRB structure.
The Tailings Stewardship Board commenced in FY22 and a dam safety inspection plus assurance review was completed.
During FY23 this program focused on changes since FY22 in the management of the risk and organisational factors. Each
of our active TSFs is subject to external inspections by the EoR, ITRB and Tailings Stewardship Board. All facilities have either
completed, or are planned to complete, a Dam Safety Review between 2021 and 2026.
Newcrest Annual Report 2023 77
DSTP
DSTP was identified as the preferred tailings management option for Lihir and was approved by the PNG Government
following findings from studies. Operational controls on the DSTP system are regularly checked including the integrity of
the outfall pipeline. During the life of the mine two DSTP pipelines have been constructed and one of the DSTP pipelines is
undergoing refurbishment to provide flexibility for tailings management and a back-up if, for example, one pipeline is not able
to be used for example, during maintenance. The integrity of the DSTP system at Lihir is regularly inspected and includes an
alarm system to track potential changes in normal operating conditions.
The latest five yearly offshore marine survey of the Lihir DSTP system (to complement monthly and annual monitoring
programs) commenced in 2022 and is continuing into 2023.
The Wafi-Golpu Environmental Impact Statement (EIS) is publicly available on the Wafi-Golpu Joint Venture (WGJV) website
and includes information on comprehensive DSTP studies used to inform the selection of DSTP as the preferred tailings
management option for Wafi-Golpu. A DSTP working group is maintained to monitor and respond to stakeholder interest in
DSTP at Wafi-Golpu and Lihir and assess opportunities for engagement.
Newcrest also participates in multiple industry forums and working groups to provide strategic perspectives on DSTP during
development of relevant industry guidelines (e.g., International Council on Mining and Metals, World Gold Council, Minerals
Council of Australia).
Community relations
and social licence
Risks associated with maintaining our social licence to operate.
That may stem, for example, from our environmental management performance at any one of our operations.
Why it is important
to Newcrest?
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.
Our relationship with communities is grounded in our approach to human rights. Understanding, protecting and respecting
those rights is core to our success. We do this by considering the United Nations Guiding Principles for Business and Human
Rights in our operations, our policies and in our dealings with others.
Newcrest’s ability to engage with communities in proximity to our mines determines the level of support we enjoy for ongoing
operations and for growth prospects of those sites. Communities that are negatively impacted by our sites, through increased
traffic, migratory workforces, environmental impacts and resource depletion may not accept continued or new mining
activity. This will impact regulatory approvals and the severity of conditions associated with licence to operate.
There is a level of public concern relating to the 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, tailings dam management and planning for the worst-case scenario
of failures, dust emissions and management and the use of DSTP.
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.
The nature and subject matter of negotiations with Indigenous communities, local landholders and the wider local community
may result in community unrest which, in some instances, results in interruptions to Newcrest’s exploration programs,
operational activities or delays to project implementation. Confidentiality clauses in agreements negotiated with Indigenous
organisations may limit the ability of the parties including Indigenous communities to speak out on issues of concern.
Negative 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.
Potential threats
and opportunities
for Newcrest
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OPERATING AND FINANCIAL REVIEW continued
8. Risks in focus continued
Mitigations implemented
and/or action taken
Catastrophic
operational risks
Where Newcrest has exploration activities, development projects or operations, it enters into agreements with Indigenous
communities and/or local landholders and the wider local community. These agreements may include (but are not limited
to) compensation, co-management and other benefits and may be subject to periodic review. The negotiation and/or review
of agreements, including components such as business development, participation, co-management, and compensation
and other benefits involves complicated and sensitive issues, associated expectations and often competing interests, which
Newcrest seeks to manage respectfully and in partnership with relevant parties. Newcrest 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, we have undertaken stakeholder mapping, perception
awareness and risk sensing. Newcrest aims to use this information to support our activities and to provide the baseline for
ongoing monitoring.
To identify where we may have the greatest impact on human rights, we identify our most salient human rights issues
and embed mitigation programs which is governed by our Human Rights Steering Committee.
The Newcrest Sustainability Fund may create opportunities for non-mine related socioeconomic value in the jurisdictions
we operate in. This focus on social value creation through partnerships aims to foster stakeholder relations, enhanced
community trust and increase Newcrest’s contribution to broader social issues.
Includes:
– Risks associated with geotechnical stability, including aboveground and underground mining environments
and stockpiles.
– Risks associated with the storage and handling of hazardous materials and the creation of hazardous environments
which have the potential to result in a material process safety event.
– Risks associated with fire or explosions not involving hazardous materials.
– Risks associated with the reliability and structural integrity of fixed and non-fixed assets, equipment and machinery
required for the delivery of the business plan.
– Risks associated with acute natural catastrophes or events associated with natural processes.
Why it is important
to Newcrest?
Newcrest operates in locations that are subject to the risk of catastrophic natural events like earthquake and avalanche,
which are difficult to predict.
Our operations face increasing geotechnical, geothermal and hydrogeological challenges as our surface mines become
deeper and/or we encounter more complex operating environments at our underground mines. Delivery of our business
plan is also dependent on our assets, utilities and equipment being operated safely and achieving their planned availability
and utilisation rates.
Use of explosives and hazardous materials is critical to mining operations and mineral processing at all Newcrest sites.
That includes the transportation, storage and use of hazardous materials such as cyanide, potassium amyl xanthate (PAX),
Methyl IsoButyl Carbinol (MIBC), sodium hydrosulfide (NaSH), propane and oxygen.
A failure to control catastrophic operational risks could result in fatalities, serious injuries to personnel and/or damage to
infrastructure or equipment. That in turn could potentially adversely impact our licence to operate and have a material
reputational and financial impact on the Company.
Newcrest Annual Report 2023 79
Potential threats
and opportunities
for Newcrest
Mitigations implemented
and/or action taken
Climate Change
Transition risk
Why it is important
to Newcrest
Examples include:
– Risks and uncertainties associated with the cave mining methods applied at Cadia and Telfer and planned to be used
at Red Chris. Risks include that a cave may not propagate as anticipated, excessive air gaps may form during cave
propagation, unplanned ground movement may occur due to changes in stresses released in the surrounding rock,
or mining induced seismicity is larger or more frequent than anticipated. Excessive water ingress, disturbance and the
presence of fine materials may also give rise to a sudden unplanned release of material including mud and dry fine ore.
– Risks and uncertainties associated with the application of techniques used in the civil engineering industry for the
stabilisation of steep open pit slopes that have not been widely applied in a mining setting. Risks include variation
to technical models when compared to actual conditions, performance of reinforcement system in hot ground,
and delays with the execution of the civil works due to lack of experience with these techniques.
– Risks associated with the incorrect transportation, storage and handling of explosives leading to an unplanned
detonation event.
– Risks associated with the use of hazardous chemicals and processes at our operations include catastrophic release due
to vessel rupture resulting in an explosion, unplanned/undetected release impacting personnel working in or near the
area or creating an explosive environment and toxic gas release.
– Critical equipment related risks that apply at all Newcrest sites; for example, mill failure arising from catastrophic failure
of a component, or unavailability of mine haul fleet. Other critical equipment related risks may be site specific; for
example, impacts on asset integrity at Lihir due to the proximity of the mine to a corrosive marine environment.
– Risks associated with a natural disaster include tsunami and mine flooding risk at Lihir, the impacts of cyclones at Telfer,
both flooding or drought conditions at Cadia, avalanche risk cutting road access to Brucejack mine, landslide at Red
Chris and geysers and outbursts at Lihir.
Key mitigations implemented and/or action taken include:
– Implementation of engineering solutions to local geotechnical, hydrogeological and geothermal conditions. For
example, rock ‘preconditioning’ techniques are implemented at Cadia to reduce the magnitude of large seismic events
and reduce the risk associated with air blast. At Cadia and Telfer, ground support systems are 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. At Lihir, equipment
with reinforced windows and remote controlled equipment are used to mitigate the impact of geysers and geothermal
outburst and blasting of outburst prone areas is used to reduce frequency and severity of outburst events.
– The Newcrest Process Safety program includes consideration of equipment and process design; controls management;
and field excellence. Process Safety reviews are conducted at all Newcrest sites to challenge the adequacy of the controls
in place to manage site specific process safety risks.
– In most jurisdictions that Newcrest operates the management of explosives is heavily regulated. Compliance with local
laws and the execution of controls is critical to prevent unplanned detonation events.
– Newcrest implements asset integrity programs which systematically review the condition of assets, determine their
current condition and the risk this poses to the business. These programs include the development and execution of
maintenance strategies, operating equipment with design limits and the holding of critical spares. Newcrest facilitates
independent reviews which analyse risk understanding, control design and control execution for those risks which
may result in the highest business interruption.
– Each Newcrest site considers the potential material risks associated with a natural disaster. That likelihood is re-assessed
annually based on changing climatic conditions. Controls focused on mitigation (i.e., reduction of consequence should
the event occur) are prioritised. For example, Telfer undertakes cyclone season preparedness, Lihir performs wet season
prevention activities, and Brucejack mine undertakes preventative actions as part of avalanche management practices.
Risks associated with climate change include transition risks relating to the transition to a lower-carbon global economy
and acute or chronic physical risks from changing weather patterns.
Transition risks and opportunities are associated with policy, legal, regulatory, technological, market, behavioural and
reputational developments arising from the global transition to a lower-carbon economy.
Newcrest predominantly produces gold and copper from operations in Australia, Canada and Papua New Guinea (PNG).
The production of gold and copper is energy intensive and produces greenhouse gas emissions that contribute to climate
change. Implementation of policy, legislation and regulation to reduce greenhouse gas emissions to align with the Paris
Agreement differs across each jurisdiction in which Newcrest operates. Failure by Newcrest to engage with government
policy frameworks, reduce greenhouse gas emissions intensity of its operations or properly assess and implement new
technologies may lead to a material impact on financial performance, financial position, share price and reputation.
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OPERATING AND FINANCIAL REVIEW continued
8. Risks in focus continued
Potential threats
and opportunities
for Newcrest
Australia, Canada and PNG’s Nationally Determined Contributions (NDC) under the Paris Agreement, commit to a
reduction in greenhouse gas emissions by 2030 by 43% below 2005 levels, 40–45% below 2005 levels and 50% below
2015 levels, respectively.
In Australia, from 1 July 2023, the policy mechanism used to realise the NDC for large industrial emitters, the Safeguard
Mechanism, will require progressive limitations to greenhouse gas emissions from our sites, with the allowance to
purchase and surrender Australian Carbon Credit Units (ACCUs) at market prices on exceedance of these limitations.
Telfer is a covered facility under the Safeguard Mechanism and is required to reduce emissions below its baseline whereas
Cadia is not currently a covered facility. In British Columbia, Canada, a carbon tax of C$50 per tonne of carbon dioxide
equivalent (CO2-e) applies to both Brucejack and Red Chris, which increased to C$65 per tonne on 1 April 2023.
The transition to lower-carbon technologies, including electrified fleet and alternative fuels, may require changes to mine
plans, standard operating practices, training and infrastructure which are likely to have an impact on operating and capital
expenditures, and work continues in these areas.
Mitigations implemented
and/or action taken
Newcrest contributes to the climate change policy debate in all jurisdictions in which we operate by advocating for effective
long-term policy to transition to lower-carbon technologies as well as harmonisation of regulations within the states, provinces
and territories in which it operates. Newcrest’s contributions are through its memberships of local industry associations.
Newcrest’s investment decisions are typically multi-decadal requiring incorporation of long-term revenue and cost
assumptions. Newcrest applies legislated carbon prices and/or a shadow carbon price of US$50 and US$100 per tonne
of CO2-e when considering investment decisions to test whether the financial returns on investment are resilient under
different carbon pricing scenarios.
Newcrest is actively seeking to expand and develop its copper resources, particularly through exploration and its investments
in Cadia, Red Chris and Wafi-Golpu. Newcrest holds interests in operations and projects with approximately 25 million
tonnes of contained copper metal as Measured and Indicated Mineral Resources providing exposure to the increase in
demand for copper resulting from the transition to lower-carbon technologies.
Physical risks include acute climate change risks from the increasing frequency and intensity of extreme weather events
such as floods, landslides, avalanches, cyclones, wildfires and hot and cold extremes. They also include chronic climate
change risks from sustained shifts in climate patterns such as higher average temperatures causing droughts, sea level rise,
increasing and decreasing regional long-term precipitation, thawing permafrost and glaciers.
Newcrest’s operations, supply and value chains and the communities in which it works need to be resilient to both acute and
chronic climate change risks. Failure to identify, respond, mitigate, and adapt to these risks may result in business interruption
causing reduced production and resource access as well as abrasion of critical infrastructure such as roads. These may lead
to a material negative impact on the timing of growth projects, financial performance, share price, employee and community
safety and Newcrest’s reputation.
Physical risk
Why it is important
to Newcrest
Potential threats
and opportunities
for Newcrest
All of Newcrest’s businesses and the local communities in which it works are subject to long term physical climate change
risks that may include water scarcity and wildfires from reducing precipitation, heat stress from increasing average
temperatures and sea level rises from thawing sea ice and glaciers. They are also exposed to extreme weather events
resulting in flooding, landslides, avalanches, increasing intensity of cyclones and extreme heat and cold.
Mitigations implemented
and/or action taken
For example, in the current period Lihir experienced reduced milling rates due to limited raw water supply to the plant driven
by drought conditions experienced across the New Ireland Province in PNG. Cadia has previously experienced water scarcity
from drought conditions in 2019 which resulted in a reduction in water use to assist the Orange community response to the
drought. Floods and wildfires have been experienced near Cadia, Telfer and Red Chris in recent years. Brucejack’s glacial
access road is subject to thaw as average temperatures increase.
Newcrest has obtained localised climate projections over the period until approximately 2100 using CMIP5 and CMIP6
(climate simulations from Coupled Model Intercomparison Project Phase 5 and Coupled Model Intercomparison Project
Phase 6) for each operation and project and is developing adaptation plans for each operation and project in order to prepare
them for the increasing frequency and intensity of extreme weather events and the sustained shifts in long-term climate
patterns. These adaptation plans include the need to reflect forecast climate projections in engineering designs, including
tailings design and management, and the augmentation of emergency response services along with a corresponding
estimate of any potential incremental cost in Newcrest’s long-term plans.
Procurement, inbound
supply chain and
inventory management
Newcrest’s reputation, production continuity and cost profile can be impacted by risks associated with the
management and operation of its inbound global supply chain (including risks associated with the inventory
management of critical equipment, spares and consumables). The underlying risks include failure to supply critical
goods/services (causing operational disruption) and a direct modern slavery event occurring in our supply chain.
Why it is important
to Newcrest
Newcrest’s reputation, production and revenue continuity is exposed to harm and disruption within the supply chain of
critical material (spares and consumables) and contract labour inputs, through transgressions, compromised availability,
route disruption and performance issues (including in source and transit geographies with the suppliers of both product
and labour along with logistics service providers).
Newcrest Annual Report 2023 81
Potential threats and
opportunities for
Newcrest
Mitigations implemented
and/or action taken
Cyber security and
data protection
Why it is important
to Newcrest
There is a risk that inbound supply chain disruption will lead to Newcrest reputational damage, mine site production
curtailment or stoppage in the event of a critical material or labour input unavailability or association with a human rights
transgression. This could have a material adverse impact to Newcrest’s financial condition depending on the duration of
the curtailment or stoppage, or reputation if the incident is due to a supplier’s human rights breach. The risks can result from
loss of suitable suppliers, the impact of epidemics, disruption to trade flows, critical infrastructure bottlenecks/breakdowns,
geopolitical impacts/changes in legislation, sub performance of suppliers, and damage to our reputation caused by actions
of our suppliers.
Newcrest aims to mitigate its inbound supply chain disruption by performing the following assurance and monitoring activities:
– Procurement Policy and Standards deployment – sets out the commitment to procuring, delivering and managing goods
and services in a way that aligns to Newcrest’s Vision and aspirations.
– Supplier due diligence and ongoing assurance – our Supplier Performance Commitments publicly set out our
expectations for business conduct from all suppliers wishing to do business with, or on behalf of, Newcrest. Newcrest
routinely reviews its supplier selection, procurement governance and contract management processes to evaluate and
monitor performance in its supply chain, with specific focus on human rights and critical inputs/high risk geographies. We
also perform supplier category assessments to assess modern slavery risk.
– Compliance with human rights legislation and standards – we publicly disclose an annual Modern Slavery Statement,
track international trends such as the Canadian Modern Slavery Act, and are guided by the UN Guiding Principles on
Business and Human Rights.
– Category planning for critical inputs – live documents with strategies and risk mitigation for optimising cost effective
supply and usage of critical inputs.
– Business continuity and crisis management plans for critical inputs – with early warning signals to be established
(including recognition of tolerances for higher cost inputs in business continuity planning), critical roles training and
awareness and incident response capability and plans.
– Critical shipping, transport and labour contracts oversight and management.
– Inventory management and optimisation – strategies, tools and management system for optimising inventory availability
for critical inventory segments.
– Ongoing critical Supplier Relationship Management which aims to have suppliers prioritising Newcrest in times
of interruption or scarcity.
– Procurement Excellence Program progression and Newcrest global procurement team capability build.
Additionally, there is a natural risk mitigation as a result of the uniqueness of supply chains to each operation
(i.e., risk/disruption in the supply chain to one operation is independent to the supply chain risk to other operations)
and the ability to implement alternate processing pathways at each operation depending on short term unavailability
of particular inputs.
Risks associated with cyber security and data protection, including both technology and physical security.
Newcrest’s operations are supported by and dependent on IT systems, consisting of infrastructure, networks, applications,
and service providers. 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.
Potential threats
and opportunities
for Newcrest
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. Any such interference or disruption could have a material impact on Newcrest’s
business, operations or financial condition and performance.
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.
Security measures and recovery plans are in place for all of Newcrest’s major sites and critical IT systems.
Mitigations implemented
and/or action taken
82
Directors’ Report continued
REMUNERATION REPORT
11 August 2023
Dear Shareholder
On behalf of the Board of Newcrest, I am pleased to provide our Remuneration Report for the year ended 30 June 2023.
This report explains the links between Newcrest’s Executive remuneration framework as well as outcomes and Newcrest’s strategy and
performance.
Newmont Transaction
On 15 May 2023, Newcrest announced that it had entered into a binding scheme implementation deed with Newmont Corporation (Newmont),
under which the parties agreed to proceed with a proposal for Newmont to acquire 100% of the issued shares in Newcrest by way of an Australian
scheme of arrangement (the Newmont Transaction). The Newmont Transaction is subject to a number of conditions, including various regulatory
approvals, approval by the Federal Court of Australia and approval by Newcrest and Newmont shareholders. The Board has decided to unanimously
recommend that shareholders vote in favour of the Newmont Transaction in the absence of a superior proposal and subject to the Independent Expert
concluding and continuing to conclude that the Newmont Transaction is in the best interests of Newcrest shareholders. A meeting of the shareholders
of Newcrest is likely to occur in or around October 2023, with implementation targeted to occur in November 2023.
Year in review
Newcrest’s performance in the 2023 financial year (FY23) was overshadowed by a tragic fatality involving a contractor at the Brucejack mine
in October 2022 and a serious injury sustained by a team member from one of Cadia’s contracting partners in June 2023. Newcrest remains
committed to learning from these devastating incidents to ensure that safety remains at the forefront of every activity across the business to prevent
fatalities and life-changing injuries going forward. For FY23, Newcrest reported a Total Recordable Injury Frequency Rate (TRIFR) of 2.97 per
million hours worked, which was a 26% improvement on FY22 and was underpinned by Red Chris reporting its lowest TRIFR outcome on record
and Lihir delivering two consecutive quarters with zero recordable injuries.
Newcrest continued to progress its Net Zero by 2050 target during FY23 with the scoping and planning of key trials and studies to implement the
Group Net Zero Emissions Roadmap continuing. In July 2022, Newcrest launched its Sustainability Fund which contributed to eight major projects
and two emergency response projects in FY23 with a focus across health, education, biodiversity, reduction in inequalities and economic growth
outcomes.
Operationally, Newcrest produced 2.1 million ounces of gold which was 8% higher than FY22. This primarily reflects the inclusion of Brucejack
for a 12 month period (FY22 included four months of production) and higher gold production at Cadia following the completion of the planned
replacement and upgrade of the SAG mill motor in November 2021. This was partially offset by lower production at Telfer and Lihir, with Lihir’s
production performance impacted by several extreme weather and unplanned downtime events.
Newcrest delivered a strong financial performance in FY23, reporting a statutory profit of $778 million, free cash flow (FCF) of $404 million and an
All-In Sustaining Cost (AISC) of $1,093 per ounce.
Newcrest made significant progress against its growth strategy with key study milestones achieved at Cadia with the PC1-2 Feasibility Study
approved to execution and completion of the two-stage plant expansion project. Newcrest also released its Lihir Phase 14A Feasibility Study and
signed a Framework Memorandum of Understanding for the Wafi-Golpu project.
In line with Newcrest’s commitment to providing strong shareholder returns, Newcrest determined a fully franked final dividend of US 20 cents
per share, bringing total dividends for FY23 to US 55 cents per share (including the special dividend of US 20 cents that was paid in March 2023),
which is an equal record for Newcrest. In addition, Newcrest expects to pay a franked special dividend of US$1.10 per Newcrest share prior to
implementation of the scheme of arrangement, subject to the scheme of arrangement becoming effective. (1)
KMP changes
During the 2023 financial year, Sherry Duhe was appointed as Interim Chief Executive Officer (CEO), Daniel O’Connell was appointed as Interim
Chief Financial Officer (CFO), and Craig Jones was appointed as Interim Chief Operating Officer (COO), following the departure of Sandeep Biswas
(Managing Director and CEO) and Philip Stephenson (Chief Operating Officer – Australasia). Seil Song also ceased as Chief Development Officer
(CDO) on 30 June 2023. Both Sherry and Daniel commenced in their interim role on a total remuneration package lower than their predecessor,
reflecting that they are new to their role. Further information in respect of the remuneration packages for the interim roles, as well as the exit
arrangements for Sandeep, Philip and Seil, can be found in section 8.
(1) Newcrest expects to have sufficient franking credits available to frank a special dividend up to an amount of US$1.10 per share. The franking of the special dividend amount is subject to
change based on timing of implementation of the scheme, business performance, foreign exchange movements and an ATO Class Ruling.
Newcrest Annual Report 2023 83
Remuneration framework
At the 2022 Newcrest Annual General Meeting, the 2022 Remuneration Report received a “first strike”. The Board values shareholder feedback and
has, over the last year, engaged with shareholders and proxy advisors to obtain their views as to Newcrest’s Executive remuneration arrangements.
The Board has considered the feedback and is of the view that the main concerns raised have been addressed with the following changes, some of
which were foreshadowed in the 2022 Remuneration Report:
– For the Short Term Incentives (STIs):
– replacement of FCF with Operating Cash Flow (OCF), to increase relevance of the metric for employees with limited control over
non-sustaining or M&A activities;
– an increase in the weighting of sustainability and costs measures; and
– streamlining of personal objectives for Executives, 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 Long Term Incentives (LTIs), an increase in the weighting of the relative total shareholder return (TSR) measure from 33% to 50%,
and an increase in the required level of performance for vesting of the Return on Capital Employed (ROCE) measure.
– An increase in the Minimum Shareholding Requirement for Executives from 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.
– Enhanced disclosure of STI outcomes in the remuneration report (refer section 5.3.1).
Further information as to our response to the main concerns raised by shareholders and proxy advisers is set out in section 2.3.
Remuneration outcomes
FY23 STI outcomes for Executives ranged from 28% to 55% of the maximum possible award, against a scorecard of business and personal
performance metrics.
66.67% of the 2019 LTIs vested during the 2023 financial year, representing Newcrest’s performance for the three years to 30 June 2022.
While no increase was made in Board or Committee fees for the Non-Executive Directors (NEDs) during the 2023 financial year, Peter Tomsett
received additional Director fees in recognition of his increased involvement in the business during the CEO transition period (as previously
announced to the market), and four NEDs received additional fees in recognition of their involvement in the Due Diligence Committee relating to the
Newmont Transaction, as disclosed in section 9.3.
Impact of the Newmont Transaction on future remuneration
The following has been agreed with Newmont in relation to KMP remuneration:
– FY23 STI awards will be delivered in cash before implementation of the Newmont Transaction with no portion deferred into restricted shares;
– Conditional on the Newmont Transaction becoming effective:
– 2021 and 2022 LTIs and sign-on rights will vest in full shortly prior to implementation of the Newmont Transaction. These awards will not be
eligible to receive the special dividend;
– 2020 LTIs will vest based on performance against the relevant performance measures (performance period is 1 July 2020 – 30 June 2023).
The date of vesting may be brought forward slightly, to ensure the shares allocated on vesting participate in the Newmont Transaction.
Vested awards will be eligible to receive the special dividend;
– In order for all issued capital to participate in the Newmont Transaction, any restricted shares held in connection with previous STI and LTI
awards will be released from trading restrictions shortly prior to implementation of the Newmont Transaction;
– No 2023 LTI award will be made; and
– A 6-month STI program will be in place for the period 1 July 2023 to 31 December 2023. The maximum STI opportunity will be half of the typical
annual entitlement. The STI will be assessed post implementation of the Newmont Transaction, by Newmont, and will be delivered in cash.
Further information in relation to the above, is set out in section 6.
The Board is committed to ensuring that Newcrest’s remuneration framework remains effective in the context of the Newmont Transaction,
particularly with a view to underpinning employee engagement, and the retention of key skills and experience, throughout a period of uncertainty,
in a fair and transparent manner, as well as recognising the increased workload of our Executive team and employees in order to deliver the
Newmont Transaction for our shareholders. More generally, the Board is confident that the updated remuneration framework is suitably aligned
to the Company’s strategy and performance and that it is sufficient to attract, reward and retain high calibre people through this period of change.
We continue to welcome shareholder feedback and thank you for your support.
Philip Aiken AM
Chairman, Human Resources and Remuneration Committee
84
Directors’ Report continued
REMUNERATION REPORT continued
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 2023 financial year.
The KMP for the 2023 financial year comprised the NEDs and certain members of the Executive Committee specified in section 1 (the Executives).
This Report has been audited under section 308(3C) of the Corporations Act 2001.
Contents
Section 1
Section 2
Section 3
Section 4
Section 5
Section 6
Section 7
Section 8
Section 9
Section 10
Section 11
Key Management Personnel
Remuneration Snapshot
Remuneration Governance
Executive Remuneration Framework
Remuneration Outcomes
Impact of Newmont Transaction on future
year remuneration arrangements
Executive Service Agreements
Executive Changes
Non-Executive Directors’ Remuneration
Shareholdings
Statutory Tables
85
86
89
90
99
106
107
107
108
108
110
Newcrest Annual Report 2023 85
1. Key Management Personnel (KMP)
The following table sets out the Company’s KMP during the 2023 financial year.
Name
Executives
Sherry Duhe
Craig Jones
Daniel O’Connell (1)
Maria Sanz Perez
Seil Song (2)
Suresh Vadnagra
Former Executives
Sandeep Biswas (3)
Philip Stephenson
Non-Executive Directors
Peter Tomsett
Philip Aiken AM
Philip Bainbridge
Roger Higgins
Sally-Anne Layman
Jane McAloon AM
Vickki McFadden
Role
FY23 Term
Interim CEO
CFO
Interim COO
COO – Americas
Interim CFO
19 Dec 2022 – present
1 Jul 2022 – 18 Dec 2022
19 Dec 2022 – present
1 Jul 2022 – 18 Dec 2022
19 Dec 2022 – present
Chief Legal, Risk & Compliance Officer (CLRCO) Full year
CDO
Chief Technical & Projects Officer (CTPO)
Full year
Full year
CEO
COO – Australasia
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
1 Jul 2022 – 19 Dec 2022
1 Jul 2022 – 15 Dec 2022
Full year
Full year
Full year
Full year
Full year
Full year
Full year
(1) Daniel O’Connell was Group Treasurer prior to his appointment as Interim CFO.
(2) Seil Song ceased as CDO on 30 June 2023. The cessation of his employment with Newcrest will take effect in December 2023.
(3) Sandeep Biswas ceased as Managing Director on 18 December 2022 and as CEO on 19 December 2022.
86
Directors’ Report continued
REMUNERATION REPORT continued
2. Remuneration Snapshot
2.1. Key remuneration outcomes for the 2023 financial year
Executive Remuneration
STI Outcomes
LTI Outcomes
NED Remuneration
During the 2023 financial year,
66.67% of the 2019 LTIs vested
reflecting the Company’s
performance over the three
year performance period to
30 June 2022.
Changes were made to the
weightings of the LTI measures
and the ROCE vesting schedule
for the 2022 LTIs. These
are described in detail at
section 4.5.
2022 LTIs granted to
Executives who ceased
employment with Newcrest
during FY23 lapsed.
No changes were made to
Board or Committee fees.
Peter Tomsett received
additional director fees during
the CEO transition period in
recognition of his increased
involvement in the business.
Vickki McFadden, Sally-Anne
Layman, Jane McAloon and
Philip Bainbridge received
additional fees in recognition
of their involvement in the Due
Diligence Committee relating
to the Newmont Transaction.
To reflect that they are new
to their respective roles,
the remuneration packages
offered to the Interim CEO and
Interim CFO were materially
lower than the amounts
received by the previous
permanent incumbents.
Fixed remuneration was
approximately 40% lower
for each role, and maximum
incentive opportunity was
more than 50% lower.
With effect from
1 October 2022 the
former CEO received
a TFR increase of 2.9%
and other Executives
received TFR increases
averaging 2.9%.
Changes were made to the
STI business measures and
weightings for the 2023
financial year, with the most
significant changes being
the use of Operating Cash
Flow (rather than Free Cash
Flow) and an increase in the
weighting for Sustainability.
These are described in detail
at section 4.4.
Personal objectives for Executives
for the 2023 financial year were
streamlined, resulting in fewer,
more heavily weighted objectives,
with increased emphasis on
culture, including organisational
health and Respect@Work.
FY23 STI outcomes for Executives
ranged from 28% to 55% of the
maximum possible award, based
on the assessment of business
and personal measures.
Given the timing of the
Newmont Transaction, FY23
STIs will be delivered as cash
without any portion deferred
into restricted shares.
Executives who ceased
employment with Newcrest
during FY23 did not receive
a FY23 STI.
In addition, the Minimum Shareholding Requirement for Executives increased to 200% of TFR for the CEO, and to 100% of TFR for other Executives from
FY23 onwards.
Newcrest Annual Report 2023 87
2.2. Actual Remuneration
The table below details the cash and value of other benefits actually received by the Executives in the 2023 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 2023 financial year. See section 11.1 for the statutory remuneration table
that has been prepared in accordance with statutory obligations and Australian Accounting Standards. As noted in section 8, Sandeep Biswas and
Philip Stephenson did not receive a FY23 STI, and the 2022 LTIs granted to them lapsed, as a result of their cessation of employment.
Actual Executive Remuneration for the 2023 financial year
2022
STI Paid
as cash (2)
TFR (1)
Termination
Benefits (3)
Other
Benefits (4)
LTI
Rights
Vested (5)
Restricted
STI Shares
Vested (6)
Sign-On
Rights
Vested (7)
Total
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
873
645
234
562
538
602
1,570
541
102
191
–
172
174
197
826
191
–
–
–
–
–
–
–
577
275
224
4
5
12
6
58
77
–
230
–
–
140
–
1,171
230
–
145
–
78
85
82
601
129
411
–
–
–
–
–
–
–
1,661
1,435
238
817
949
887
4,226
1,745
Executives
Sherry Duhe
Craig Jones
Daniel O’Connell
Maria Sanz Perez
Seil Song
Suresh Vadnagra
Former Executives
Sandeep Biswas
Philip Stephenson
Notes to Actual Executive Remuneration
(1) TFR 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. For Sandeep Biswas, this also includes payments for advisory services up to his retirement on 18 March 2023 as set out in section 8.2.
(2) Represents amounts paid for STIs relating to performance for the 2022 financial year. The cash component for the 2022 financial year was paid in October 2022.
(3) This comprises of payment in lieu of any notice period not served to Philip Stephenson upon cessation of his employment. A description of the treatment of former KMP remuneration is set
out in section 8.2.
(4) Comprises cash payments for travel costs, relocation assistance, non-monetary benefits such as parking, insurance and applicable fringe benefits tax paid on benefits. It also includes:
– For Sherry Duhe, sign-on cash rights (refer to section 4.7) and relocation assistance of US$135,000.
– For Craig Jones, an allowance that covers part of the cost of housing, vehicle, and other expenses associated with his assignment to Canada prior to his appointment as Interim COO.
(5) Represents 2019 LTIs that vested on 22 November 2022. 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 the earlier of 22 November 2023 and the Effective Date for the Newmont Transaction). The value of the Rights has been determined based on the share price at the close
of business on the vesting date of A$18.88 (US$12.54).
(6) Ordinary Newcrest shares were released by Pacific Custodians Pty Ltd as trustee for the Newcrest Employee Share Trust:
– on 28 October 2022 to Sandeep Biswas (16,926), Craig Jones (2,675), Seil Song (902) and Philip Stephenson (3,596) on vesting of restricted STI shares (tranche 2) awarded for the 2020
financial year;
– on 28 October 2022 to Sandeep Biswas (34,900), Craig Jones (7,076), Maria Sanz Perez (6,720), Seil Song (6,431), Philip Stephenson (7,501) and Suresh Vadnagra (7,098) on vesting of
restricted STI shares awarded (tranche 1) for the 2021 financial year;
– on 4 November 2022 to Craig Jones (17,392) as an allocation of STI shares awarded for the 2022 financial year. Of those shares, 2,871 shares were sold to fund Canadian withholding tax,
and a holding lock was applied over the remaining 14,521 shares to apply for one year as to 50% of the 14,521 shares, and two years as to the other 50% of the 14,521 shares (with the intention
that the holding lock be of similar effect to the restrictions on the STI restricted shares allocated to other Executives).
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 being A$17.81 (US$11.59) for shares vested on
28 October 2022 and A$17.40 (US$11.08) for shares transferred to Craig Jones on 4 November 2022.
(7) Represents the Sign on Rights issued to Sherry Duhe that vested on 21 February 2023. The value of the Rights has been determined based on the share price at the close of business on the
vesting date of A$23.74 (US$16.36).
TFR and Other Benefits have been translated from Australian dollars (in which they were paid) to US dollars using an average exchange rate of 0.6735,
and, in the case of payments to Craig Jones while relocated to Canada, from Canadian dollars (in which they were paid) to US dollars using an average
exchange rate of 0.9017. 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, this is the date the trading restriction is lifted.
88
Directors’ Report continued
REMUNERATION REPORT continued
2. Remuneration Snapshot continued
2.3. Response to ‘first strike’ received at the 2022 AGM
At the 2022 AGM, some shareholders expressed concerns regarding Newcrest’s Executive remuneration arrangements, resulting in a ‘first strike’ against
the adoption of the Remuneration Report for the year ended 30 June 2022 (with 36.60% votes cast against).
The Board values shareholder feedback and has, over the last year, engaged with proxy advisers and shareholders to obtain their view as to the total
quantum and complexity of Newcrest’s Executive remuneration arrangements and the overall alignment of them with investor outcomes. The Board
has considered the feedback and the options available to it, and received input from the Board’s independent advisor, KPMG.
A number of key changes to the Executive remuneration framework were implemented for the 2023 financial year, as set out below and
foreshadowed in the 2022 Remuneration Report. Changes were made with the key objective of seeking alignment of shareholder and Executive
interests and clearer accountability.
– For the STIs:
– replacement of FCF with OCF, to increase the relevance of the metric for employees with limited control over non-sustaining or M&A activities;
– an increase in the weighting of sustainability and costs measures; and
– streamlining of personal objectives for Executives, 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, an increase in the weighting of the relative TSR measure from 33% to 50%, and an increase in the required level of performance for
vesting of the ROCE measure.
– An increase in the Minimum Shareholding Requirement for Executives from FY23 onwards to 200% of 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.
In light of the first strike, the Board has continued to consider the Executive remuneration framework during the 2023 financial year against the feedback
received, and considers that the feedback received has been addressed appropriately as set out below.
Feedback topics
Board response
Remuneration structure
Quantum of TFR and
incentive outcomes
Alignment between
incentive outcomes and
shareholder returns
FY22 STI outcome
Outcome of the FCF
STI measure in FY22
Newcrest reviews Executive remuneration periodically on the basis of benchmarking provided by the Board’s
independent advisor, KPMG, to ensure that Executive remuneration is market competitive and sufficient to attract
and retain talent.
Fixed pay increases averaging 2.9% for the former CEO and other Executives took effect from 1 October 2022.
The increases were reflective of the length of time since a previous increase and the positioning of the former CEO and
Executives’ packages relative to key peers, as well as the experience and tenure of the former CEO and other Executives.
To reflect that they are new to their respective roles, the remuneration packages offered to the Interim CEO and Interim
CFO were materially lower than the amounts received by the previous permanent incumbents. Fixed remuneration was
approximately 40% lower for each role, and maximum incentive opportunity was more than 50% lower.
No Executive remuneration increases have taken place since Newmont’s indicative proposal was received, and none are
scheduled entering FY24.
The changes made to Newcrest’s Executive remuneration framework in the 2023 financial year have sought to increase
alignment of Executive and shareholder outcomes by:
– reducing the total number of metrics within the STI scorecards, in order to encourage greater focus on the measures
considered most important to create shareholder value;
– increasing the LTI weighting of relative TSR from 33% to 50%;
– increasing the ROCE vesting thresholds; and
– increasing the minimum shareholding requirement to 200% for the CEO and 100% for other Executives.
The FCF target, which was based on Newcrest’s FY22 Budget, was negative in the 2022 financial year. The Board
considered the appropriateness of the FCF outcome for the 2022 financial year, along with the outcome of the other STI
measures, when determining the overall STI outcome and considered it reasonable on the basis that:
– the Budget was set having regard to significant additional capital expenditure expected to be undertaken in the 2022
financial year as well as materially lower than expected production at Cadia due to the SAG mill motor replacement;
– the FCF outcome included unfavourable adjustments for the effect of commodity prices, foreign exchange rates,
transactions related to M&A activity and other items determined by the Board which were considered to be outside the
control of Management; and
– the Board used discretion to exclude the receipt of an insurance settlement of $75 million relating to the NTSF
embankment slump, which had the effect of reducing the adjusted FCF.
In FY23, adjusted operating cash flow was US$893M. The corresponding FY23 STI measure vested at 69% of target
(34.5% of maximum).
Newcrest Annual Report 2023 89
Feedback topics
Board response
STI business measures
Calculation of the NPAT
STI measure
Change from FCF to OCF
LTI measures
ROCE threshold
Newcrest has retained ‘NPAT before significant items’ as a STI business measure. The Board considers this appropriate.
Under the terms of the plan, the Board retains a discretion on any adjustments in the NPAT calculation and does not
adjust significant items that are considered within the control of Management. For the FY22 STI, the Board made
adjustments for significant items outside the control of management and the net adjustments to the NPAT measure
reduced the vesting outcome for participants.
The FCF performance measure was replaced by an OCF performance measure for the FY23 STI. Newcrest considers
OCF to be a critical measure as it is within the control of Management and goes directly to generation of cash from
operations. This change has been made to increase relevance of the metric for employees with limited control over
non-sustaining or M&A activities.
For the 2023 LTI, the Board increased the ROCE thresholds for vesting at 30% from 6% to 8%, and for vesting at 100%
from 13% to 15%. The Board is satisfied that this increase is sufficiently challenging in light of prevailing economic conditions.
Relative TSR as a measure
The increase in weighting of relative TSR as a hurdle (to 50%) has been made to more closely align Executive and
shareholder outcomes, as noted above.
LTI structure
LTI performance period
Disclosure
STI thresholds and targets
Sign-on awards
Sign-on awards
The Board is satisfied that the three year performance period, with a further one year holding lock, is an appropriate way
to incentivise and retain Executives.
Additional detail has been provided in this report compared with previous reports in relation to the thresholds and targets
used as STI measures. See section 5.3.
Sign-on awards are an important mechanism to attract experienced Executives to the Company, as they compensate for
benefits forfeited on leaving a previous employment.
2.4. Currency
Unless otherwise indicated, the currency used in this Report is US dollars (US$) which represents Newcrest’s reporting (presentation) currency.
Executive remuneration and NED fees are paid in Australian dollars (A$) and are translated into US dollars for reporting purposes at the average rate
of A$1.00:US$0.6735 (2022: 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 9.3.
3. Remuneration Governance
Board
HRR Committee
Takes an active role in the governance and oversight of Newcrest’s remuneration policies and has overall responsibility
for ensuring that the Company’s remuneration strategy aligns with Newcrest’s short and long term business objectives
and risk profile. The Board approves the remuneration arrangements for the CEO and non-executive directors, upon
recommendation from the Human Resources and Remuneration (HRR) Committee. No Executive is involved in deciding
his or her own remuneration.
Established by the Board to review, formulate and make recommendations to the Board in relation to matters within
its Charter, including the remuneration arrangements of the CEO, Executives and the NEDs, and oversees 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 Philip Aiken AM (Chairman), Vickki McFadden, Roger Higgins and
Jane McAloon AM, who are each independent NEDs. All Directors are invited to attend HRR Committee meetings.
External Remuneration
Consultants
External remuneration consultants are on occasion engaged by the HRR Committee to provide advice on remuneration
related issues.
The Company’s External Remuneration Consultants Policy sets out protocols governing the engagement of external
remuneration consultants.
No remuneration consultant made a remuneration recommendation in relation to any of the KMP for the reporting period.
90
Directors’ Report continued
REMUNERATION REPORT continued
4. Executive Remuneration Framework
4.1. Remuneration Strategy and Guiding Principles
Our remuneration strategy is to provide market-competitive remuneration, having regard to the size and complexity of the Company, the scope of each
role, and the impact the Executive can have on Company performance. The guiding principles of our remuneration strategy are as set out below.
Strategy and Purpose
Values and culture
Shareholders
Performance
Market
Drive execution of key objectives, which
align with the Company’s strategy and
short, medium and longer term performance
objectives, and will deliver long term growth
in shareholder value and is consistent with
the Company’s risk appetite. This includes
our commitment to safety and sustainability.
Incorporate
framework and
processes that
reinforce our values
and culture.
Align interests of
Executives with those
of shareholders.
Provide appropriate
levels of “at risk”
performance pay to
encourage, recognise
and reward high
performance.
Attract and retain
talented, high
performing Executives
by reference to
comparable roles.
Executive remuneration packages are benchmarked against comparable roles in:
– ASX listed companies with market capitalisations ranked between 11 – 40;
– a customised peer group of ASX listed companies comprising largely industrial, materials, energy and utilities companies of comparable scale and
international complexity, i.e.: Woodside Energy 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
and 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, Evolution Mining Limited, Northern Star Resources Limited and Endeavour Mining Plc.
TFR is targeted at the 50th percentile for comparable roles and experience/skills, while the total remuneration package for each Executive (inclusive
of both fixed and variable remuneration) is targeted at up to the 75th percentile for comparable roles and experience/skills.
4.2. Components of the Executive Remuneration Framework
The table below outlines the remuneration components that were put in place for the 2023 financial year for all Executives.
Remuneration Type
Fixed Remuneration
Variable/At-Risk Remuneration
Component
Delivery
Composition
Total Fixed Remuneration
(TFR)
Short Term Incentive (STI)
Long Term Incentive (LTI)
Cash
Equity
Base salary plus
superannuation
contributions in line with
statutory obligations,
and any salary packaged
amounts.
50% of STI award
paid in cash after the
financial year.
50% of STI award
as shares, with one
half restricted for one
year and the other
half restricted for two
years.
Outcomes based on a combination of business
performance and personal measures.
Subject to clawback and overarching
Board discretion.
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 ROCE, comparative
cost position and relative TSR.
Subject to clawback and overarching
Board discretion.
Link with strategic
objectives
Set to attract, retain,
motivate and reward high
quality executive talent to
deliver on the Company’s
strategy.
Designed to:
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.
– 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 2023 91
4.2. Components of the Executive Remuneration Framework continued
The diagram below illustrates how the different components of Executive remuneration provided in respect of the 2023 financial year were intended to be
delivered over a four year period. However, note that it has been agreed with Newmont that, if the Newmont Transaction proceeds, some changes will be
made including in relation to vesting and release dates. Further details regarding the changes are provided in section 6.
Salary
Paid throughout year
50% cash
25% restricted shares
25% restricted shares
STI
Performance Period
(12 months)
Restriction
Restriction
Payable Oct 2023
Released Oct 2024
Released Oct 2025
Awarded as Rights
LTI
Performance Period
(3 years)
Vests as shares
Unlocked
Holding lock
Nov 2022
Nov 2025
Nov 2026
FY23
FY24
FY25
FY26
FY27
Newcrest’s mix of remuneration components, expressed as a percentage of “maximum” earning opportunity, for current Executives for the 2023 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. As above, some changes will be made to timing of awards if the Newmont Transaction proceeds. Further details regarding the
changes are provided in section 6.
Remuneration Mix as a Percentage of Maximum FY23 (%)
31.6
42.1
26.3
9.5
42.9
47.6
26.7
31.3
40.0
37.5
33.3
31.3
TFR
STI
LTI
Interim CEO, COO, CTPO
Interim CFO
CLRCO
CDO
Totals in the above graph may not add to 100% due to rounding.
As at the date they ceased as KMP: the former Managing Director and CEO (Sandeep Biswas) had a package comprising 20.8% TFR, 41.7% STI and
37.5% LTI; and the former COO – Australasia (Philip Stephenson) had a package comprising 26.3% TFR, 42.2% STI and 31.6% LTI.
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.
The table does not include sign-on grants awarded to Sherry Duhe in the 2022 financial year, some of which vested in the 2023 financial year, and does
not include transition performance awards offered to Craig Jones and Suresh Vadnagra during the 2023 financial year. See sections 4.6, and 4.7 and 11.2.
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Directors’ Report continued
REMUNERATION REPORT continued
4. Executive Remuneration Framework continued
4.3. Total Fixed Remuneration (TFR)
Description
Feature
Composition
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 for all Executives other than Craig Jones,
for whom TFR was paid in Canadian dollars during his period of relocation to Canada.
Relevant Considerations
TFR is determined on an individual basis, considering the scope of the role, the individual’s skills and expertise, individual
and group performance, market movements and competitiveness.
4.4. Short Term Incentive (STI)
4.4.1. Key features of the STI award for the 2023 financial year
Feature
Participation
Opportunity
Description
All Executives are eligible to participate.
Executives are eligible for the following STI opportunities:
Role
Interim CEO, Interim COO, and CTPO
CLRCO & CDO
Interim CFO
Target Opportunity
(as % of TFR)
Maximum Opportunity
(as % of TFR)
80%
60%
45%
160%
120%
90%
In respect of the Interim Executives, their actual FY23 STI awards were pro-rated to take into account the TFR levels in
their previous positions.
Performance Period
The performance period is the financial year preceding the payment date of the STI. For the 2023 financial year, the
performance period was 1 July 2022 to 30 June 2023.
Performance Conditions
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 Interim CEO’s personal
conditions for the period from her appointment as Interim CEO to the end of the 2023 financial year as an example.
Cultural Transformation 30%
Executive Leadership 10%
Effective Capital Allocation 20%
40%
Personal
measures
Capital Projects and Operations 40%
60%
Business
measures
Safety 15%
Sustainability 15%
Earnings 20%
Costs 25%
Free Cash Flow 25%
Newcrest Annual Report 2023 93
Feature
Description
Calculation of STI Award
to Executives
STI Amount ($) = ((40% x personal outcome) + (60% x business outcome)) x “At Target” STI% x TFR (other than for
Daniel O’Connell who continued to have business and personal measures weighted as 50% each).
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 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.
Payment, Delivery
and Deferral
For Executives, the STI is delivered in or around October 2023, following finalisation of the audited annual Company
results and the approval of all personal outcomes.
The STI is usually delivered 50% in cash and 50% in restricted shares, with half of the restricted shares to be released
12 months after the allocation date (in October 2024) and the remainder two years after the allocation date
(in October 2025).
However, in light of the Newmont Transaction, FY23 STIs will be delivered as cash rather than 50% in cash and 50%
in restricted shares.
Cessation of Employment
Except at the discretion of the Board:
– if a participant resigns or is dismissed for cause during the STI performance period, the participant will 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.
Clawback
Overriding Board Discretion
The Board retains overriding discretion to adjust the final STI outcome. This is an important measure to ensure any STI
award is appropriate in the circumstances.
94
Directors’ Report continued
REMUNERATION REPORT continued
4. Executive Remuneration Framework continued
4.4. Short Term Incentive (STI) continued
4.4.2. Performance conditions for the STI award for the 2023 financial year in detail
Business measures for the 2023 financial year
Business Measure
Weighting Reason the Performance Measure Was Adopted
Safety
TRIFR (1) (7.5%)
Scheduled Critical
Control System
Verifications (CCSVs)
(7.5%)
Sustainability
Improved maturity
level of Newcrest’s
Integrated
Sustainability
Framework relative to
FY22 baseline (10%)
Resolution of
community complaints,
concerns and
grievances (5%)
Earnings
20%
Adjusted Net
Profit/(Loss) After
Tax and Before
Significant Items
Costs
25%
AISC per ounce (2)
15%
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 a key leading indicator of safety, as measured by CCSVs.
A gateway applies to safety metrics of Executives in the event of a fatality during the 2023 financial year.
The overall weighting was reduced (from 20% in FY22) to accommodate the increase in weighting of
Sustainability.
15%
These measures are intended to determine how well the Integrated Sustainability Framework is embedded
throughout the business.
The performance measures chosen for the FY23 STI represent measurable objectives that can be contributed
to by all sites, and form key components of our overall sustainability goals.
The first metric relates to the advancement of the maturity of Newcrest’s approach to sustainability across
three key areas of the GlobeScan Sustainability Leaders Survey (core business model/strategy, sustainability
values/purpose, and stakeholder impact). Performance against this metric was assessed by a third party,
against a detailed rubric, and informed by insights from stakeholder interviews and documentation reviews.
The second measure was selected to support the global adoption of our renewed approach to the
management and resolution of community concerns, complaints and grievances (CCCGs), and is assessed
based on the percentage of CCCGs resolved within 30 days or with action plans in place.
The overall weighting of Sustainability increased (from 10% in FY22).
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.
The overall weighting reduced (from 25% in FY22) to accommodate the increase in weighting for Costs.
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.
The overall weighting of this measure increased from 20% in FY22 to 25%.
Operating Cash Flow
25%
(OCF)
This measure replaced Free Cash Flow (used for the FY22 STI). The Board’s intention in changing this
measure was to increase relevance of the metric for employees with limited control over non-sustaining or
M&A activities.
OCF 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 includes sustaining capex, sustaining production stripping and sustaining exploration but does not include
non-sustaining capex, non-sustaining production stripping, non-sustaining exploration and M&A activities.
TRIFR is the total number of recordable injuries per million hours worked. It is a lagging indicator of safety performance.
(1)
(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 2023 financial year (Operating and Financial Review).
The business measures are set by the Board. The Board assesses the Company’s performance outcomes, as it is best placed to undertake the assessment.
Newcrest Annual Report 2023 95
Personal measures for the 2023 financial year
For the 2023 financial year, STI personal measures for Executives were streamlined, resulting in fewer, more heavily weighted objectives and increased
weighting on matters relating to our culture, including organisational health and Respect@Work.
The key elements of the personal performance measures for the Interim CEO 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 for other Executives for the 2023 financial year were set by the CEO following consultation with the Board. They were
focussed on their areas of responsibility which included safety, people, production, operating performance and business improvement, project delivery,
enterprise risk management, sustainability and profitable growth. Non-financial targets were generally aligned to core values, including safety, culture,
organisational health and Respect@Work. In assessing personal performance outcomes, regard was also had for performance against key business
objectives that were triggered following the receipt of Newmont’s indicative proposal on 5 February 2023. The Board (in the case of the CEO) and the
CEO (in the case of the other Executives) assess the personal performance outcomes, as it is considered those people are best placed to undertake
the assessment.
Further detail as to the personal measures for the Interim 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 2022 financial year
The terms that applied to the 2022 financial year STI award in respect of the performance period from 1 July 2021 to 30 June 2022, were described in detail
in the 2022 Remuneration Report.
For the 2022 financial year STI award, the cash component was paid on 14 October 2022 and the restricted STI shares were allocated on 28 October
2022 for all Executives other than Craig Jones.
On 4 November 2022 Craig Jones was allocated STI shares for the 2022 financial year, after a proportion was sold to fund Canadian withholding tax.
A holding lock was applied over the shares to apply for one year as to 50%, and two years as to the other 50% (intended to be of similar effect to the
restrictions on the STI restricted shares allocated to other Executives).
4.5. Long Term Incentive (LTI)
4.5.1. Key features of the 2022 LTIs (under which Rights were granted during the 2023 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 2022 LTIs are governed by the Equity Incentive Plan Rules.
Maximum LTI Opportunity
Executives were eligible for the following 2022 LTI opportunities:
Role
Maximum Opportunity (as % of TFR)
Interim CEO, Interim COO, and CTPO
CDO
CLRCO
Interim CFO
Former CEO
Former COO – Australasia
120%
100%
80%
20%
180%
120%
In respect of the Interim Executives, their LTI grants were made in their previous roles and were calculated based on
their TFRs in those positions.
As noted in section 8.2, due to their cessation of employment, the 2022 LTI Rights granted to the Former CEO and
Former COO – Australasia lapsed in full.
Grant Date
The grant date was 16 November 2022 and Rights will vest, subject to the satisfaction of the performance conditions
and other terms of the grant, on 16 November 2025 (unless the Newmont Transaction becomes effective).
The total number of Rights issued to, and held by, each Executive is summarised in section 11.4.
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$19.51 per share).
Performance period
The 2022 LTI performance period is the three financial years commencing on 1 July 2022 and ending on 30 June 2025.
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Directors’ Report continued
REMUNERATION REPORT continued
4. Executive Remuneration Framework continued
4.5. Long Term Incentive (LTI) continued
4.5.1. Key features of the 2022 LTIs (under which Rights were granted during the 2023 financial year) continued
Feature
Description
Performance Conditions
2022 LTI Rights issued are subject to the Performance Conditions shown below:
ROCE
25%
Comparative
Cost
25%
Relative
TSR
50%
Vesting
The Performance Conditions have been set to align with the long-term goals and performance of Newcrest and the
generation of shareholder returns. Further details in relation to the Performance Conditions are detailed in section 4.5.2.
Rights are scheduled to 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.
If the Newmont Transaction proceeds it has been determined that all 2022 LTIs will vest in full after the Special Dividend
Record Date, and prior to the Scheme Record Date.
Holding lock
For Executives, shares received on the vesting and automatic exercise of Rights are subject to a 12 month holding lock.
Dividends
Clawback
If the Newmont Transaction proceeds it has been determined that all 2022 LTIs will vest and no holding lock will apply.
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:
Change of control
– 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. The remainder will lapse.
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 has broad discretion in relation to the treatment of the LTI award. A change of control event includes a
takeover bid or any other transaction, event or state of affairs that, in the Board’s opinion, is likely to result in a change in
the control of the Company.
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 lapsed and any remaining unvested Rights will lapse. All restricted shares subject to holding lock
will be released from restrictions.
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 2023 97
4.5.2. 2022 LTI performance conditions in detail
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.
In FY23 the weighting of Relative TSR has
been increased to 50% (from 33% in FY22).
The increased weighting was thought to better
align Management reward with shareholders’
experience, and encourage outperformance
of international gold miners.
Relative TSR will be measured by comparing
Newcrest’s AUD share price performance
against the S&P TSX Global Gold Index over
three years.
The performance calculations will reference
the six month period immediately prior to
the start (1 January 2022 – 30 June 2022)
and the end (1 January 2025 – 30 June 2025) of
the performance period. Assessing performance
against average prices avoids relying on
sometimes volatile spot prices.
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 2022 LTI
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 a hand-picked 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.
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.
Comparative Cost Position
The Company’s measure for the Comparative
Cost Position performance condition is the
AISC per ounce, adopted by the Company in
relation to costs reporting.
The AISC per ounce incorporates costs related
to sustaining production.
As a result of the increase in the weighting
of Relative TSR in FY23, the weighting of
Comparative Cost Position was decreased to
25% (from 33% in FY22).
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.
The vesting scale for this measure is as follows:
–
–
–
0% vests if Comparative Costs are at or
above the 50th percentile;
40% vests if Comparative Costs are less than
the 50th percentile;
100% vests if Comparative Costs are below
the 25th percentile.
Straight line vesting occurs between
these thresholds.
The Comparative Costs measure will be
assessed using peer data for the period from
1 July 2022 until 30 June 2025.
98
Directors’ Report continued
REMUNERATION REPORT continued
4. Executive Remuneration Framework continued
4.5. Long Term Incentive (LTI) continued
4.5.2. 2022 LTI performance conditions in detail continued
Component
Assessment
Reason for adoption of the Performance Measure
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.
Return on Capital Employed (ROCE)
The vesting scale for this measure is as follows:
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.
–
–
–
0% vests if ROCE is less than 8%;
30% vests if ROCE is 8%;
100% vests if ROCE is 15% or more.
Straight line vesting occurs between
these thresholds.
The required level of performance for vesting
was increased for the 2022 LTI award, when
compared to the 2021 LTI award.
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.
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.
As a result of the increase in the weighting of
Relative TSR in FY23, the weighting of ROCE
was decreased to 25% (from 33% in FY22).
Newcrest Annual Report 2023 99
4.6. Transition performance awards
In December 2022, following the announcement of the departure of Sandeep Biswas and Philip Stephenson, Craig Jones and Suresh Vadnagra were
advised that they would be offered transition performance awards as an additional performance and retention incentive during the period of leadership
change for Newcrest.
Craig Jones’ award has a maximum value of $714,000 and Suresh Vadnagra’s award has a maximum value of $630,000, each payable in cash. While each
of Craig and Suresh were advised of the expected terms of the transition performance awards in December 2022, the awards have a formal grant date of
23 February 2023. The vesting date is scheduled for 23 February 2025, with payment to occur in March 2025.
Vesting conditions include performance conditions that relate to the Executive’s key responsibilities, contribution to leadership, individual performance
rating, and continued service (other than in limited circumstances). These conditions were chosen because they incentivise the delivery of key objectives in
the Executive’s area of responsibility over the vesting period and act as a retention incentive during a period of leadership change for Newcrest. The Board
will assess performance against the relevant conditions as it is best placed to assess the Executive’s performance. Where the gateway conditions and
the performance conditions are not satisfied, the cash payments will not be made. Therefore, the minimum possible value of the transition performance
awards is zero.
Unless the Board determines otherwise, if the Executive resigns or their employment is terminated for cause, the transition performance awards will be
forfeited. In all other circumstances, the service vesting gateway will be waived and the performance conditions and other vesting gateways will be tested
based on the period between the grant date and the date of termination of employment.
4.7. Sign-on arrangements
As set out in the 2022 Remuneration Report 41,845 sign-on rights were granted to Sherry Duhe in the 2022 financial year, in compensation for benefits
forfeited on leaving her previous employer. Of these, 25,107 rights vested in the 2023 financial year, with the remaining 16,738 due to vest in February
2024. A cash sign-on payment of A$200,000 was also made to her in February 2023. Further information as to the terms of the sign-on arrangements
are set out in the 2022 Remuneration Report.
5. Remuneration Outcomes
5.1. Total Fixed Remuneration (TFR) for the 2023 financial year
Set out below is the TFR for the current Executives as at 30 June 2023, shown in Australian dollars, which is the currency in which they are paid, except for
Craig Jones, whose TFR was paid in Canadian dollars during the 2023 financial year until he was appointed as Interim COO. 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 which took effect on 1 October 2022 followed a benchmarking review. Increases averaged 2.9% across the Executives.
The increases in TFR for Sherry Duhe, Craig Jones and Daniel O’Connell in December 2022 occurred due to their change in role to interim positions. The
remuneration packages offered to the Interim CEO and Interim CFO were at a material discount to the previous full-time incumbents. Fixed remuneration
was approximately 40% lower for each role compared to the previous permanent Executive.
Executive
Sherry Duhe
Craig Jones
Daniel O’Connell (2)
Maria Sanz Perez
Seil Song
Suresh Vadnagra
(1) Craig Jones TFR translated into Australian Dollars using an exchange rate of A$1.00:C$0.9116.
(2) Daniel O’Connell was not KMP prior to his appointment as Interim CFO.
TFR A$
30 June 2023
TFR A$
1 October 2022
TFR A$
30 June 2022
1,500,000
1,020,000
650,000
840,000
805,000
900,000
1,075,000
1,050,000
900,000(1)
875,000(1)
n/a
840,000
805,000
900,000
n/a
815,000
780,000
875,000
100
Directors’ Report continued
REMUNERATION REPORT continued
5. Remuneration Outcomes continued
5.1. Total Fixed Remuneration (TFR) for the 2023 financial year continued
Set out below is the TFR for the Executives as at 30 June 2023, shown in US dollars. The amounts for 2023 have been translated using the average
exchange rate for 2023 of 0.6735. The amounts for 2022 have been converted to US dollars using the average exchange rate for 2022 of 0.7260.
The difference between the TFR for the Executives as at 30 June 2023 and as at 30 June 2022 are on account of fluctuations in the exchange rate
and the increases in TFR outlined above.
Executive
Sherry Duhe
Craig Jones
Daniel O’Connell
Maria Sanz Perez
Seil Song
Suresh Vadnagra
TFR US$
30 June 2023
TFR US$
30 June 2022
1,010,250
686,970
437,775
565,740
542,168
606,150
762,300
635,250
n/a
591,690
566,280
635,250
5.2. Newcrest’s Financial Performance for the past five financial years
The following table provides a summary of 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)
OCF (3)
EBITDA Margin
EBIT Margin
Net Debt to EBITDA (4)
ROCE
Gearing (5)
Share price at 30 June (6)
Earnings per share (7)
Basic
Underlying
Dividends (8)
Gold produced
All-in sustaining cost (9)
Average realised gold price
Measure
US$ million
US$ million
US$ million
US$ million
US$ million
US$ million
%
%
Times
%
%
A$
2023
778
778
1,605
404
447
893
45.8
26.0
0.7
9.0
11.1
2022
872
872
1,680
(868)
229
–
48.8
31.0
0.6
11.4
10.2
2021
1,164
1,164
2,302
1,104
1,125
–
53.4
38.7
(0.1)
18.5
(1.8)
26.42
20.89
25.28
US cents/share
US cents/share
US cents/share
000’s ounces
US$/oz sold
US$/oz
87.0
86.8
2,105
1,093
1,797
103.4
103.1
27.5
1,956
1,043
1,797
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
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 2023 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) OCF is 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, includes sustaining capex, sustaining production stripping and sustaining exploration but does not include non-sustaining capex, non-sustaining production stripping, non-sustaining
exploration and M&A activities. As this is a new measure for 2023 there are no comparatives.
(4) Net debt to EBITDA is calculated as net debt at the end of the reporting period divided by the rolling 12 month EBITDA.
(5) Gearing ratio is calculated as net debt at the end of the reporting period divided by net debt plus equity.
(6) Opening share price on 1 July 2018 was A$21.80.
(7) Basic EPS is calculated as net profit after tax and non-controlling interests (statutory profit) divided by the weighted average number of ordinary shares. Underlying earnings per share is
calculated as net profit after tax and non-controlling interests and before significant items (underlying profit) divided by the weighted average number of ordinary shares.
(8) Represents dividends determined in respect of the financial year.
(9) AISC metrics as per World Gold Council Guidance Note on Non-GAAP Metrics. See section 4.4.2 for further detail. Newcrest’s AISC will vary from period to period as a result of various factors
including production performance, timing of sales, the level of sustaining capital and the relative contribution of each asset.
Newcrest Annual Report 2023 101
The graphs below show Newcrest’s performance over the last five years for metrics used for multiple years to determine the business component
of STI awards, before any adjustments as a result of the exercise of Board discretion. Where no values are shown in the graphs for particular years,
they represent years where it was not a business performance measure for STI purposes.
Statutory Profit (US$m)
Underlying Profit (US$m)
1,164
1,164
872
778
647
561
750
561
872
778
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
AISC (US$ per oz sold)
Cash Flows from Operating Activities (US$m)
1,043
1,093
2,302
862
911
738
1,487
1,471
1,680
1,605
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
TRIFR
4.0
3.0
2.6
2.3
2.3
2019
2020
2021
2022
2023
102
Directors’ Report continued
REMUNERATION REPORT continued
5. Remuneration Outcomes continued
5.3. STI Outcomes for 2023 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.
Business Measures – representing 60% of the STI award
Performance Measure
Safety
Performance Outcomes
Target Weight
Threshold
Target
Maximum
Outcome
(as a % Target)
The health and safety of our employees and contractors, and that of the broader communities in which we operate, lies at the core of our company values.
During the 2023 financial year, there was a tragic incident at our Brucejack mine which sadly resulted in the fatality of an employee from our contracting
partner, Procon. This was the first fatality at Newcrest in seven years. In addition, in June 2023 a team member from one of Cadia’s contracting partners
sustained a serious injury which is currently subject to investigation by the NSW Resource Regulator.
As a result, the safety gateway has been applied for the 2023 financial year and each member of the Executive Committee received a score of zero on the
safety component of the business scorecard.
Notwithstanding that the gateway has been applied, resulting in nil vesting, performance against the safety measures is included below in order to
provide shareholders with an overview of performance over FY23.
Total Recordable Injury Frequency Rate (TRIFR)
TRIFR decreased from 4.0 in FY22 to 2.97 in FY23. This
outcome included a record low TRIFR at Cadia, Red Chris
and Brucejack.
Despite exceeding TRIFR targets, the fatality at Brucejack
in October 2022, and the life changing injury at Cadia in
June 2023, has led to the safety gateway being applied
to reduce the score to nil. The Board considers this
appropriate as nothing is more important than the safety
of our people.
Schedules Critical Control System Verification
4.49
3.29
2.19
7.5%
129%
2.97
System verifications are detailed interrogations into
the design, implementation and training of each critical
control, and can take between two hours and two days to
complete. This is a leading measure to mitigate safety risks.
7.5%
All scheduled major hazard critical controls were verified
during FY23. An additional 314 critical control system
verifications were conducted across our sites, exceeding
our target.
90%
100%
150%
184%
142%
Safety measures total
Sustainability
15%
Gateway applied
0%
In 2022 we established our Integrated Sustainability Framework. The performance measures chosen for the FY23 STI represent key measurable
objectives that all sites can contribute to, and that form key components of our overall sustainability goals.
Integrated Sustainability Framework
Specific objectives were set in relation to the advancement
of the maturity of Newcrest’s approach to sustainability
across three key areas of the GlobeScan Sustainability
Leaders Survey (core business model/strategy,
sustainability values/purpose, and stakeholder impact).
Progress from an FY22 baseline was independently
assessed, and while significant progress was made,
including through areas relating to progress to Net Zero
and development and rollout of refreshed stakeholder
engagement training, the assessed outcome was slightly
below our ambitious targets.
Threshold
Target
Maximum
10%
90%
Below target
Newcrest Annual Report 2023
103
Performance Measure
Community Response Time
This metric was selected in order to support the global
adoption of our renewed approach to the management
and resolution of community concerns, complaints
and grievances.
Significant work was completed across FY23 including
building capability of our social performance and
engagement practitioners, and the development of
consistent and streamlined processes for engagement.
While our assessed outcome against this metric was above
target, the Board exercised its discretion to reduce this
score to a target outcome.
Sustainability measures total
Financial
Performance Outcomes
Target Weight
Threshold
Target
Maximum
Outcome
(as a % Target)
5%
15%
80%
90%
90%
100%
100%
14%
The following are core measures used to assess Newcrest’s financial performance.
Newcrest’s financial performance for FY23 was impacted by lower production at Lihir and Brucejack with both operations delivering below their
production guidance ranges for the year. Lihir’s production performance was impacted by lower grade and mill throughput driven by extreme weather
events experienced during the year, with Brucejack’s production performance impacted by the temporary suspension of operations following the tragic
fatality in October 2022 together with lower grade.
As described in section 4.4.2, these STI measures are assessed net of adjustments 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 FY23, the value of
adjustments made had the impact of reducing management outcomes for all three financial metrics. While adjustments for each of the financial metrics
were unfavourable to management overall, favourable adjustments were included in relation to the impact of the temporary evacuation of Telfer due to
Cyclone Isla, and a partial adjustment in relation to extreme weather at Lihir.
NPAT (before significant items) (US$m)
NPAT (before significant items) was
15% below target for FY23.
Adjusted Operating Cash Flow (US$m)
Adjusted Operating Cash Flow was
19% below target for FY23.
All-In-Sustaining-Costs (AISC) (US$m)
AISC for was 12% higher than target for FY23.
Financial measures total
Total
552
736
920
619
769
1,099
1,429
893
1,157
1,006
855
1,129
20%
25%
25%
70%
100%
69%
69%
59%
46%
60%
104
Directors’ Report continued
REMUNERATION REPORT continued
5. Remuneration Outcomes continued
5.3. STI Outcomes for 2023 financial year continued
5.3.1. Performance against STI objectives continued
Personal Measures – representing 40% of the target STI award
Interim CEO – Sherry Duhe
On Sherry Duhe’s appointment to the Interim CEO role on 19 December 2022, the Board’s intended approach to assessing the personal
component of her STI was to review her performance against a combination of her CFO personal scorecard (for the period from 1 July
2022 to 18 December 2022) and the personal scorecard largely inherited from the previous CEO (for the period from 19 December 2022).
In light of the approaches received from Newmont from early 2023, and the impact that this had on Sherry’s responsibilities (and the
relevance of many of the objectives in the scorecards initially set), the Board has assessed her personal performance on a holistic basis.
Sherry demonstrated outstanding performance through FY23, culminating in the delivery of significant shareholder value through
successful negotiations with Newmont, leading to increased offers and a substantial premium for Newcrest shareholders. Additionally,
she led the business in achieving various operational, commercial and exploration milestones. This includes advancing Wafi-Golpu
negotiations with the Papua New Guinea government, expanding exploration targets for East Ridge at Red Chris and completing the Lihir
Phase 14A Feasibility Study, which is expected to boost gold production from a previously inaccessible high-grade ore source. Under her
leadership, the year also saw the securing of an early repayment of the gold prepay credit facility from Lundin Gold, which resulted in a
special dividend being paid to investors during the year, and completion of the Pretium integration into the Newcrest business.
Within the company, her leadership was consistently exemplary as she focused on strengthening our organisational culture and ensuring
both physical safety and psychological safety are at the core of our global workplaces. Sherry spearheaded more direct engagement
with the company’s global workforce, driving essential business and cultural priorities during uncertain times arising as a result of the
Newmont approaches. Consistent feedback from our workforce shows this approach has led to improvements in employee satisfaction,
enhanced trust, openness and empowerment across the business. Furthermore, Sherry championed the Respect@Work program, with
significant progress achieved in the first year of this substantive cultural change program. With the appointment of key roles in FY23,
the business strengthened the journey to remove sexual assault and sexual harassment from our workplaces through education and
awareness, accommodation reviews, risk and reporting assessments, process and procedure updates, and continued communication
to our workforce.
In recognition of her highly valued contribution, the Board awarded Sherry 160% in her personal STI scorecard.
In awarding a personal score of 160% of target, in addition to Sherry’s performance, the Board recognises that the workload associated
with the Interim CEO role as a result of the Newmont Transaction was significantly greater than foreshadowed at the time of appointment.
The Board recognises and thanks Sherry for her performance through this period.
160%
Other Executives
Individual measures based on initiatives and key project deliverables linked to company strategy, culture and performance.
50% to 160%
5.3.2. Reconciliation of Earnings and OCF measures for the 2023 financial year
A reconciliation of the Earnings measure outcome to statutory profit is detailed below:
Earnings Measure
Statutory profit
Add back: Significant items after tax (1)
Underlying profit
Adjust: Board agreed adjustments (2)
Earnings measure
2023
US$m
778
–
778
(159)
619
2022
US$m
872
–
872
(277)
595
There were no significant items in 2023 (2022: nil).
(1)
(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.
Newcrest Annual Report 2023 A reconciliation of the OCF measure outcome to the statutory cashflow is detailed below:
Operating Cashflow Measure
Cash flows from operating activities
Sustaining exploration (1)
Sustaining leases (1)
Sustaining production stripping (1)
Underground mine development (1)
Sustaining capital expenditure (1)
Cash flows from sustaining investing activities
Unadjusted OCF
Adjust: Board agreed adjustments (2)
OCF measure
105
2023
US$m
1,605
(18)
(44)
(128)
3
(445)
417
973
(80)
893
(1) Refer to section 6.3 of the Operating and Financial Review for details.
(2) Represents adjustments for the effect of commodity prices, foreign exchange rates and other significant items determined by the Board which are considered to be outside the control
of Management.
No comparatives have been included in the above table as the Operating Cashflow measure replaced the Free Cash Flow measure (used for the FY22 STI).
5.3.3. STI outcomes for all Executives for the 2023 financial year
The table below summarises achievement against the performance conditions and final STI outcomes for all Executives for the 2023 financial year.
The 2023 STI awards are expected to be made in October 2023 and delivered in cash with no portion deferred into restricted shares, as has been agreed
with Newmont in connection with the Newmont Transaction. Details of changes in connection with the Newmont Transaction are set out in section 6.
Executives
Sherry Duhe
Craig Jones
Daniel O’Connell
Maria Sanz Perez
Seil Song
Suresh Vadnagra
Former Executives
Sandeep Biswas
Philip Stephenson
% of STI
Target
Awarded (1)
Total STI
Awarded (2)
US$’000
% of Max STI
Opportunity
Forgone
100
90
110
74
56
90
–
–
701
467
115
251
182
436
–
–
50
55
45
63
72
55
100
100
(1)
The assessment against personal measures for the Executives (which represent 40% of the award for Executives other than Daniel O’Connell, for which it represents 50% of the award) ranged
from 25% to 80% of maximum.
(2) Amounts have been translated from Australian dollars to US dollars using the average exchange rate for the financial year.
5.4. Vesting Outcomes for 2019 LTIs
Following the completion of the performance period from 1 July 2019 to 30 June 2022, the 2019 LTI Rights vested on 22 November 2022 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
Performance Achieved
33.3%
33.3%
33.3%
20th percentile (3-yr avg)
16.6% (3-yr avg) (1)
NCM share price underperformed the S&P/TSX Global Gold
Total Return Index over the period
Percentage of
Total LTI Award
Vesting
33.3%
33.3%
0%
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
$1.233 million, representing approximately 12% of the pre-adjusted Capital Employed.
106
Directors’ Report continued
REMUNERATION REPORT continued
6. Impact of Newmont Transaction on Future Year
Remuneration Arrangements
On 15 May 2023 the Newmont Transaction was announced. Under
the Scheme Implementation Deed, it is a condition of the scheme of
arrangement that Newcrest do all things necessary to ensure that all
Newcrest equity incentives vest or lapse before the scheme record date
(so that, on implementation of the Newmont Transaction, Newmont will
hold all of the issued shares in Newcrest and no other rights over shares
will exist). This applies to all restricted shares and rights issued under the
Newcrest equity plans. Accordingly, the Board has determined, and has
agreed with Newmont (where required), to treat KMP remuneration in
future periods as summarised in this section.
If the Newmont Transaction does not proceed, further consideration will be
given to the Executive remuneration framework, including the appropriate
STI and LTI measures.
6.1. Short Term Incentives
6.1.1. FY23 STI (2023 financial year)
The STI payment will be delivered 100% in cash and will not be deferred
into equity.
6.1.2. Deferred STIs for past financial years
The remaining tranches of restricted shares allocated under the
FY21 and FY22 deferred STI plans will be released on the Effective
Date for the Newmont Transaction and the shares will be eligible for
the special dividend.
6.1.3. FY24 STI (2024 financial year)
If the Newmont Transaction proceeds, it has been agreed with Newmont
that Executive KMP are eligible to receive a STI award for the 6-month
period from 1 July 2023 to 31 December 2023. The FY24 will be assessed
against an agreed scorecard of performance measures. However,
Newmont has agreed, as a retention mechanism for employees more
generally, that the STI payment for the period 1 July 2023 to 31 December
2023 will be not less than “at target” performance (subject to behavioural
hurdles) and the award will be delivered in cash.
6.2. Long Term Incentives
6.2.1. Estimated vesting of 2020 LTI Rights in the 2024
financial year
The performance period for the 2020 LTI Rights, which is 1 July 2020
to 30 June 2023, has been completed and these Rights are scheduled
to vest on 18 November 2023. If the Newmont Transaction proceeds,
it has been determined that testing against the performance measures
and vesting of the 2020 LTI Rights will be brought forward slightly to the
Effective Date to ensure that shares allocated on vesting participate in
the Newmont Transaction. Shares held on the special dividend record
date will also be eligible to receive the special dividend.
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 2020 LTIs are the same as for the 2019 LTIs detailed in section 5.4
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 2021 Remuneration Report
that can be found in the Company’s Annual Financial Report for the 2021
financial year.
6.2.2. LTIs for past financial years
The terms that apply to the 2019 LTIs which vested in the 2023 financial
year, and the 2020 and 2021 LTIs which remain on foot, are described
in detail in the 2020, 2021 and 2022 Remuneration Reports that can be
found in the Company’s Annual Reports in respect of such years. Refer to
sections 5.4 and 11.2 for details of prior vestings of LTI awards.
In the event that the Newmont Transaction proceeds, it has been agreed
with Newmont that:
– 2019 LTIs will be released from holding lock restrictions on the earlier of
their scheduled date of release and the effective date of the Newmont
Transaction and the shares will be eligible for the special dividend;
– 2020 LTIs will vest based on performance against the relevant
performance measures (see above for further details), no holding lock
will apply and the shares will be eligible for the special dividend; and
– 2021 and 2022 LTIs will vest in full shortly prior to implementation of
the Newmont Transaction. These awards will not be eligible to receive
the special dividend.
6.2.3. 2023 LTI (2024 financial year)
In the event that the Newmont Transaction proceeds, it has been agreed
with Newmont that Newcrest will not grant a 2023 LTI.
6.3. Other changes
6.3.1. Sign-on arrangements
Sherry Duhe has 16,738 sign-on rights (granted in the 2022 financial year,
in compensation for benefits forfeited on leaving her previous employer)
that are due to vest in February 2024. If the Newmont Transaction
proceeds, the sign-on rights will vest in full shortly prior to implementation
of the Newmont Transaction. The shares allocated on vesting of the
sign-on rights will not be eligible to receive the special dividend.
6.3.2. Transition performance awards
Craig Jones and Suresh Vadnagra have been offered transition performance
awards that have a vesting date of 23 February 2025. If the Newmont
Transaction proceeds, Craig Jones and Suresh Vadnagra remain eligible to
receive their transition performance awards in accordance with the terms
of offer, including that the transition performance awards will vest/become
payable on a pro-rata basis unless the Board determines otherwise.
Newcrest Annual Report 2023 107
7. 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 2023 financial year is detailed in sections 2.2 and 11.1, 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.
Executive notice
Newcrest notice
Notice for cause
Sherry Duhe
Craig Jones
Daniel O’Connell
Maria Sanz Perez
Seil Song
Suresh Vadnagra
6 months
6 months
6 months
6 months
6 months
6 months
12 months
12 months
6 months
12 months
12 months
12 months
Immediate
Immediate
Immediate
Immediate
Immediate
Immediate
Notwithstanding the proposed treatment of incentives prior to the Newmont Transaction (described in section 6), any outstanding STI or LTI awards will vest,
lapse or are forfeited on cessation of employment, 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.
8. Executive Changes
8.1. Interim CEO, CFO and COO
Sherry Duhe (former Newcrest CFO) was appointed as the Interim CEO from 19 December 2022. Upon her appointment, Sherry’s TFR increased to
$1,500,000. Sherry’s notice period remained unchanged and her “at-target” STI remained at 80% of TFR. She was not offered any additional LTI as a result
of her interim appointment.
Daniel O’Connell (former Newcrest Group Treasurer) was appointed as the Interim CFO from 19 December 2022. On his appointment, Daniel’s TFR
increased to $650,000, and his “at-target” STI opportunity increased to 45% of his TFR. Assessment of his STI amount continued to be determined based
on 50% personal outcome and 50% business outcome. Daniel’s notice period remained unchanged and he was not offered any additional LTI as a result
of his interim appointment.
Craig Jones (former Newcrest COO – Americas) was appointed as the Interim COO from 19 December 2022. On his appointment, Craig’s TFR increased
to $1,020,000, reflecting his responsibility for both Americas and Australasia. Craig’s notice period remained unchanged and his “at-target” STI remained
at 80% of his TFR. He was not offered any additional LTI as a result of his interim appointment.
8.2. Departed Executive KMP
During the 2023 financial year, two Executives, being Sandeep Biswas and Philip Stephenson, ceased employment with the Company.
Sandeep Biswas ceased as Managing Director on 18 December 2022 and as CEO on 19 December 2022. Sandeep remained employed in an advisory
capacity during a transition period, and retired on 18 March 2023.
Philip Stephenson ceased as COO – Australasia on 15 December 2022, and as an employee on 31 December 2022.
Sandeep and Philip were each entitled to receive their statutory entitlements (including accrued annual leave) and their STIs and LTIs were treated
in accordance with Newcrest’s policy, including that:
– no FY23 STI was awarded;
– their restricted FY21 and FY22 STIs remained on foot in accordance with the original terms of grant;
– their 2022 LTI Rights lapsed in full;
– a pro rata number of their 2020 and 2021 LTI Rights (based on time served) remained on foot, subject to the applicable vesting conditions and the
original terms of grant. The remaining 2020 and 2021 LTI Rights lapsed; and
– their 2019 LTI shares remained on foot, subject to the applicable holding lock in accordance with the original terms of grant.
Other than the payment in lieu of any notice for Philip, no additional termination benefits were provided.
Seil Song ceased as CDO on 30 June 2023. The cessation of his employment with Newcrest will take effect in December 2023. Seil Song is entitled to
receive his statutory entitlements (including accrued annual leave) and his STIs and LTIs will be treated in accordance with the original terms of grant.
If the Newmont Transaction occurs prior to his cessation of employment, Seil’s incentives will be treated in the same manner as other employees
(see section 6). Seil Song will not be eligible for a FY24 STI award or a 2023 LTI grant.
108
Directors’ Report continued
REMUNERATION REPORT continued
9. Non-Executive Directors’ Remuneration
9.1. 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.
9.2. 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 9 November 2022, shareholders approved an increase in the aggregate fee pool to A$3,200,000 (US$2,155,200).
9.3. Fee Structure
In reviewing the level of fees, the Board obtains independent market data from its remuneration adviser, KPMG, primarily (but not exclusively) in relation
to ASX listed companies with market capitalisations ranked between 11–40. Base Board fees and Committee fees remained unchanged as a result of the
review conducted in November 2022.
The table below outlines the main Board and Committee fees as at 30 June 2023.
Fees (per annum) (1)
Board (2)
Audit & Risk Committee
Safety & Sustainability Committee
HRR Committee
Chairman
Member
A$’000
US$’000
A$’000
US$’000
630
55
44
44
424
37
30
30
210
28
22
22
141
19
15
15
(1) Board and Committee fees have been translated from Australian dollars to US dollars using the average exchange rate for the 2023 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.
As previously announced to the market, to provide continuity and ongoing support to the management team, Peter Tomsett had an increased involvement
in the business following the leadership changes in December 2022. Peter received additional director fees of A$128,000 during the 2023 financial year in
recognition of this increased contribution.
Vickki McFadden, Sally-Anne Layman, Jane McAloon and Philip Bainbridge received additional fees of A$20,000 in July 2023 in recognition of their
involvement in the Due Diligence Committee relating to the Newmont Transaction, of which 50% is attributable to FY23.
10. Shareholdings
10.1. Minimum Shareholding Policy
The Company has a Minimum Shareholding Requirement Policy which requires that KMP hold at least the value of Newcrest shares set out below.
The intent of the policy is to align the interests of KMP with those of our shareholders. Progress is monitored at least annually.
From FY23, the Minimum Shareholding Requirement value increased to 200% of TFR for the CEO, and to 100% of TFR for other Executives. The Minimum
Shareholding Requirement for NEDs remained as one year’s total annual fees. As at 30 June 2023, each member of KMP who has been KMP for at least
the period set out below has met the current requirement, including Seil Song and Maria Sanz Perez despite being employed for a shorter period of time.
CEO
Executives
NEDs
Minimum Shareholding Requirement
200% of TFR in shares
100% of TFR in shares
One year’s total annual fees in shares
Deadline for achieving shareholding
(from the date of appointment)
5 years
5 years
3 years
Newcrest Annual Report 2023 109
10.2. Executive Shareholdings
A summary of shareholdings of Executives, including their closely related parties, as at 30 June 2023 is set out below.
Granted as remuneration
during FY23
Executives
Sherry Duhe
Craig Jones
Daniel O’Connell
Maria Sanz Perez
Seil Song
Suresh Vadnagra
Former Executives
Sandeep Biswas
Philip Stephenson
Opening
balance (1)
0
51,427
5,461
42,826
23,446
21,196
718,684
159,410
STIs (2)
LTIs (3)
Sign-ons (4)
Net other
movements (5)
Closing
balance (6)
Value based
on VWAP (7)
A$’000
Percentage
of TFR
%
9,250
17,392
–
15,622
15,804
17,922
75,028
17,326
–
18,374
–
–
11,131
–
93,387
18,374
25,107
–
–
–
–
–
–
–
12,421
(7,747)
–
(3,360)
(9,232)
–
46,778
79,446
5,461
55,088
41,149
39,118
(66,051)
–
821,048
195,110
1,024
1,740
120
1,206
901
857
N/A
N/A
68
171
18
144
112
95
N/A
N/A
(1) Opening balance is as at 1 July 2022 for all Executives, except for Daniel O’Connell, whose opening balance is at his commencement date as Interim CFO of 19 December 2022.
(2) Remuneration granted in FY23 includes restricted shares allocated on 28 October 2022 in respect of 50% of an Executive’s STI award for the STI for the 2022 financial year. The number of
restricted shares granted was determined using the five day VWAP of shares, being A$17.53 per share, calculated over the period 7 to 13 October 2022, being the five trading days prior to the
date the 2022 cash STI payment was made. Restricted STI shares were granted subject to restrictions.
(3) Represents the shares acquired on vesting and automatic exercise of 2019 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 2023 for current Executives, and as at the date of cessation as KMP for former Executives.
(7) Based on VWAP for the period 1 July 2022 to 30 June 2023 of A$21.90.
10.3. Non-Executive Directors’ Shareholdings
A summary of shareholdings of NEDs, including their closely related parties, as at 30 June 2023 is set out below.
Non-Executive Directors
Peter Tomsett
Philip Aiken AM
Philip Bainbridge
Roger Higgins
Sally-Anne Layman
Jane McAloon AM
Vickki McFadden
Opening
balance (1)
Net other
Movements (2)
Closing
balance (3)
42,143
19,187
4,310
13,675
10,510
6,132
11,747
1,656
753
5,600
–
–
–
461
43,799
19,940
9,910
13,675
10,510
6,132
12,208
Value based
on VWAP (4)
A$’000
Percentage of
ongoing
annual fees
%
959
437
217
299
230
134
267
152
158
94
109
89
52
93(5)
(1) Opening balance is as at 1 July 2022.
(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 2023.
(4) Based on VWAP for the period 1 July 2022 to 30 June 2023 of A$21.90.
(5) Vickki McFadden has complied with Newcrest’s Minimum Shareholding Requirements Policy based on the cost of acquisition of her Newcrest shares being $289,917, which is 101% of her TFR.
Under the Policy, the value of holdings of Newcrest shares is the greater of the sum of the cost of acquisition of Newcrest shares held or the VWAP of Newcrest shares for the relevant financial
year.
10.4. Securities Dealing Policy
The Company has a Securities Dealing Policy which prohibits the use by Directors, Executives and employees of hedging and derivatives such as caps,
collars, warrants or similar products in relation to Newcrest securities, including shares acquired under the Company’s equity incentive schemes, whether
or not they are vested. The Securities Dealing Policy also prohibits entry into transactions in associated products that operate to limit the economic
risk of their security or interest holdings in the Company. Employees are not permitted to enter into margin loans in relation to Newcrest securities
at any time without prior approval from the Chairman or Company Secretary. The Securities Dealing Policy is available on the Company’s website at
https://www.newcrest.com/about-newcrest/corporate-governance.
110
Directors’ Report continued
REMUNERATION REPORT continued
11. Statutory Tables
11.1. Executive Remuneration
Short Term
Long
Term
Post-
Employ-
ment
Termi-
nation
Benefits
Share-
Based Payments
Short
Term
Incentive
US$’000
(B)
Other
Cash
Benefits
US$’000
(C)
Salary
US$’000
(A)
Other
Benefits
US$’000
(D)
Leave
US$’000
(E)
Super-
annuation
US$’000
(F)
Termi-
nation
Benefits
US$’000
(G)
LTI
Rights
US$’000
(H)
STI
Restricted
Shares
US$’000
(I)
Sign-On
Rights
US$’000
(J)
Total
US$’000
Perfor-
mance
related
%
(K)
Executives
2023
Sherry Duhe
Craig Jones
Daniel O’Connell (1)
Maria Sanz Perez
Seil Song
Suresh Vadnagra
Former Executives
Sandeep Biswas (2)
Philip Stephenson
Total
Executives
2022
856
635
224
544
521
585
1,167
286
701
467
115
251
182
436
–
–
4,818
2,152
Sandeep Biswas
1,725
Sherry Duhe
Craig Jones
Maria Sanz Perez
Seil Song
Philip Stephenson
Suresh Vadnagra
268
617
584
544
614
614
955
118
221
199
201
221
228
Total (3)
4,966
2,143
275
359
253
–
–
–
74
19
35
740
5
132
118
–
–
20
–
6
11
4
5
12
6
39
42
125
11
1
2
4
6
21
6
51
60
39
8
18
(48)
22
22
19
140
76
8
3
17
5
40
20
169
17
9
9
17
17
17
12
13
111
17
6
12
5
17
17
17
91
–
–
–
–
542
–
–
577
1,119
–
–
–
–
–
–
–
–
976
878
72
600
1,028
878
570
52
5,054
2,553
85
506
223
264
506
298
–
–
–
–
–
–
–
–
–
999
118
229
199
201
228
228
444
–
–
–
–
–
–
–
3,419
2,292
432
1,435
2,254
2,018
1,829
1,024
444
14,703
–
194
–
–
–
–
30
6,341
930
1,708
1,231
1,238
1,667
1,441
49.0
62.3
43.3
59.3
53.7
68.8
31.2
5.1
71.1
34.5
56.0
50.4
53.8
57.3
52.3
4,435
2,202
224
14,556
(1) Appointed as KMP during the 2023 financial year and therefore no prior year comparison is shown.
(2) 227,863 LTI Rights were issued to Sandeep Biswas on 2 December 2022 in accordance with shareholder approval under ASX Listing Rule 10.14. They subsequently lapsed following the
announcement of his retirement.
(3) Executive remuneration for the 2022 financial year excludes Executives who ceased being Executives in the 2022 financial year. Total remuneration for these Executives in the 2022 financial
year was US$964,000. Refer to the 2022 Annual Report for further detail.
The table above details the statutory remuneration disclosures in respect of the 2023 financial year as calculated with reference to the Corporations Act
2001 and relevant accounting standards. All Executives are compensated in Australian dollars other than Craig Jones who was paid in Canadian dollars
during his relocation to Canada. 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 0.6735 (2022: 0.7260) except where otherwise stated in
the associated footnotes below. Amounts paid in Canadian dollars have been translated to US dollars using an average rate of 0.7470.
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 2023 111
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 for further information as to the period for which each of the
Executives was KMP during the 2023 financial year. For Sandeep Biswas, this also includes payments for advisory services, up to his retirement on 18 March 2023 as set out in section 8.2.
(B) Short Term Incentive refers to cash amounts earned as STIs. For FY23, 100% will be awarded in cash and none will be deferred. For FY22, this represents 50% of the total FY22 STI awarded as
detailed in section 5.3.3. 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, sign-on arrangements and relocation assistance to Sherry Duhe and an expatriate allowance to Craig Jones. The sign-on arrangements and transition
performance awards 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 exceeding 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 outstanding notice period for Seil Song and Philip Stephenson, being approximately 52 weeks and 50 weeks of fixed pay respectively.
(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.
As detailed in section 6, on 15 May 2023 the Newmont Transaction was announced. Subject to the Scheme of Arrangement becoming effective, all unvested LTI Rights will vest in full shortly
prior to implementation of the Newmont Transaction. Newcrest Management assessed the likelihood of the Scheme of Arrangement becoming effective and has determined that it is more likely
than not that it will become effective. As such, share based payments have been calculated on the basis that the Scheme of Arrangement becomes effective and all rights vest in full shortly
prior to the implementation date (accelerated vesting), with the impact of the revision to the expense recognised in the Income Statement with a corresponding adjustment recognised in equity.
The impact to the Executives was an increase in share-based payments expense of $518,000 for Sherry Duhe, $406,000 for Craig Jones, $32,000 for Dan O’Connell, $268,000 for Maria Sanz
Perez, $238,000 for Seil Song and $406,000 for Suresh Vadnagra. The Newcrest share price on 15 May 2023 was A$28.68.
(I) Represents the 50% of the FY22 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.
(J) Represents Sign-On Rights issued to Sherry Duhe and Suresh Vadnagra, as the equity component of their sign-on grant in accordance with their ESA. 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, restricted STI shares, LTI Rights, sign-on rights and
transition performance awards.
11.2. Executives – Incentive Plan Awards – Movements during the 2023 financial year
Number of Rights
Executives
Sherry Duhe
Craig Jones
Daniel O’Connell
Maria Sanz Perez
Seil Song
Suresh Vadnagra
Former Executives
Sandeep Biswas
Philip Stephenson
Opening
balance (1)
2022
LTI Rights
granted
Other
Grants
Rights
Lapsed/
Forfeited (2)
Vested
and/or
Exercised(3,6)
Closing
balance(4,5)
87,090
91,092
9,324
47,567
69,728
63,531
66,114
55,351
–
34,441
41,257
55,351
457,962
91,092
227,863 (7)
55,351
–
–
–
–
–
–
–
–
–
(9,187)
(25,107)
(18,374)
–
–
–
–
(2,227)
(11,131)
–
–
(402,261)
(93,387)
(94,679)
(18,374)
128,097
118,882
9,324
82,008
97,627
118,882
190,177
33,390
The opening balance is as at 1 July 2022 or the date of appointment for new Executives during the year.
(1)
(2) Represents 2019 LTI Rights which lapsed or were forfeited (which were granted in the 2020 financial year). For Sandeep Biswas and Philip Stephenson, the numbers also include the number
of their 2020 and 2021 LTI Rights that lapsed upon cessation.
(3) Represents 2019 LTI Rights that vested (which were granted in the 2020 financial year).
(4) The closing balance is on 30 June 2023 or the date of cessation as KMP 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 2023, no Rights are vested and exercisable or vested and unexercisable.
(6) Sherry Duhe was granted 41,845 sign-on rights in the 2022 financial year, and 25,107 of these vested in the 2023 financial year, as detailed in section 4.7.
(7) 227,863 LTI Rights were issued to Sandeep Biswas on 2 December 2022 in accordance with shareholder approval under ASX Listing Rule 10.14. They subsequently lapsed following the
announcement of his retirement.
112
Directors’ Report continued
REMUNERATION REPORT continued
11. Statutory Tables continued
11.3. Executives – Total Value of Rights Granted and Exercised during the 2023 financial year
Executives
Sherry Duhe
Craig Jones
Daniel O’Connell
Maria Sanz Perez
Seil Song
Suresh Vadnagra
Former Executives
Sandeep Biswas
Philip Stephenson
Accounting Fair Value of 2022
LTI Rights Granted
US$’000
Value of Rights
Exercised
US$’000
(A)
605
507
–
315
378
507
2,085
507
(B)
411
230
–
–
140
–
1,171
230
The following assumptions have been applied to the table:
(A) The accounting value of the 2022 LTI Rights reflects the fair value of a Right on the grant date, being US$9.15 multiplied by the number of Rights granted during the year. This amount represents
the maximum value which will be expensed over the performance period. The minimum value is nil if the performance and/or service conditions are not met.
(B) The Rights which were exercised were 2019 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 2023 (nil exercise price).
11.4. Executives – Source of Rights Held as at 30 June 2023
Financial Year
Type
Grant Date
VWAP for grant (1)
Future financial years in which rights may vest (2)
Executives
Sherry Duhe (3)
Craig Jones
Daniel O’Connell
Maria Sanz Perez
Seil Song
Suresh Vadnagra
Former Executives
Sandeep Biswas
Philip Stephenson
FY21
FY22
2020 LTI
2021 LTI
FY22
Other
FY23
2022 LTI
18 Nov 2020
17 Nov 2021
21 Feb 2022
16 Nov 2022
A$29.21
FY24
A$25.41
A$23.90
FY24
FY24
A$19.51
FY24
Balance at
30 June 2023
–
29,095
2,434
21,907
25,672
29,095
114,786
20,539
45,245
34,436
2,864
25,660
30,698
34,436
75,391
12,851
16,738
–
–
–
–
–
–
–
66,114
55,351
4,026
34,441
41,257
55,351
–
–
128,097
118,882
9,324
82,008
97,627
118,882
190,177
33,390
(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 2020 LTI, 2021 LTI, and 2022 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) Details of the service and performance criteria used to determine the amount of compensation for each award are described in the 2020, 2021 and 2022 Remuneration Reports that can
be found in the Company’s Annual Reports for the relevant year of grant. As detailed in section 6, if the Newmont Transaction proceeds all outstanding Rights will vest in full shortly prior
to implementation of the Newmont Transaction. If the Newmont Transaction does not become effective, the Rights will remain on foot and vest according to existing vesting conditions, as
determined by the Board. These awards will not be eligible to receive the special dividend.
(3) 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 (based on a VWAP of Newcrest’s share price (US$23.90) over the five trading days immediately prior to commencement of employment on 21 February 2022). During the
year 25,107 sign-on rights vested.
Newcrest Annual Report 2023 113
11.5. Non-Executive Directors Compensation
Non-Executive Directors
Peter Tomsett
Philip Aiken AM
Philip Bainbridge
Roger Higgins
Sally-Anne Layman
Jane McAloon AM
Vickki McFadden
Total
Total (5)
Short Term
Committee
Fees (1)
Other
Fees (2)
US$’000
US$’000
Board
Fees
US$’000
Post
Employment
Super-
annuation (3)
US$’000
Total (4)
US$’000
407
330
125
149
127
34
124
135
125
135
125
136
124
135
1,157
1,054
–
13
44
48
15
4
44
48
33
36
33
29
52
56
221
234
86
–
–
–
7
–
–
–
7
–
7
–
7
–
114
–
17
17
17
4
15
4
17
17
17
18
17
17
17
17
117
94
510
360
186
201
164
42
185
200
182
189
182
182
200
208
1,609
1,382
FY
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Fees for the Audit & Risk Committee, Safety & Sustainability Committee and the HRR Committee.
(1)
(2) To provide continuity and ongoing support to the management team, Peter Tomsett had an increased involvement in the business following the leadership changes in December 2022.
Vickki McFadden, Sally-Anne Layman, Jane McAloon and Philip Bainbridge received additional fees of A$20,000 (US$14,000) in July 2023 in recognition of their involvement in the Due
Diligence Committee relating to the Newmont Transaction. Of this additional Due Diligence Committee fees, 50% is attributable to FY23.
(3) 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 Non-Executive Director’s choice. Non-Executive Directors can make additional contributions over and above those required to be paid by the Company.
(4) 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 0.6735 (2022:
0.7260).
(5) Non-Executive Director remuneration for the 2022 financial year excludes Non-Executives Directors who ceased being a Non-Executive Director in the 2022 financial year. Total remuneration
for these Non-Executives Directors in the 2022 financial year was US$165,000.
11.6. 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.
114
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 2023, 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
Glenn Carmody
Partner
11 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Newcrest Annual Report 2023 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
1 Corporate Information
2 Basis of Preparation
116
116
117
118
119
120
121
173
174
121
121
121
115
CAPITAL STRUCTURE AND FINANCIAL RISK MANAGEMENT
143
20 Capital Management and Financial Objectives
21 Net Debt
3 Critical Accounting Judgements, Estimates and Assumptions
122
22 Leases
PERFORMANCE
4 Segment Information
5
Income and Expenses
6 Net Finance Costs
7
Income Tax Expense
8 Earnings per Share (EPS)
9 Dividends
123
123
126
128
128
129
129
23 Other Financial Assets and Liabilities
24 Financial Risk Management
25 Fair Value Measurement
26 Issued Capital
27 Reserves
GROUP STRUCTURE
28 Controlled Entities
10 Notes to the Consolidated Statement of Cash Flows
130
29 Interest in Joint Operations
RESOURCE ASSETS AND LIABILITIES
11 Property, Plant and Equipment
12 Impairment of Non-Financial Assets
13 Inventories
14 Trade and Other Receivables
15 Other Assets
16 Goodwill
17 Other Intangible Assets
18 Deferred Tax
19 Provisions
131
131
134
136
137
137
138
138
139
141
30 Investment in Associates
31 Acquisition of Pretium Resources Inc.
OTHER
32 Newmont Transaction
33 Contingencies
34 New Accounting Standards and Interpretations
35 Share-Based Payments
36 Key Management Personnel
37 Auditors’ Remuneration
38 Parent Entity Information
39 Deed of Cross Guarantee
40 Events Subsequent to Reporting Date
143
144
146
147
149
156
159
160
161
161
162
163
164
167
167
167
167
167
169
170
170
171
172
116
Consolidated Income Statement
For the year ended 30 June 2023
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)
30
6(a)
6(b)
7(a)
8
8
2023
US$m
4,508
(3,282)
1,226
(76)
(138)
141
19
1,172
41
(137)
(96)
1,076
(298)
778
778
87.0
86.8
2022
US$m
4,207
(2,853)
1,354
(76)
(138)
119
45
1,304
25
(100)
(75)
1,229
(357)
872
872
103.4
103.1
Newcrest Annual Report 2023 Consolidated Statement of Comprehensive Income
For the year ended 30 June 2023
Profit after income tax
Other comprehensive income/(loss)
Items that may be reclassified subsequently to the Income Statement
Hedging
Hedge (gains)/losses transferred to the Income Statement
Hedge gains/(losses) deferred in equity
Income tax (expense)/benefit
Investments
Share of other comprehensive income/(loss) of associates
Foreign currency translation
Exchange gains/(losses) on translation of foreign operations, net of hedges of
foreign investments and tax
Items that will not be reclassified to the Income Statement
Investments
Fair value gain/(loss) of equity instruments held at fair value through
other comprehensive income (‘FVOCI’)
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income for the year
Total comprehensive income attributable to:
Owners of the parent
The above Statement should be read in conjunction with the accompanying notes.
117
2023
US$m
778
2022
US$m
872
73
(73)
–
–
(2)
(2)
(258)
(258)
–
–
(260)
518
518
518
40
123
(49)
114
–
–
(457)
(457)
46
46
(297)
575
575
575
Note
24(a)
30
25(d)
118
Consolidated Statement of Financial Position
As at 30 June 2023
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Current tax assets
Other assets
Total current assets
Non-current assets
Trade and other receivables
Inventories
Other financial assets
Property, plant and equipment
Goodwill
Other intangible assets
Deferred tax assets
Investment in associates
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Current tax liability
Other financial liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Total equity
The above Statement should be read in conjunction with the accompanying notes.
Note
2023
US$m
2022
US$m
14
13
23
15
14
13
23
11
16
17
18
30
15
22
19
23
21
22
19
18
26
27
586
254
615
60
58
80
565
238
633
141
5
43
1,653
1,625
109
1,116
351
76
976
454
12,996
12,902
686
32
50
483
45
15,868
17,521
693
45
176
37
33
984
1,935
65
511
2,314
4,825
5,809
11,712
13,764
(1,440)
(612)
11,712
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
Newcrest Annual Report 2023 Consolidated Statement of Cash Flows
For the year ended 30 June 2023
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
Dividends received
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 contingent consideration
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
– Convertible notes
– Term facility
Payment for treasury shares
Repayment of lease principal
Other financing activities
Dividends paid to members of the parent entity
Net cash provided by/(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.
119
Note
2023
US$m
2022
US$m
1,076
1,229
5(e)
6
25(b)
11
10(a)
31(c)
30
891
96
(143)
76
(19)
(35)
(107)
1,835
217
(118)
(359)
30
1,605
(961)
(206)
(143)
(7)
–
116
(13)
10
3
–
–
750
75
(62)
76
(45)
(18)
(76)
1,929
86
(91)
(244)
–
1,680
(1,181)
(213)
(120)
(12)
(1,084)
51
(7)
–
1
36
(19)
(1,201)
(2,548)
21(d)
1,659
860
21(d)
10(b)
10(b)
(1,504)
–
–
(8)
(49)
–
(477)
(379)
25
565
(4)
586
(717)
(52)
(88)
(14)
(43)
(1)
(372)
(427)
(1,295)
1,873
(13)
565
120
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2023
2023
Balance at 1 July 2022
Profit for the year
Other comprehensive income/(loss)
for the year
Total comprehensive income/(loss)
for the year
Transactions with owners in their
capacity as owners
Share-based payments
Shares purchased
Dividends
Shares issued – Dividend
reinvestment plan
Balance at 30 June 2023
Issued
Capital
US$m
13,759
–
–
–
–
(10)
–
15
FX
Translation
Reserve
US$m
Hedge
Reserve (1)
US$m
Equity
Settlements
Reserve
US$m
Other
Reserves (2)
US$m
Accumulated
Losses
US$m
(585)
–
(258)
(258)
–
–
–
–
51
–
–
–
–
–
–
–
51
151
–
–
–
16
–
–
–
167
15
–
(2)
(2)
–
–
–
–
13
(1,726)
778
–
778
–
–
(492)
–
(1,440)
13,764
(843)
(1) Includes cashflow hedge reserve and cost of hedging reserve.
(2) Includes Newcrest’s share of other comprehensive income of associates and changes in fair value of equity instruments held at fair value.
The above Statement should be read in conjunction with the accompanying notes.
2022
Balance at 1 July 2021
Profit for the year
Other comprehensive income/(loss)
for the year
Total comprehensive income/(loss)
for the year
Transactions with owners in their
capacity as owners
Share-based payments
Shares purchased
Dividends
Shares issued – Dividend
reinvestment plan
Share consideration for acquisition of
Pretium Resources Inc. (Note 31)
Shares issued – Convertible notes
Share issue costs
Transfer of fair value reserves
Issued
Capital
US$m
12,419
–
–
–
–
(14)
–
16
1,289
50
(1)
–
FX
Translation
Reserve
US$m
Hedge
Reserve (1)
US$m
(128)
–
(457)
(457)
–
–
–
–
–
–
–
–
(63)
–
114
114
–
–
–
–
–
–
–
–
Equity
Settlements
Reserve
US$m
137
–
–
–
14
–
–
–
–
–
–
–
Balance at 30 June 2022
13,759
(585)
51
151
(1) Includes cashflow hedge reserve and cost of hedging reserve.
(2) Includes Newcrest’s share of other comprehensive income of associates and changes in fair value of equity instruments held at fair value.
The above Statement should be read in conjunction with the accompanying notes.
Other
Reserves (2)
US$m
Accumulated
Losses
US$m
31
–
46
46
–
–
–
–
–
–
–
(2,272)
872
–
872
–
–
(388)
–
–
–
–
(62)
15
62
(1,726)
Total
US$m
11,665
778
(260)
518
16
(10)
(492)
15
11,712
Total
US$m
10,124
872
(297)
575
14
(14)
(388)
16
1,289
50
(1)
–
11,665
Newcrest Annual Report 2023 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2023
121
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 2023 was authorised for issue in accordance with a resolution of the Directors
on 11 August 2023.
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,
except as noted in Note 2(b).
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
The following accounting policy was effective this financial year.
Property, Plant and Equipment Amendment – Proceeds before Intended Use
The amendment to AASB 116 Property, Plant and Equipment prohibits 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 (i.e. pre-commissioning revenue). Production costs of the items sold are now measured
by applying AASB 102 Inventories. Proceeds from selling any such items, and the cost of those items, are recognised in the Income Statement.
This amendment was applied from 1 July 2022. The impact of adoption of this amendment had no impact to the Group.
(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.
122
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
2. Basis of Preparation continued
(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.
3. Critical Accounting Judgements, Estimates and Assumptions
Judgements, estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances. All judgements, estimates and assumptions made are believed to be reasonable
based on the most current set of circumstances available to Management. The resulting accounting estimates will, by definition, seldom equal the related
actual results.
The judgements, estimates and assumptions that potentially have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are found within the following notes:
– Note 11 – Exploration, evaluation and deferred feasibility expenditure
– Note 11 – Production stripping
– Note 11 – Units of production method of depreciation/amortisation
– Note 11 – Ore reserves and mineral resources
– Note 12 – Fair value of CGUs
– Note 13 – Net realisable value of ore stockpiles
– Note 18 – Recovery of deferred tax assets
– Note 19 – Mine rehabilitation provision
– Note 22 – Leases
– Note 25 – Valuation of Fruta del Norte (‘FdN’) finance facilities
– Note 25 – Valuation of power purchase agreement
– Note 31 – Business combination
– Note 35 – Share-based payments
Newcrest Annual Report 2023
123
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
– Brucejack, Canada (1)
– Red Chris JV (70% interest), Canada
– Exploration and Projects (2)
(1) Newcrest acquired the Brucejack mine as part of the acquisition of Pretium Resources Inc. during the 2022 financial year. Refer to Note 31.
(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.
It also includes Wafi-Golpu JV (50% Interest) in PNG, Namosi JV (73.03% 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.
Telfer
US$m
Brucejack
US$m
Red Chris
US$m
Total
Operations
US$m
Exploration
Corporate
& Projects (2)
US$m
& Other (3)
US$m
124
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
4. Segment Information continued
Cadia
US$m
1,120
834
13
43
(113)
1,897
1,306
Lihir
US$m
1,236
–
1
–
–
1,237
455
576
141
4
–
(49)
672
124
495
–
9
–
(11)
493
220
(234)
(338)
(100)
(148)
1,072
117
484
4,451
(882)
286
5,617
(1,402)
24
92
242
(314)
72
81
3,510
(935)
73
155
2
–
(21)
209
(5)
(54)
(59)
170
1,337
(171)
3,500
1,130
29
43
(194)
4,508
2,100
(874)
1,226
1,113
15,157
(3,704)
2023
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)
Total
Group
US$m
3,500
1,130
29
43
(194)
4,508
2,063
(891)
1,172
1,181
17,521
(5,809)
–
–
–
–
–
–
39
(17)
22
12
1,464
(1,984)
–
–
–
–
–
–
(76)
–
(76)
56
900
(121)
779
3,569
4,215
(72)
2,575
1,166
11,453
(520)
11,712
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$437 million, Havieron JV of US$223 million and Namosi JV of US$25 million.
(3) Includes investment in associates, FdN finance facilities and eliminations.
2022
Gold
Copper
Silver
Molybdenum
Treatment
and refining
deductions
Total revenue
EBITDA
Depreciation and
amortisation
EBIT (Segment
result) (1)
Capital
expenditure
Segment assets
Segment liabilities
Net assets/
(liabilities)
Cadia
US$m
1,014
806
11
3
(90)
1,744
1,229
Lihir
US$m
1,222
–
1
–
–
1,223
446
(180)
(301)
1,049
145
685
4,237
(816)
365
5,655
(1,462)
Telfer
US$m
Brucejack
US$m
Red Chris
US$m
Total
Operations
US$m
Exploration
Corporate
& Projects (2)
US$m
& Other (3)
US$m
657
138
4
–
(48)
751
203
(125)
78
64
217
(300)
226
–
3
–
(3)
226
109
(68)
41
31
3,606
(928)
75
205
3
–
(20)
263
98
(57)
41
203
1,243
(166)
3,194
1,149
22
3
(161)
4,207
2,085
(731)
1,354
1,348
14,958
(3,672)
–
–
–
–
–
–
(76)
–
(76)
55
801
(95)
–
–
–
–
–
–
45
(19)
26
14
1,600
(1,927)
Total
Group
US$m
3,194
1,149
22
3
(161)
4,207
2,054
(750)
1,304
1,417
17,359
(5,694)
3,421
4,193
(83)
2,678
1,077
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$25 million.
(3) Includes investment in associates, FdN finance facilities and eliminations.
Newcrest Annual Report 2023 125
Note
4(a)
6
2023
US$m
2022
US$m
1,172
(96)
1,076
1,304
(75)
1,229
1,801
1,622
15
3
2
1
–
7
–
19
1,822
1,648
1,555
368
288
160
149
91
67
8
–
2,686
4,508
4,767
5,672
5,159
245
25
1,500
261
155
174
110
191
143
–
25
2,559
4,207
4,541
5,644
5,178
346
25
15,868
15,734
(b) Reconciliation of EBIT (Segment Result) to Profit Before Tax
Segment Result
Net finance costs
Profit before tax
(c) Geographical Information – Revenue (1)
Bullion (2)
Australia
United Kingdom
Switzerland
United States
Canada
Concentrate (3)
Japan
Korea
China
Philippines
United States
Singapore
Switzerland
Chile
United Kingdom
Total revenue
(d) Geographical Information – Non-Current Assets (4)
Australia
Papua New Guinea
Canada
United States
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$553 million (2022: US$532 million).
(3) Concentrate sales to one customer amounted to US$855 million (2022: US$802 million) arising from concentrate sales by Cadia and Telfer.
(4) Non-Current Assets includes deferred tax assets of US$50 million (2022: US$56 million).
126
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
5. Income and Expenses
(a) Revenue
Gold – Bullion
Gold – Concentrate
Gold – Concentrate treatment and refining deductions
Total gold revenue
Copper – Concentrate
Copper – Concentrate treatment and refining deductions
Total copper revenue
Silver – Bullion
Silver – Concentrate
Silver – Concentrate treatment and refining deductions
Total silver revenue
Molybdenum – Concentrate
Molybdenum – Concentrate treatment and refining deductions
Total molybdenum revenue
Total revenue (1)
(b) Cost of Sales
Site production costs
Royalties
Selling costs
Inventory movements
Cost of sales (excluding depreciation and amortisation)
Depreciation and amortisation
Total cost of sales
(c) Corporate Administration Expenses
Corporate costs
Corporate depreciation
Share–based payments
Total corporate administration expenses
(d) Other Income/(Expenses)
Net fair value movements on concentrate receivables
Net foreign exchange gain/(loss)
Net fair value gain on Fruta del Norte finance facilities
Net fair value gain on power purchase agreement (Note 25(c))
Net insurance recoveries (2)
Gain on sale of royalty portfolio
Business acquisition and integration costs (Note 31(d))
Business development costs (3)
Other items
Total other income/(expenses)
2023
US$m
2022
US$m
1,818
1,682
(52)
3,448
1,130
(133)
997
4
25
(5)
24
43
(4)
39
1,646
1,548
(44)
3,150
1,149
(115)
1,034
2
20
(2)
20
3
–
3
4,508
4,207
2,264
120
91
(67)
2,408
874
3,282
108
17
13
138
4
7
143
5
–
–
(6)
(23)
11
141
1,915
125
82
–
2,122
731
2,853
103
19
16
138
(51)
68
62
–
65
11
(42)
–
6
119
Newcrest Annual Report 2023
(e) Depreciation and Amortisation
Property, plant and equipment
Intangible assets
Adjustments to inventory on hand or assets under construction
Total depreciation and amortisation expense
Included in:
Cost of sales depreciation
Corporate depreciation
Total depreciation and amortisation expense
(f) Employee Benefits Expense
Salaries, wages and other employment benefits
Defined contribution plan expense
Share-based payments
Redundancy expense
Total employee benefits expense
127
2023
US$m
2022
US$m
931
15
946
(55)
891
874
17
891
569
45
17
2
633
807
17
824
(74)
750
731
19
750
496
40
16
–
552
(1) Total revenue for the year comprises of revenue from contracts with customers of US$4,584 million (2022: US$4,298 million) and realised gold hedge losses of US$76 million (2022: US$91 million).
(2) 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.
(3) Business development costs relate to costs associated with the Newmont Transaction. Refer Note 32. It includes acceleration of certain share-based payments of US$4 million.
(g) 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’.
128
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
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
Total finance costs
Net finance costs
Note
25(b)
22(b)
19(b)
2023
US$m
2022
US$m
13
28
41
(103)
(5)
(13)
(16)
(137)
(96)
19
6
25
(75)
(4)
(12)
(9)
(100)
(75)
Interest income
Interest income on financial assets that are classified as fair value through profit and loss (‘FVTPL’) is accounted for on a contractual rate basis.
7. Income Tax Expense
(a) Reconciliation of Prima Facie Income Tax Expense to Income Tax Expense per the Income Statement
Accounting profit before tax
Income tax expense calculated at 30% (2022: 30%)
Recognition and de-recognition of deferred tax balances
Tax effect of profit from equity accounted investments
Impact of tax rates applicable outside of Australia
Other items
Income tax expense per the Income Statement
(b) Income Tax Expense Comprises:
Current income tax
Current income tax expense
Adjustments to current income tax of prior periods
Deferred tax (1)
Relating to origination and reversal of temporary differences
Adjustments to deferred tax of prior periods
Income tax expense per the Income Statement
(1) Refer to Note 18(a) for movements in deferred taxes.
2023
US$m
2022
US$m
1,076
323
(12)
(5)
(16)
8
(25)
298
227
(26)
201
72
25
97
298
1,229
369
1
(12)
(3)
2
(12)
357
272
(70)
202
90
65
155
357
Newcrest Annual Report 2023
8. Earnings per Share (EPS)
EPS (cents per share)
Basic EPS
Diluted EPS
Earnings used in calculating EPS
Earnings used in the calculation of basic and diluted EPS:
Profit after income tax attributable to owners of the parent
Weighted average number of shares
Share data used in the calculation of basic and diluted EPS:
Weighted average number of ordinary shares used in calculating basic EPS
Effect of dilutive securities: share rights
Adjusted weighted average number of ordinary shares used in calculating diluted EPS
129
2023
US¢
87.0
86.8
2023
US$m
2022
US¢
103.4
103.1
2022
US$m
778
872
2023
No. of shares
2022
No. of shares
893,783,801
842,968,290
2,844,704
2,420,456
896,628,505
845,388,746
Rights granted to employees as described in Note 35 have been included in the determination of diluted earnings per share to the extent they are dilutive.
9. Dividends
(a) Dividends declared and paid
The following fully franked ordinary dividends were paid during the year:
Final dividend:
Paid 29 September 2022
Paid 30 September 2021
Interim dividend:
Paid 30 March 2023
Paid 31 March 2022
Special dividend:
Paid 30 March 2023
2023
US¢ per share
2023
US$m
2022
US¢ per share
2022
US$m
20.0
–
15.0
–
20.0
55.0
179
–
134
–
179
492
–
40.0
–
7.5
–
47.5
–
327
–
61
–
388
Participation in the dividend reinvestment plan reduced the cash amount paid during 2023 to US$477 million (2022: US$372 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 2023 of US 20 cents per share, which will be fully
franked. The dividend will be paid on 18 September 2023. The total amount of the dividend is US$179 million.
Refer Note 32 for details of the Newmont Transaction and proposed special dividend.
(c) Dividend franking account balance
Franking credits at 30% as at 30 June 2023 available for subsequent financial years is US$443 million (2022: US$440 million).
130
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
10. Notes to the Consolidated Statement of Cash Flows
(a) Operating Cash Flows Arising from Changes in:
Trade and other receivables
Inventories
Trade and other payables
Provisions
Other assets and liabilities
Change in working capital
2023
US$m
2022
US$m
(15)
(101)
36
13
(40)
(107)
6
(38)
(31)
(4)
(9)
(76)
(b) Debt Assumed from Business Acquisition
In 2022, 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).
In 2022, Newcrest assumed a term facility liability of US$88 million on the acquisition of Pretium. Subsequent to the acquisition, this liability was fully
settled in cash.
Newcrest Annual Report 2023
131
RESOURCE ASSETS AND LIABILITIES
This section provides information that is relevant in understanding the composition and management of the Group’s resource assets and liabilities.
11. Property, Plant and Equipment
Exploration &
Evaluation
Expenditure
US$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
Year ended 30 June 2023
Carrying amount at 1 July 2022
1,054
2023
At 30 June 2023
Cost
Accumulated depreciation and
impairment
Additions during the year
Expenditure written-off
Depreciation
Disposal of assets
Foreign currency translation
Reclassifications/transfers (1)
Carrying amount
at 30 June 2023
1,181
(80)
1,101
143
(76)
–
–
(20)
–
404
–
404
356
56
(2)
–
–
(6)
–
1,101
404
950
–
950
947
540
–
–
–
(26)
(511)
950
913
232
9,763
9,199
22,642
(549)
364
372
206
–
(210)
–
(4)
–
(123)
109
111
52
–
(52)
–
(2)
–
(4,219)
5,544
5,710
132
–
(226)
–
(125)
53
(4,675)
4,524
4,352
247
–
(443)
(1)
(83)
452
(9,646)
12,996
12,902
1,376
(78)
(931)
(1)
(266)
(6)
364
109
5,544
4,524
12,996
(1) Total reclassifications of US$6 million relates to transfers to Other Intangible Assets (Note 17).
2022
At 30 June 2022
Cost
Accumulated depreciation and
impairment
Year ended 30 June 2022
Carrying amount at 1 July 2021
Business acquisition (Note 31)
Additions during the year
Expenditure written-off
Depreciation
Disposal of assets
Foreign currency translation
Reclassifications/transfers (1)
Carrying amount
at 30 June 2022
Exploration &
Evaluation
Expenditure
US$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
1,134
356
(80)
1,054
484
541
120
(76)
–
–
(15)
–
–
356
311
–
55
(3)
–
–
(7)
–
947
–
947
807
19
663
–
–
–
(61)
(481)
811
200
9,753
8,879
22,080
(439)
372
337
–
213
–
(174)
–
(4)
–
(89)
111
60
12
85
–
(43)
–
(3)
–
(4,043)
5,710
(4,527)
4,352
(9,178)
12,902
4,162
1,751
74
–
(194)
–
(197)
114
3,627
568
343
–
(396)
–
(145)
355
9,788
2,891
1,553
(79)
(807)
–
(432)
(12)
1,054
356
947
372
111
5,710
4,352
12,902
(1) Total reclassifications of US$12 million relates to transfers to Other Intangible Assets (Note 17).
132
11. Property, Plant and Equipment continued
Exploration, Evaluation and Deferred Feasibility
Expenditure
Exploration and Evaluation
Exploration and evaluation expenditure related to areas of interest is
capitalised and carried forward to the extent that:
(i) Rights to tenure of the area of interest are current; and
(ii) (a) Costs are expected to be recouped through successful development
and exploitation of the area of interest or alternatively by sale; or
(b) Where activities in the area of interest have not yet reached a
stage which permits a reasonable assessment of the existence
or otherwise of economically recoverable reserves, and active
and significant operations in, or in relation to, the area of interest
are continuing.
Such expenditure consists of an accumulation of acquisition costs
and direct exploration and evaluation costs incurred, together with
an appropriate portion of directly related overhead expenditure.
The carrying value of capitalised exploration and evaluation assets are
assessed for impairment when facts and circumstances suggest that
the carrying value may exceed its recoverable amount.
Deferred Feasibility
Feasibility expenditure represents costs related to the preparation and
completion of a feasibility study to enable a development decision to be
made in relation to an area of interest and are capitalised as incurred.
At the commencement of construction, all past exploration, evaluation
and deferred feasibility expenditure in respect of an area of interest that
has been capitalised is transferred to assets under construction.
Accounting Judgement, Estimates and Assumptions – Exploration,
Evaluation and Deferred Feasibility Expenditure
Judgement is required to determine whether future economic benefits
are likely, from either exploitation or sale, or whether activities have
not reached a stage that permits a reasonable assessment of the
existence of reserves. In addition to these judgements, the Group has
to make certain estimates and assumptions. The determination of a
Joint Ore Reserves Committee (‘JORC’) resource is itself an estimation
process that involves varying degrees of uncertainty depending on
how the resources are classified (i.e. measured, indicated or inferred).
The estimates directly impact when the Group capitalises exploration
and evaluation expenditure. The capitalisation policy requires
Management to make certain estimates and assumptions as to future
events and circumstances, in particular, the assessment of whether
economic quantities of reserves will be found. Any such estimates
and assumptions may change as new information becomes available.
The recoverable amount of capitalised expenditure relating to
undeveloped mining projects (projects for which the decision to mine
has not yet been approved at the required authorisation level within
the Group) can be particularly sensitive to variations in key estimates
and assumptions. If a variation in key estimates or assumptions has a
negative impact on recoverable amount it could result in a requirement
for impairment or write-down.
Assets Under Construction
This expenditure includes direct costs of construction, borrowing
costs capitalised during construction and an appropriate allocation
of attributable overheads.
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.
Notes to the Consolidated Financial StatementsFor the Year Ended 30 June 2023Newcrest Annual Report 2023 133
Capital Commitments
The Group’s capital expenditure commitments were US$264 million
at 30 June 2023 (2022: US$307 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.
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.
134
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
12. Impairment of Non-Financial Assets
(a) Impairment Testing
Impairment tests are performed when there is an indicator of impairment
or impairment reversal and performed at least annually for cash generating
units (‘CGUs’) with goodwill recognised as an asset. Newcrest conducts
a review of the key drivers of the recoverable amount of CGUs annually,
which is used as a source of information to determine whether there is an
indicator of impairment or reversal of previously recognised impairments.
Other factors, such as changes in assumptions in future commodity prices,
exchange rates, production rates, input costs and impacts of carbon price
scenarios are also monitored to assess for indications of impairment
or reversal of previously recognised impairments. Where an indicator
of impairment or impairment reversal exists, a detailed estimate of the
recoverable amount is determined.
CGUs represent a grouping of assets at the lowest level for which there
are separately identifiable cash inflows that are largely independent of the
cash inflows from other assets or groups of assets. Generally, this results
in the Group evaluating its CGUs as individual mining operations, which
is consistent with the Group’s representation of operating segments.
During the year ended 30 June 2023, the Group reviewed its future gold and
copper price estimates, exchange rates and discount rate assumptions.
During the year there were indicators of impairment at Lihir and indicators
of impairment reversal at Telfer. Consequently, a detailed estimate of
the recoverable amounts of both CGUs was undertaken. A range
of valuation outcomes were assessed having regard to scenarios and
sensitivity analysis conducted on a number of assumptions. As a result of
this analysis, it was concluded that no impairment was required for Lihir
and no impairment reversal was required for Telfer as at 30 June 2023.
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 2023 and it was concluded no
impairment was required.
As a result of the Brucejack acquisition (refer Note 31) in 2022, 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 2023 and it was concluded
no impairment was required.
The Scheme Implementation Deed (‘SID’) entered with Newmont on
15 May 2023 to acquire 100% of Newcrest’s issued shares (refer Note 32)
represented a premium of 30% to book value based on closing prices at
30 June 2023. Due to this, there was an indicator of impairment reversal at
the enterprise level. However, as the SID did not ascribe the consideration
to specific CGUs, this did not impact on the Group’s assessment on whether
there was an indicator of impairment reversal for Lihir or Telfer.
(b) Basis of Impairment and Impairment Reversal
Calculations
An impairment loss is recognised when a CGU’s carrying amount exceeds
its recoverable amount. The recoverable amount of each CGU has been
estimated on the basis of fair value less costs of disposal (‘Fair Value’). The
costs of disposal have been estimated based on prevailing market conditions.
For CGUs that have previously recognised an impairment loss, an
impairment reversal is recognised for non-current assets (other than
goodwill) when the Fair Value indicates that the previously recognised
impairment has been reversed. Such a reversal is limited to the lesser
of the amount that would not cause the carrying amount to exceed
its recoverable amount or the value that would have been determined
(net of depreciation) had no impairment loss been recognised.
Fair Value is estimated based on discounted cash flows using
market-based commodity price and exchange rate assumptions, estimated
quantities of recoverable minerals, production levels, operating costs
and capital requirements, based on the CGU’s latest life of mine (‘LOM’)
plans. For business planning, including new acquisitions and key capital
expenditures:
– Carbon price scenarios are included in sensitivity analysis at $50 per
tonne of CO2-e, and at $100 a tonne of CO2-e for jurisdictions where
there is no regulated carbon price (these shadow carbon prices
enable Newcrest to simplistically scenario test the potential impact on
investments);
– Telfer includes the estimated cost associated with carbon emissions
under the Australian Federal Government Safeguard Mechanism; and
– Red Chris and Brucejack include the estimated cost associated with
British Columbia’s Carbon Tax.
In certain cases, where multiple investment options and economic input
ranges exist, Fair Value may be determined from a combination of two
or more scenarios that are weighted to provide a single Fair Value that is
determined to be the most indicative. When plans and scenarios used to
estimate Fair Value do not fully utilise the existing mineral resource for a
CGU, and options exist for the future extraction and processing of all or
part of those resources, an estimate of the value of unmined resources,
in addition to an estimate of value of exploration potential, is included in
the estimation of Fair Value.
The Fair Value estimates are considered to be level 3 fair value
measurements (as defined by accounting standards, refer Note 25(a)) as
they are derived from valuation techniques that include inputs that are not
based on observable market data. The Group considers the inputs and the
valuation approach to be consistent with the approach taken by market
participants.
Estimates of quantities of recoverable minerals, production levels,
operating costs and capital requirements are sourced from the Group’s
planning and budgeting process, including LOM plans, latest short-term
forecasts and CGU-specific studies.
(c) Key Judgements, Estimates and Assumptions
Accounting Estimates and Assumptions – Fair Value of CGUs
Significant judgements, estimates and assumptions are required
in determining estimates of Fair Value. This is particularly so in the
assessment of long life assets. It should be noted that the CGU Fair
Values are subject to variability in key assumptions including, but not
limited to, gold and copper prices, exchange rates, discount rates,
production profiles, 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.
Newcrest Annual Report 2023
135
The table below summarises the key assumptions used in the carrying value assessments as at 30 June 2023, and for comparison also provides
the equivalent assumptions used in 2022:
As at 30 June 2023
As at 30 June 2022
2024
2025
2026
2027
Long term
(2028+)
2023
2024
2025
2026
Long term
(2027+)
Assumptions for
financial year
Gold
(US$ per ounce)
$1,850
$1,800
$1,700
$1,600
$1,500
$1,750
$1,650
$1,550
$1,550
$1,500
Copper
(US$ per pound)
$3.90
$3.90
$3.80
$3.70
$3.50
$3.70
$3.60
$3.50
$3.50
$3.50
AUD:USD
exchange rate
CAD:USD
exchange rate
USD:PGK
exchange rate
$0.71
$0.72
$0.74
$0.74
$0.75
$0.73
$0.75
$0.75
$0.75
$0.75
$0.76
$0.78
$0.78
$0.78
$0.77
$0.80
$0.80
$0.80
$0.80
$0.80
K3.52
K3.52
K3.52
K3.52
K3.52
K3.52
K3.52
K3.52
K3.52
K3.52
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 2023. These changes were to align with
observable market data, taking into account spot prices during the 2023 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 2024 to 2027 financial years have decreased from 2022, reflecting spot prices during the 2023 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 decreased its CAD:USD exchange rate estimates for all future periods, reflecting spot prices during the 2023 financial year and Newcrest’s
analysis of observable market forecasts for future periods.
USD:PGK exchange rate
Newcrest has maintained its USD:PGK exchange rate estimates for all future periods, reflecting spot prices during the 2023 financial year and Newcrest’s
analysis of observable market forecasts for future periods.
Discount rate
In determining the Fair Value of CGUs, the future cash flows were discounted using rates based on the Group’s estimated real after tax weighted average
cost of capital (‘WACC’) for each functional currency used in the Group, with an additional premium applied having regard to the geographic location of,
and specific risks associated with the CGU.
CGU
Cadia, Telfer
Lihir
Red Chris, Brucejack
Functional
Currency
AUD
USD
CAD
2023
4.50%
6.50%
4.50%
2022
4.50%
6.00%
4.50%
The Group uses a capital asset pricing model to determine its estimated real after tax WACC. Newcrest’s discount rate for Lihir was updated to 6.50%
at 30 June 2023, predominantly driven by an increase in US government bond rates. Newcrest’s discount rate for other CGUs are unchanged from those
applied at 30 June 2022.
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.
136
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
12. Impairment of Non-Financial Assets continued
(d) Sensitivity Analysis
Impairments have previously been recognised for the Lihir CGU in 2013 and 2014. Following the review of Lihir’s recoverable amount as at 30 June 2023,
and in recognising no requirement for asset impairment or impairment reversal, the Group has determined that the Lihir carrying amount as at 30 June
2023 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 2023, and in recognising no requirement for asset impairment or impairment reversal,
the Group has determined that the Telfer carrying amount as at 30 June 2023 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).
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 2023:
$ 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
$0.10 increase/decrease in USD:PGK rate
5% increase/decrease in operating costs from that assumed
Lihir
US$
910
n/a
105
290
n/a
100
355
Telfer
A$
75
5
minor
90
n/a
n/a
60
Red Chris
C$
Brucejack
C$
165
115
70
n/a
395
n/a
115
305
n/a
35
n/a
320
n/a
85
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.
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)
(1) Total inventories include inventories held at net realisable value of US$14 million (2022: US$15 million).
2023
US$m
2022
US$m
79
48
78
410
615
1,116
1,116
119
35
96
383
633
976
976
Newcrest Annual Report 2023
137
Ore stockpiles, gold in circuit, bullion and concentrate are physically measured or estimated and valued at the lower of cost and net realisable value. Cost
represents the weighted average cost and includes direct costs and an appropriate portion of fixed and variable production overhead expenditure, including
depreciation and amortisation, incurred in converting materials into finished goods. Net realisable value is the estimated selling price in the ordinary course
of business, less estimated costs of completion and estimated costs necessary to make the sale.
Ore stockpiles which are not scheduled to be processed in the twelve months after the reporting date are classified as non-current inventory. The Group
believes the processing of these stockpiles will have a future economic benefit to the Group and accordingly values these stockpiles at the lower of cost
and net realisable value.
Materials and supplies are valued at the lower of cost and net realisable value. Any allowance for obsolescence is determined by reference to stock
items identified.
Accounting Judgement and Estimate – Net Realisable Value of Ore Stockpiles
The computation of net realisable value for ore stockpiles involves significant judgements and estimates in relation to timing and cost of processing,
commodity prices, foreign exchange rates, recoveries and the timing of sale of the bullion and concentrate produced. A change in any of these
assumptions will alter the estimated net realisable value and may therefore impact the carrying value of ore stockpiles.
14. Trade and Other Receivables
Current
Metal in concentrate receivables
GST receivable
Receivable from joint venture partners (1)
Other receivables
Total current receivables
Non-Current
Receivable from joint venture partners (1)
Other receivables
Total non–current receivables
2023
US$m
2022
US$m
143
37
27
47
254
79
30
109
72
92
26
48
238
76
–
76
(1) Represents right to reimbursement from the Red Chris joint venture partner for its share of Red Chris’ liabilities and a receivable from the Havieron joint venture partner.
Metal in concentrate receivables are initially and subsequently measured at fair value and are generally expected to settle within one to four months.
Fair value movements are recognised in the Income Statement and presented as part of ‘Other Income/Expenses’.
GST and other receivables are initially measured at fair value then subsequently at amortised cost, less an allowance for doubtful debts. GST and other
current receivables are expected to settle within one to twelve months.
15. Other Assets
Current
Prepayments and other
Total current other assets
Non-Current
Prepayments and other
Non-current tax assets
Total non–current other assets
2023
US$m
2022
US$m
80
80
2
43
45
43
43
3
39
42
138
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
16. Goodwill
Opening balance
Business acquisition (Note 31)
Foreign currency translation
Closing balance
Goodwill is attributable to the following CGUs:
– Red Chris
– Brucejack
2023
US$m
2022
US$m
704
–
(18)
686
17
669
686
19
690
(5)
704
18
686
704
Goodwill is measured at cost and is not amortised. It is tested annually for impairment (refer Note 12).
Goodwill arose upon the acquisition of Red Chris in 2020 and Brucejack in 2022. It reflected the requirement to record deferred tax balances for the difference
between the assigned values and the tax bases of assets acquired and liabilities assumed in those business acquisitions.
17. Other Intangible Assets
Information Systems Development
Cost
Accumulated amortisation and impairment
2023
US$m
240
(208)
32
2022
US$m
237
(200)
37
Costs incurred in developing information technology systems and acquiring software are capitalised as intangible assets. Amortisation is calculated
on a straight line basis over the useful life, ranging from three to seven years.
Newcrest Annual Report 2023
139
18. Deferred Tax
(a) Movement in Deferred Taxes
2023
Deferred tax relates to the following:
– Revenue losses recognised
– Property, plant and equipment
– Provisions
– Other
Net deferred taxes
Reflected in the statement of financial position as
follows:
Deferred tax assets
Deferred tax liabilities
Net deferred taxes
2022
Deferred tax relates to the following:
– Revenue losses recognised
– Property, plant and equipment
– Provisions
– Other
Net deferred taxes
Reflected in the statement of financial position
as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred taxes
Opening
Balance
at 1 July
US$m
Acquisi-
tions
US$m
(Charged)/
credited
to income
US$m
(Charged)/
credited
to equity
US$m
Trans-
lation
US$m
Closing
Balance
at 30 June
US$m
142
(2,270)
55
(139)
(2,212)
–
–
–
–
–
54
(1,372)
54
(46)
(1,310)
–
(791)
–
(33)
(824)
18
(59)
2
(40)
(79)
94
(147)
4
(12)
(61)
–
–
–
–
–
–
–
–
(49)
(49)
(4)
31
(1)
1
27
(6)
40
(3)
1
32
156
(2,298)
56
(178)
(2,264)
50
(2,314)
(2,264)
142
(2,270)
55
(139)
(2,212)
56
(2,268)
(2,212)
140
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
18. Deferred Tax continued
(b) Unrecognised Deferred Tax Assets
Deferred tax assets have not been recognised in respect of:
– capital losses with a tax effect of US$101 million (2022: US$124 million);
and
– revenue losses and temporary differences with a tax effect
of US$61 million (2022: US$73 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.
Deferred Income Tax
Deferred tax is accounted for using the balance sheet liability method.
Temporary differences are differences between the tax base of an asset
or liability and its carrying amount in the statement of financial position.
The tax base of an asset or liability is the amount attributed to that asset
or liability for tax purposes.
Deferred tax liabilities are recognised for taxable temporary differences.
Deferred tax assets are recognised for deductible temporary differences,
carry-forward of unused tax credits and unused tax losses to the extent
that it is probable that taxable profit will be available against which the
deductible temporary differences and the carry-forward of unused tax
credits and unused tax losses can be utilised.
Deferred tax assets and liabilities are not recognised if the temporary
differences giving rise to them:
– Arise from the initial recognition of an asset or liability in a transaction
that is not a business combination and that, at the time of the
transaction, affects neither the accounting profit nor taxable profit
or loss.
– Are associated with investments in subsidiaries, associates or interests
in joint ventures, and the timing of the reversal of the temporary difference
can be controlled and it is probable that the temporary difference will
not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting
date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred income
tax asset to be utilised. Unrecognised deferred tax assets are reassessed
at each reporting date and are recognised to the extent that it has
become probable that future taxable profit will allow the deferred tax
asset to be recovered.
Deferred tax assets and liabilities are measured based on the expected
manner of recovery of the carrying value of an asset or liability. Deferred
tax assets and liabilities are measured at the tax rates that are expected to
apply to the year when the asset is realised, or the liability is settled, based
on tax rates (and tax laws) that have been enacted or substantively enacted
at the reporting date.
Current and deferred taxes attributable to amounts recognised directly
in equity are also recognised directly in equity.
Accounting Judgements, Estimates and Assumptions – Recovery of
Deferred Tax Assets
Judgement is required to determine whether deferred tax assets are
recognised in the statement of financial position. Deferred tax assets,
including those arising from un-utilised tax losses, require Management
to assess the likelihood that the Group will generate sufficient taxable
earnings in future periods in order to recognise and utilise those deferred
tax assets. Judgement is also required in respect of the expected manner
of recovery of the value of an asset or liability (which will then impact the
quantum of the deferred tax assets or deferred tax liabilities recognised)
and the application of existing tax laws in each jurisdiction.
Estimates of future taxable income are based on forecast cash flows
from operations and existing tax laws in each jurisdiction. These
assessments require the use of estimates and assumptions such as
exchange rates, commodity prices and operating performance over the
life of the assets. To the extent that cash flows and taxable income differ
significantly from estimates, the ability of the Group to realise the net
deferred tax assets reported at the reporting date could be impacted.
Additionally, future changes in tax laws in the jurisdictions in which
the Group operates could limit the ability of the Group to obtain tax
deductions and recover/utilise deferred tax assets in future periods.
Newcrest Annual Report 2023
19. Provisions
Current
Employee benefits
Mine rehabilitation
Other
Total current provisions
Non-Current
Employee benefits
Mine rehabilitation
Total non-current provisions
141
Note
2023
US$m
2022
US$m
(a)
(b)
(c)
(a)
(b)
152
7
17
176
13
498
511
143
7
16
166
9
482
491
Provisions (other than those relating to employee benefits) are recognised when the Group has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be
made of the amount of the obligation.
(a) Employee Benefits
Liabilities for wages and salaries, annual leave and any other employee benefits are measured at the amounts expected to be paid when the liabilities
are settled.
Amounts expected to settle within twelve months are recognised in ‘Current Provisions’ (for annual leave and salary at risk) and ‘Trade and Other Payables’
(for all other employee benefits) in respect of employees’ services up to the reporting date. Costs incurred in relation to non-accumulating sick leave are
recognised when leave is taken and are measured at the rates paid or payable.
The liability for long service leave and other long-term benefits is measured at the present value of the estimated future cash outflows resulting from
employees’ services provided up to the reporting date.
Long-term benefits not expected to be settled within twelve months are discounted using the rates attaching to high quality corporate bonds at the
reporting date, which most closely match the terms of maturity of the related liability.
(b) Mine Rehabilitation
The Group records the present value of the estimated cost of legal and constructive obligations to rehabilitate locations where activities have occurred
which have led to a future obligation to make good. The nature of rehabilitation activities includes dismantling and removing structures, rehabilitating
mine sites, dismantling operating facilities, closure of tailings and waste sites and restoration, reclamation and revegetation of affected areas.
Typically, the obligation arises when the asset is installed or the ground/environment is disturbed at the mining location. When the liability is initially
recorded, the present value of the estimated cost is capitalised as part of the carrying amount of the related mining assets. Over time, the discounted
liability is increased for the change in the present value based on a discount rate that reflects current market assessments. Additional disturbances or
changes in rehabilitation costs will be recognised as additions or changes to the corresponding asset and rehabilitation liability when incurred. Although
the ultimate cost to be incurred is uncertain, the Group has estimated its costs based on feasibility and engineering studies using current restoration
standards and techniques.
142
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
19. Provisions continued
(b) Mine Rehabilitation continued
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 31)
Movements in economic assumptions and timing of cash flows
Change in cost estimates (1)
Paid/utilised during the year
Unwinding of discount (Note 6(b))
Foreign currency translation
Closing balance
Split between:
Current
Non-current
2023
US$m
489
–
(37)
54
(6)
16
(11)
505
7
498
505
2022
US$m
561
27
(94)
20
(5)
9
(29)
489
7
482
489
(1) The change for 2023 primarily relates to an increase in estimated closure costs at Cadia, Lihir and Brucejack, following an update to their respective mine closure plans. 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.
(c) Other Provisions
Other provisions comprise of community obligations and other miscellaneous items.
Newcrest Annual Report 2023
143
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$1.5 billion, with approximately one-third of that amount in the form of cash.
At 30 June, the Group’s position in relation to these metrics were:
Metric
Credit rating (S&P/Moody’s)
Leverage ratio (Net debt to EBITDA)
Gearing ratio
Cash and committed undrawn facilities (US$)
Policy ‘looks to’ be
Investment grade
Less than 2.0 times
Below 25%
At least $1.5bn, of which
~ 1/3 is in the form of cash
Detail of the calculation of the capital management performance ratios is provided below:
Leverage Ratio
Net debt (Note 21)
EBITDA (Note 4)
Leverage ratio
2023
2022
BBB/Baa2
BBB/Baa2
0.7
11.1 %
0.6
10.2%
$2.29bn
($586m cash)
$2.42bn
($565m cash)
2023
US$m
1,459
2,063
2022
US$m
1,325
2,054
0.7 times
0.6 times
Leverage Ratio is calculated as net cash or net debt at the end of the reporting period divided by the trailing 12 month EBITDA. Refer to Note 4, Segment
Information, for the definition of EBITDA.
Gearing Ratio
Net debt (Note 21)
Equity
Total capital (Net debt/(cash) and equity)
Gearing ratio
2023
US$m
1,459
11,712
13,171
11.1%
2022
US$m
1,325
11,665
12,990
10.2%
Gearing ratio is calculated as net cash or net debt at the end of the reporting period divided by net cash or net debt plus equity.
144
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
21. Net Debt
Newcrest obtains access to funds from financial institutions and debt investors in the form of committed revolving facilities and corporate bonds.
As at 30 June 2023, all of Newcrest’s borrowings were unsecured.
Borrowings are initially recognised at fair value and subsequently at amortised cost. Borrowings are net of transaction costs incurred. Borrowings are
classified as non-current liabilities where Newcrest has an unconditional right to defer settlement or is not due to be settled for at least 12 months from
the year end.
Cash and cash equivalents comprise cash at bank and short-term deposits.
Net Debt
Corporate bonds
Bilateral bank debt
Less: capitalised transaction costs on facilities
Total non-current borrowings
Total borrowings
Lease liabilities (current)
Lease liabilities (non-current)
Total lease liabilities
Total Debt
Cash and cash equivalents
Net debt
Note
(a)
(b)
(d)
2023
US$m
1,650
298
(13)
1,935
1,935
45
65
110
2,045
(586)
1,459
2022
US$m
1,650
143
(14)
1,779
1,779
47
64
111
1,890
(565)
1,325
(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$1,150 million in US dollar Notes. All Notes were issued in accordance with Rule 144A and
Regulation S of the Securities Act of the United States. The Notes consist of:
Maturity
May 2030
November 2041
May 2050
Term
(years)
10
30
30
Coupon
Rate
3.25%
5.75%
4.20%
2023
US$m
650
500
500
1,650
2022
US$m
650
500
500
1,650
(b) Bilateral Bank Debt
As at 30 June 2023, the Group had bilateral bank debt facilities of US$2,000 million (2022: US$2,000 million) with 13 banks (2022: 13 banks). These are
committed unsecured revolving facilities, individually negotiated and documented with each bank but with similar terms and conditions.
The facilities are on normal terms and conditions and include certain financial covenants. Up to 30 June 2023, interest is based on LIBOR plus a margin,
which varies amongst the lenders. Due to the LIBOR reference rate ceasing on 30 June 2023, interest will be based on USD Term Secured Overnight
Financing Rate, plus a credit spread and margin from 1 July 2023.
The maturity date profile of these facilities is shown in the table below:
Facility Maturity (financial year ending)
June 2024
June 2026
2023
US$m
1,077
923
2,000
2022
US$m
1,077
923
2,000
Newcrest Annual Report 2023
(c) Financing Facilities
The Group has access to the following unsecured financing facilities at the end of the financial year.
2023
Corporate bonds
Bilateral bank debt facilities
2022
Corporate bonds
Bilateral bank debt facilities
(d) Movement in Debt
Movement in total debt during the year was as follows:
Debt
Opening balance
Movements:
Cash movements:
Drawdown of bilateral bank debt facilities
Repayment of bilateral bank debt facilities
Payment of lease principal
Repayment – Convertible notes
Repayment – Term facility
Total cash movements
Non-cash movements
Business acquisition – Convertible notes
Business acquisition – Term facility
Business acquisition – Lease liabilities
Repayment of Convertible notes – non-cash (1)
Other non-cash movements (2)
Total non-cash movements
Net movement
Closing balance
145
Facility
Utilised
US$m
Facility
Unutilised
US$m
Facility
Limit
US$m
1,650
298
1,948
1,650
143
1,793
Note
31
31
31
10(b)
–
1,702
1,702
–
1,857
1,857
2023
US$m
1,890
1,659
(1,504)
(49)
–
–
106
–
–
–
–
49
49
155
1,650
2,000
3,650
1,650
2,000
3,650
2022
US$m
1,697
860
(717)
(43)
(52)
(88)
(40)
102
88
11
(50)
82
233
193
2,045
1,890
(1) Represents issuance of Newcrest’s ordinary shares for settlement of Pretium’s convertible notes during the prior 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.
146
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
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 31)
Lease payments
Interest accretion
Foreign currency translation
Net movement
Closing balance
Split between:
Current
Non-current
2023
US$m
2022
US$m
111
28
25
–
(58)
5
(1)
(1)
110
45
65
110
62
66
20
11
(49)
4
(3)
49
111
47
64
111
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.
Newcrest Annual Report 2023
147
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.
(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$41 million (2022: US$20 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 (2022: US$16 million)
of productivity-based lease payments that were not required to be included in the measurement of the lease liability.
Accounting Judgement and Estimate – Leases
Judgement is required when assessing whether a contract is or contains a lease. In exercising this judgement, the Group refers to the rights conferred
to it in the contract, such as whether it conveys the right to control, or the right to direct the use of an identified asset.
Judgement is also required in determining the lease term, in particular for service contracts that contain contractor provided equipment leases. The
Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is
reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
23. Other Financial Assets and Liabilities
Other Financial Assets/(Liabilities)
Fuel forward contracts
FdN finance facilities
Power purchase agreement
Total other financial assets – current
FdN finance facilities
Power purchase agreement
Total other financial assets – non-current
Telfer AUD gold hedges
Fuel forward contracts
Total other financial liabilities – current
Note
2023
US$m
2022
US$m
(b)
(c)
(b)
(c)
–
55
5
60
245
106
351
(24)
(9)
(33)
31
110
–
141
345
109
454
(68)
–
(68)
148
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
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.
(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%.
In January 2023, Newcrest received early repayment of the GPCA from
Lundin Gold Inc. representing the remaining ten quarterly payments from
March 2023. The GPCA facility was subsequently terminated.
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.
Newcrest Annual Report 2023
149
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.
(a) Commodity and Other Price Risks
(i) Gold and copper price
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, retail electricity arrangements, credit risk and
counterparty/construction risk.
Detail on the fair value measurement process is provided in Note 25(c).
24. Financial Risk Management
Newcrest is exposed to a number of financial risks, by virtue of the industry
and geographies in which it operates and the nature of the financial
instruments it holds. The key risks that could adversely affect Newcrest’s
financial assets, liabilities or future cash flows are:
a) Commodity and other price risks
b) Foreign currency risk
c) Liquidity risk
d) Interest rate risk
e) Credit risk
Further detail of each of these risks is provided below, including
Management’s strategies to manage each risk. These strategies are
executed subject to Board approved policies and procedures and
administered by Group Treasury.
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 2023, 199,000 gold ounces and 46,000 copper tonnes
were subject to QP adjustment (2022: 236,000 gold ounces and
48,000 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 very sensitive to the realised Australian
Dollar gold price.
Having regard to the spot and forward prices at the time, hedging
instruments in the form of Australian dollar (AUD) 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. These Australian dollar forward contracts matured by
the end of 2023.
In November 2022, Newcrest hedged a portion of Telfer’s future planned
production to June 2024, in the form of Australian dollar gold zero cost
collar contracts, to secure margins and support investment in cutbacks
and mine development. Zero cost collar contracts consist of a call (sold
by Newcrest) at the collar price cap and a put (bought by Newcrest)
at the collar price floor.
150
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
24. Financial Risk Management continued
(a) Commodity and Other Price Risks continued
(i) Gold and copper price continued
The Telfer AUD gold hedges have been designated as 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 2023, the Group is holding Australian dollar gold zero cost collar contracts with the following maturity:
Gold AUD zero cost collar contracts maturing:
Less than 12 months
Total
The Group previously held Australian dollar forward contracts with the following maturity:
Quantity
(ounces)
(‘000s)
309
Collar
Price
Floor
A$
2,500
Gold AUD forward contracts maturing:
Less than 12 months
Total
2023
Weighted
Average
Price
A$
Quantity
(ounces)
(‘000s)
–
–
Fair Value
US$m
–
–
Quantity
(ounces)
(‘000s)
138
1,942
2023
Collar
Price Cap
A$
2,886
2022
Weighted
Average
Price
A$
Fair Value
US$m
(24)
(24)
Fair Value
US$m
(68)
(68)
These contracts are measured at fair value with the effective portion of fair value movements being recognised in OCI and accumulated in the ‘Hedge
Reserve’ in equity. There was no hedge ineffectiveness recognised in the Income Statement during the year (2022: nil).
(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
2023
Quantity
(‘000s)
Weighted
Average Price
US$
426
177
102
442
Fair Value
US$m
Quantity
(‘000s)
2022
Weighted
Average Price
US$
(5)
(4)
(9)
288
156
90
455
Fair Value
US$m
13
18
31
These fuel forward contracts are measured at fair value with the effective portion of fair value movements being recognised in OCI and accumulated
in the ‘Hedge Reserve’ in equity. There was no hedge ineffectiveness recognised in the Income Statement during the year (2022: nil).
The Group’s input costs are exposed to price fluctuation in electricity prices. The Group entered into a power purchase agreement with respect to the
Cadia mine in 2021. Refer to Note 23(c) for further details.
Newcrest Annual Report 2023
(iii) Financial impacts of hedges
The impact of hedged items designated in hedging relationships on the Income Statement and OCI, is as follows:
Cash flow hedges
Telfer gold sales
Diesel
Heavy fuel oil
Total
(iv) Sensitivity analysis
Line item in the Income Statement
Revenue – Total gold revenue
Cost of sales – Site production costs
Cost of sales – Site production costs
151
Gain/(loss) reclassified from
OCI to Income Statement
2023
US$m
2022
US$m
(76)
8
(5)
(73)
(91)
20
31
(40)
The following table summarises the sensitivity of financial assets and financial liabilities held at the reporting date to movement in the gold and copper
prices with all other variables held constant. The movements for gold and copper of 15% (2022: 15%) are based on reasonably possible changes, over
a financial year, using an observed range of actual historical rates for the preceding five year period.
Post-tax gain/(loss)
Gold
Gold +15%
Gold -15%
Copper
Copper +15%
Copper -15%
Impact on Profit (1)
Higher/(Lower)
Impact on Equity (2)
Higher/(Lower)
2023
US$m
2022
US$m
2023
US$m
2022
US$m
40
(40)
40
(40)
45
(45)
41
(41)
(77)
36
–
–
(26)
26
–
–
(1) Represents the impact of the movement in commodity prices on the balance of the financial assets and financial liabilities at year end.
(2) For derivatives which are in an effective hedging relationship, all fair value movements are recognised in Other Comprehensive Income.
The sensitivity of the exposure of diesel and heavy fuel oil prices on financial assets and financial liabilities at year end has been analysed and determined
to be not material to the Group.
The sensitivity of the exposure of gold prices on the FdN finance facilities has been disclosed as part of Note 25(b). The sensitivity of the exposure
of electricity prices on the Cadia PPA has been disclosed as part of Note 25(c).
(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.
152
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
24. Financial Risk Management continued
(b) Foreign Currency Risk continued
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
Financial Liabilities
Payables
Borrowings
Derivatives
Lease liabilities
Gross Exposure
Net investment in US dollar functional currency entities
Net Exposure (inclusive of net investment in foreign operations)
Net investment hedges
2023
US$m
2022
US$m
286
225
96
–
607
49
1,935
9
–
1,993
(1,386)
1,935
549
316
155
99
31
601
30
1,779
–
3
1,812
(1,211)
1,779
568
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 2023, US dollar borrowings of US$1,935 million were designated as a net investment in foreign operations (2022: US$1,779 million).
Sensitivity analysis
The following table details the Group’s sensitivity arising in respect of translation of financial assets and financial liabilities to a 5% movement (2022: 5%)
in the Australian dollar against the US dollar at the reporting date, with all other variables held constant. The impact of the movement in other currencies
against the US dollar is immaterial. The percentage sensitivity is based on reasonably possible changes, over a financial year, using the observed range
of actual historical rates for the preceding five-year period.
Post-tax gain/(loss)
AUD/USD +5%
AUD/USD -5%
Impact on Profit After Tax
Higher/(Lower)
Impact on Equity
Higher/(Lower)
2023
US$m
(15)
15
2022
US$m
(14)
14
2023
US$m
(97)
97
2022
US$m
(88)
88
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% (2022: 5%) was calculated by taking the AUD spot rate as at the reporting date, moving this spot rate by
5% (2022: 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.
Newcrest Annual Report 2023
153
(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$1,500 million, with approximately one-third of that amount
in the form of cash.
– Targeting to maintain an investment grade credit rating.
– Forecasting cash flows relating to operational, investing and financing activities, including sensitivity analysis to test multiple scenarios.
– Managing repayment maturities to avoid excessive refinancing in any period.
– Maintaining funding flexibility with committed available credit lines with a variety of counterparties.
– Managing credit risk related to financial assets.
The Group maintains a balance between continuity of funding and flexibility through the use of cash, loans and committed available credit facilities,
and equity market raisings. Included in Note 21 is a list of committed undrawn credit facilities that the Group has at its disposal to manage liquidity risk.
The following table reflects all contractually fixed repayments and interest resulting from recognised financial liabilities at the reporting date, including
derivative financial instruments and leases. For derivative financial instruments the market value is presented, whereas for the other obligations the
respective undiscounted cash flows for the respective upcoming financial years are presented.
2023
Payables
Borrowings
Derivatives
Lease liabilities
2022
Payables
Borrowings
Derivatives
Lease liabilities
Less than
6 months
US$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
693
36
16
26
771
675
28
13
28
744
–
45
17
24
86
–
37
24
22
83
–
90
–
33
123
–
216
–
22
238
–
524
–
37
561
–
213
–
45
258
–
2,542
–
–
2,542
–
2,613
–
2
2,615
Total
US$m
693
3,237
33
120
4,083
675
3,107
37
119
3,938
154
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
24. Financial Risk Management continued
(d) Interest Rate Risk
The Group’s exposure to the risk of changes in market interest rates primarily relates to the Group’s cash and debt obligations that have floating interest
rates. The Group is also subject to interest rate risk with respect to the fair value of the FdN finance facilities, which are accounted for at fair value through
profit or loss (refer Note 25(b)). The Group’s interest rate exposure together with the effective interest rate for each class of financial assets and financial
liabilities at the reporting date is summarised as follows:
Consolidated
Financial Assets
Cash and cash equivalents
FdN finance facilities (1)
Other receivables
Financial Liabilities
Corporate bonds
Bilateral debt facilities
Lease liabilities
Net exposure
2023
2022
Floating
Interest
US$m
Fixed
Interest
US$m
Effective
Interest
Rate
%
Floating
Interest
US$m
Fixed
Interest
US$m
Effective
Interest
Rate
%
586
–
58
644
–
298
–
298
346
–
110
–
110
1,650
–
110
1,760
(1,650)
4.6
7.5
13.1
4.3
6.5
5.4
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) The principal component of the FdN finance facilities 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$72 million (2022: US$61 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 2023 or 30 June 2022.
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 2023
155
(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’).
2023
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
Power purchase agreement – current (2)
Power purchase agreement – non-current (2)
Financial Liabilities
Trade and other payables
Borrowings
Lease liabilities – current
Lease liabilities – non-current
Fuel forward contracts
Telfer AUD gold hedges
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 (2)
Financial Liabilities
Trade and other payables
Borrowings
Lease liabilities – current
Lease liabilities – non-current
Telfer AUD gold hedges
(1) The Trade and other receivables in this classification relates to concentrate receivables.
(2) Refer to Note 25(c) for further details.
Fair Value
through
profit
or loss (1)
US$m
Fair Value
through
OCI
US$m
Amortised
cost
US$m
586
111
109
–
–
–
–
806
693
1,935
45
65
–
–
2,738
–
143
–
55
245
–
–
443
–
–
–
–
–
–
–
–
–
–
–
–
5
106
111
–
–
–
–
9
24
33
Fair Value
through
profit
or loss (1)
US$m
Fair Value
through
OCI
US$m
Amortised
cost
US$m
565
166
76
–
–
–
–
807
675
1,779
47
64
–
2,565
–
72
–
110
345
–
–
527
–
–
–
–
–
–
–
–
–
–
–
31
109
140
–
–
–
–
68
68
Total
US$m
586
254
109
55
245
5
106
1,360
693
1,935
45
65
9
24
2,771
Total
US$m
565
238
76
110
345
31
109
1,474
675
1,779
47
64
68
2,633
156
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
25. Fair Value Measurement
(a) Fair Value Measurements Recognised in the Statement of Financial Position
For financial assets and liabilities carried at fair value, the Group uses the following to categorise the fair value method used, as defined by
AASB 13/IFRS 13 Fair Value Measurement.
– Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
– Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices). Valuation inputs include forward curves, discount curves and underlying spot
and futures prices.
– Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The Group’s financial assets and liabilities which are measured at fair value on a recurring basis, are categorised as follows:
Financial assets and liabilities
measured at fair value
At 30 June 2023
Concentrate receivables
FdN finance facilities
Power purchase agreement
Fuel forward contracts
Telfer AUD gold hedges
At 30 June 2022
Concentrate receivables
FdN finance facilities
Power purchase agreement
Fuel forward contracts
Telfer AUD gold hedges
Note
Level 1
US$m
Level 2
US$m
Level 3
US$m
Total
US$m
(b)
(c)
(b)
(c)
–
–
–
–
–
–
–
–
–
–
–
–
143
–
–
(9)
(24)
110
72
–
–
31
(68)
35
–
300
111
–
–
411
–
455
109
–
–
564
143
300
111
(9)
(24)
521
72
455
109
31
(68)
599
There were no transfers between levels during the year.
(b) Fair Value of FdN Finance Facilities
In April 2020, Newcrest acquired the GPCA, SCFA and Offtake Agreement in relation to Lundin Gold’s FdN mine (refer Note 23(b)). Each of these financial
instruments are classified as Level 3 as their valuation includes significant unobservable inputs. The following table summarises the fair value of these
financial assets on an aggregated basis.
Movements in Fair Value
Opening balance
Net receipts during the period (1)
Accrued interest
Fair value adjustments
Other movements
Closing balance
Split between:
Current
Non-current
2023
US$m
2022
US$m
455
(307)
13
143
(4)
300
55
245
300
509
(132)
19
62
(3)
455
110
345
455
(1) In January 2023, Newcrest received early repayment of the GPCA of US$173 million (net of withholding taxes) from Lundin Gold Inc. The GPCA facility was subsequently terminated. The SCFA
and offtake agreement continue in place following the early repayment of the GPCA.
Newcrest Annual Report 2023
157
Valuation measurement and key assumptions
The SCFA valuation is 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$30 million/-US$30 million.
(2022: +US$44 million/-US$44 million)
An increase or decrease in the discount rate of 1% would change the fair value of the
asset by -US$10 million/+US$10 million.
(2022: -US$14 million/+US$15 million)
An increase or decrease in the production profile of 10% would change the fair value
of the asset by +US$13 million/-US$14 million.
(2022: +US$13 million/-US$17 million)
Each of the sensitivities above assumes that the specific assumption moves in isolation, whilst all other assumptions are held constant. The sensitivity
of the exposure of silver prices on the FdN finance facilities has been analysed and determined to be not material to the Group.
Accounting Estimates and Assumptions – Fair Value of FdN finance facilities
Significant judgements, estimates and assumptions are required in determining estimates of Fair Value for the FdN finance facilities. It should be noted
that the Fair Value is subject to variability in key assumptions including, but not limited to, gold prices, discount rates and FdN production profiles. A
change in one or more of the assumptions used could result in a material change in the estimated Fair Value of the FdN finance facilities.
(c) Fair Value of Power Purchase Agreement
In December 2020, Newcrest entered into a 15-year renewable Power Purchase Agreement (‘PPA’) in relation to Cadia. The PPA will act as a partial hedge
against future electricity price increases and will provide Newcrest with access to large scale generation certificates which the Group intends to surrender
to achieve a reduction in its greenhouse gas emissions.
Movements in Fair Value
Opening balance
Fair value adjustments
Closing balance
Split between:
Current
Non-current
2023
US$m
2022
US$m
109
2
111
5
106
111
2
107
109
–
109
109
Hedge ineffectiveness recognised in the Income Statement was a net fair value gain of US$5 million (2022: nil). Refer Note 5(d).
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$36 million/-US$36 million.
(2022: +US$35 million/-US$35 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.
158
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
25. Fair Value Measurement continued
(c) Fair Value of Power Purchase Agreement continued
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 31 for further details.
A total cumulative gain of US$62 million was recognised within Other Comprehensive Income upon revaluation to the acquisition date (including a gain of
US$46 million in the 2022 year). This total gain was transferred from Other Comprehensive Income to Accumulated Losses during the 2022 year, reducing
the Accumulated Losses balance.
(e) Fair value of financial instruments carried at amortised cost
The carrying amounts of financial assets and financial liabilities recognised at amortised cost in the financial statements approximate their fair value,
except as detailed in the following table:
Financial Liabilities
Borrowings:
Carrying amount
Fair value (1)
2023
US$m
2022
US$m
2023
US$m
2022
US$m
Fixed rate debt – Corporate Bonds
1,637
1,636
1,481
1,487
(1) The fair value is a level 2 valuation. Fair values of the Group’s fixed rate borrowings are determined by using discounted cash flow models that use discount rates that reflect the issuer’s borrowing
rate as at the end of the reporting period.
Newcrest Annual Report 2023 26. Issued Capital
(a) Movements in Issued Capital
Opening balance
Shares issued – Acquisition of Pretium (1)
Shares issued – Convertible notes
Shares issued – Dividend reinvestment plan
Share issue costs
Shares repurchased and held in treasury (2)
Total issued capital
(b) Number of Issued Ordinary Shares
Comprises:
– Shares held by the public
– Treasury shares
Total issued shares
Movement in issued ordinary shares for the year
Opening number of shares
Shares issued – Acquisition of Pretium (1)
Shares issued – Convertible notes
Dividend reinvestment plan
Shares repurchased and held in treasury
Share plans (3)
Closing number of shares
Movement in treasury shares for the year
Opening number of shares
– Purchases
– Allocated pursuant to share plans
Closing number of shares
159
Note
31(a)
10(b)
31(a)
2023
US$m
13,759
–
–
15
–
(10)
13,764
2022
US$m
12,419
1,289
50
16
(1)
(14)
13,759
2023
No.
2022
No.
891,604,615
890,510,101
2,626,117
2,613,146
894,230,732
893,123,247
890,510,101
814,745,123
–
–
72,316,008
2,606,579
1,107,485
(715,877)
702,906
910,968
(800,000)
731,423
891,604,615
890,510,101
2,613,146
2,544,569
715,877
(702,906)
2,626,117
800,000
(731,423)
2,613,146
(1) Represents issue of shares on 9 March 2022 pursuant to the Plan of Arrangement between Pretium and its ordinary shareholders. Refer Note 31 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 715,877 (2022: 800,000) fully paid ordinary Newcrest shares at an average price of A$20.98 (US$14.26) per
share (2022: average price of A$24.39 (US$17.70) per share). The shares were purchased on-market to be held by the Trustee on behalf of the Trust to satisfy the future entitlements of the holders
of performance rights (and any other rights to acquire shares) under Newcrest’s current and future employee incentive schemes.
(3) Represents rights exercised under the Company’s share-based payments plans and executive service agreements. Refer to Note 35 for share-based payments.
160
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
26. Issued Capital continued
(c) Significant Accounting Policies
Issued ordinary share capital is classified as equity and is recognised at the fair value of the consideration received by the Group. Any transaction costs
arising on the issue of ordinary shares and the associated tax are recognised directly in equity as a reduction of the share proceeds received.
Treasury Shares
The Group’s own equity instruments, which are purchased on-market for later use in employee share-based payment arrangements (Treasury shares), are
deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
27. Reserves
Equity settlements reserve
Foreign currency translation reserve
Hedge reserve
Other reserves
Total reserves
Note
(a)
(b)
(c)
(d)
2023
US$m
167
(843)
51
13
(612)
2022
US$m
151
(585)
51
15
(368)
(a) Equity Settlements Reserve
This reserve is used to recognise the fair value of rights and options issued to employees in relation to equity-settled share-based payments.
(b) Foreign Currency Translation Reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of subsidiaries
which do not have a functional currency of USD. The reserve is also used to record exchange gains and losses on hedges of the net investment in foreign
operations. Refer Note 24(b).
(c) Hedge Reserve
The hedge reserve is used to record the effective portion of changes in the fair value of cash flow hedges and cost of hedging reserves (refer Note 24). The
components of the hedge reserve at year end were as follows:
Component
Telfer AUD gold hedges
Fuel forward contracts
Power purchase agreement
Tax effect
Total Hedge Reserve
Note
24(a)
24(a)
25(c)
2023
US$m
2022
US$m
(24)
(9)
106
73
(22)
51
(68)
31
109
72
(21)
51
(d) Other Reserves
Other Reserves are used to record Newcrest’s share of other comprehensive income/(loss) of associates (refer Note 30) and changes in the fair value of
equity instruments held at fair value.
Newcrest Annual Report 2023
161
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:
Notes
Country of
Incorporation
2023
%
2022
%
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
(a) These controlled entities are a party to a Deed of Cross Guarantee. Refer Note 39 for further information.
(b) Audited by affiliates of the Parent entity auditors.
(c) This entity was incorporated during the 2022 year.
(d) These entities were acquired during the 2022 year.
(e) During the 2022 year, Pretium Resources Inc was amalgamated with Pretium Exploration Inc. and Newcrest BC Mining Ltd. (which was incorporated in 2022).
(f) These entities were deregistered during the 2022 year.
162
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
29. 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
2023
50.0%
70.0%
2022
50.0%
70.0%
73.03%
72.88%
Note
(a)
(b)
(c)
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. As at
30 June 2023, 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 2023 is US$437 million (2022: US$447 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.
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 2023 is US$223 million (2022: US$151 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 2023 is US$25 million (2022: US$25 million).
Newcrest Annual Report 2023
30. Investment in Associates
Movements in investment in associates
Opening balance
Acquisition – Lundin Gold Inc
Acquisition – Antipa Minerals Ltd
Acquisition – Headwater Gold Inc.
Acquisition – Metallic Minerals Corporation
Total acquisitions
Dividends received
Share of profit/(loss)
Share of other comprehensive income/(loss)
Foreign currency translation
Closing balance
163
2023
US$m
487
2022
US$m
442
7
1
1
4
13
(30)
19
(2)
(4)
483
7
–
–
–
7
–
45
–
(7)
487
An associate is an entity that is neither a subsidiary nor joint arrangement, over which the Group has significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The Group’s
investment in associates is accounted for using the equity method.
After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on its investment in its
associate. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this
is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value
and recognises the amount in the Income Statement.
(a) Details of Associates
Associate
Lundin Gold Inc
SolGold plc
Azucar Minerals Ltd
Antipa Minerals Ltd
Headwater Gold Inc.
Metallic Minerals Corporation
Country of
Incorporation
Canada
United Kingdom
Canada
Australia
Canada
Canada
Interest
Carrying Amount
2023
%
32.0%
10.3%
19.9%
9.9%
9.9%
9.5%
2022
%
32.0%
13.5%
19.9%
9.9%
–
–
2023
US$m
410
65
1
3
1
3
2022
US$m
408
74
1
4
–
–
483
487
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$1 million), following a
share subscription agreement entered into on 24 February 2018. The Group’s current interest is 32.0%. The Group has appointed two directors to the
Board of Lundin Gold.
In April 2020, Newcrest acquired the FdN finance facilities. This did not have an impact on the Group’s equity interest in Lundin Gold. Refer to Note 23(b).
164
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
30. Investment in Associates continued
(b) Investment in Lundin Gold Inc continued
The following table discloses summarised financial information of the Group’s investment in Lundin Gold Inc.
Lundin Gold’s Statement of Financial Position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Proportion of Newcrest’s ownership
Carrying value calculated per ownership percentage
Fair value adjustment
Carrying amount
2023
US$m
540
969
(272)
(311)
926
2022
US$m
569
1,095
(315)
(439)
910
32.0%
32.0%
296
114
410
291
117
408
Lundin Gold had revenue during the year of US$922 million (100% basis) (2022: US$771 million).
As at 30 June 2023, the Group held 75,780,909 shares (2022: 75,231,577) with a market value of US$907 million (2022: US$539 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 2023, the Group held 309,309,996 shares
(2022: 309,309,996 shares) with a market value of US$62 million (2022: US$110 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 2023, the Group held 14,674,056 shares (2022: 14,674,056 shares) with a market value of US$1 million
(2022: 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 2023, the Group held 356,114,785 shares (2022: 310,830,163 shares) with a market value of US$3 million (2022: US$7 million)
based on the closing share price on the ASX.
Headwater Gold Inc (‘Headwater’) is a Canadian based exploration company listed on the Canadian Securities Exchange (‘CSE’), with exploration assets
in Idaho-Oregon and Nevada, United Stated of America. As at 30 June 2023, the Group held 6,151,397 shares (2022: nil) with a market value of US$1 million
based on the closing share price on the CSE.
Metallic Minerals Corporation (‘Metallic’) is a Canadian based exploration company listed on the TSX Venture Exchange (‘TSX-V’), with exploration assets
in Colorado, United States of America and Yukon Territory, Canada. As at 30 June 2023, the Group held 15,838,593 shares (2022: nil) with a market value
of US$4 million based on the close share price of the TSX-V.
The Group has a right (but not an obligation) to appoint a Director to the Board of each of these associates.
31. 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.
Newcrest Annual Report 2023
165
(a) Consideration
The consideration comprised cash and Newcrest shares, and Pretium shareholders were able to elect either C$18.50 in cash or 0.80847 Newcrest shares
per Pretium share, subject to proration and an aggregate cap of 50% cash and 50% Newcrest shares. The consideration paid in the 2022 financial year is
shown in the table below:
Consideration paid in respect to:
Consideration – Cash component (1)
Consideration – Scrip component (2)
Fair value of consideration transferred (for 95.2%)
Fair value of existing 4.8% equity interest (3)
Total fair value (100% interest)
2022
US$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$62 million was recognised within other comprehensive income upon revaluation on the
acquisition date. This gain was transferred from Other Comprehensive Income to Accumulated Losses.
(b) Fair Value
Details of the fair values at the date of acquisition are set out below. During the 2023 financial year, the fair values were finalised and there were no
changes to the fair values provisionally determined at 30 June 2022.
Assets and Liabilities Acquired
Cash and cash equivalent
Receivables
Inventories
Property, plant and equipment
Other assets
Total assets
Trade and other payables
Debt – convertible notes
Debt – term facility
Debt – lease liabilities
Provisions – employee benefits
Provisions – mine rehabilitation
Deferred tax liabilities
Other liabilities
Total liabilities
Fair value of identifiable net assets
Goodwill on acquisition
Fair value of net assets
Final
Fair Value
US$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.
166
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
31. Acquisition of Pretium Resources Inc. continued
(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
2022
US$m
1,292
(208)
1,084
2022
US$m
19
23
42
2023
US$m
–
6
6
(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 nil (2022: US$17 million) and integration costs of US$6 million (2022: 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.
Pretium contributed US$226 million of revenue and US$37 million to profit before tax in the 2022 financial year from the date of acquisition until 30 June 2022.
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,
in respect to the 2022 financial year.
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.
Newcrest Annual Report 2023
167
OTHER
This section includes additional financial information and other disclosures that are required by the accounting standards and the Corporations Act 2001.
32. Newmont Transaction
In May 2023, Newcrest entered into a binding Scheme Implementation Deed (‘SID’) with Newmont Corporation (‘Newmont’) in relation to a proposal
for Newmont to acquire 100% of the issued shares in Newcrest by way of a scheme of arrangement (‘Scheme’) under the Corporations Act 2001 (Cth)
(‘the Newmont Transaction’).
Under the terms of the Newmont Transaction, Newcrest shareholders will be entitled to receive 0.400 Newmont shares for each Newcrest share held on
the scheme record date. In addition, Newcrest expects to pay a franked special dividend of US$1.10 per Newcrest share prior to implementation of the
scheme, subject to the scheme becoming effective.
The scheme of arrangement is subject to a number of conditions, including approval by Newcrest shareholders at a Scheme Meeting which is expected
to be held in October 2023. If the Newmont Transaction is approved by Newcrest shareholders and the other conditions precedent are satisfied or
waived, implementation of the Newmont Transaction is targeted to occur in November 2023.
The SID includes certain circumstances in which a break fee of US$174 million would be payable to Newmont, or reverse break fee of US$375 million
would be payable to Newcrest.
33. 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$205 million (2022: US$173 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.
34. New Accounting Standards and Interpretations
The Group has considered accounting standards, amendments and interpretations that have been issued and will be applicable in future periods, however
their impact is not considered material to the Group.
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 members of the Executive Committee (including Key Management Personnel), General Managers and
Managers participate in this plan.
The vesting conditions for the Performance Rights granted in the 2023 financial year for members of the Executive Committee comprised a service
condition and three performance measures, being:
– Relative Total Shareholder Return (‘TSR’)
– Comparative Cost Position (‘CCP’); and
– Return on Capital Employed (‘ROCE’).
168
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
35. Share-Based Payments continued
(a) Executive Performance Share Plan (LTI Plan) continued
The weighting for the TSR is 50% (2022: 33.3%), the CCP is 25% (2022: 33.3%) and the ROCE is 25% (2022: 33.3%). 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.
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 – Members of the Executive Committee
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
2023
A$13.67
A$15.44
A$17.21
2022
A$19.38
A$20.89
A$22.40
16 Nov 2022
17 Nov 2021
A$19.11
3 years
Nil
3.2%
30.0%
1.8%
A$24.66
3 years
Nil
0.8%
25.0%
1.5%
The rights have been valued using a combination of the Monte Carlo simulation and Black-Scholes models. The fair value of the rights granted is
adjusted to reflect market vesting conditions. Non-market conditions are included in the assumptions about the number of rights that are expected
to become exercisable and are updated at each reporting date. The impact of the revision to original estimates is recognised in the Income Statement
with a corresponding adjustment to equity.
Upon the exercise of rights, the balance of the equity settlements reserve relating to those rights remains in the Equity Settlements Reserve.
Accounting Estimates and Assumptions – Share-Based Payments
The Group measures the cost of equity settled transactions with employees by reference to the fair value of equity instruments at the date at which
they are granted. The fair value is determined by an external valuer using an option pricing model, using the assumptions detailed above.
(b) Movements in the Number of Rights issued under the LTI Plan
Detailed information about Performance Rights is set out below:
Grant
date
2023
16 Nov 2022
17 Nov 2021
18 Nov 2020
19 Nov 2019
Total
2022
17 Nov 2021
18 Nov 2020
19 Nov 2019
21 Nov 2018
Total
Exercise
date
16 Nov 2025
17 Nov 2024
18 Nov 2023
19 Nov 2022
17 Nov 2024
18 Nov 2023
19 Nov 2022
21 Nov 2021
Movement in Number of Rights During the Year
Beginning
of year
Granted
Exercised
Forfeited
End
of year
–
1,630,838
953,974
658,579
529,766
–
–
–
2,142,319
1,630,838
–
1,009,239
774,929
623,592
796,396
–
–
–
2,194,917
1,009,239
–
–
–
(379,768)
(379,768)
–
–
–
(544,204)
(544,204)
(358,372)
1,272,466
(212,326)
(109,249)
(149,998)
741,648
549,330
–
(829,945)
2,563,444
(55,265)
(116,350)
(93,826)
(252,192)
953,974
658,579
529,766
–
(517,633)
2,142,319
All Performance Rights have a nil exercise price. The number of performance rights exercisable at year end is nil (2022: nil).
Newcrest Annual Report 2023
169
(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 281,260 (2022: 278,137).
(d) STI Deferral Plan
This plan applied to certain employees including Key Management Personnel in the 2022 and prior financial years. Under the STI Deferral Plan, for
eligible employees, 50% of the payment was 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.
The number of rights outstanding under this plan at year end was 258,982 (2022: 223,762).
(e) Expense
Refer to Note 5(f) for the total share-based payments expense.
As detailed in Note 32, in May 2023, Newcrest entered into the Newmont Transaction. Subject to the Scheme of Arrangement becoming effective, all
unvested rights over shares will vest in full shortly prior to implementation of the Newmont Transaction. Newcrest assessed the likelihood of the Newmont
Transaction becoming effective and has determined that it is more likely than not that it will become effective. As such, the share-based payments expense
from May 2023, has been calculated on the basis that all rights vest in full shortly prior to the implementation date (accelerated vesting), with the impact of
the revision to the expense recognised in the Income Statement.
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.
2023
US$’000
9,327
140
228
1,119
5,498
16,312
2022
US$’000
10,019
123
204
86
6,635
17,067
170
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
37. Auditors’ Remuneration
The auditor of the Group is Ernst & Young Australia.
(a) Fees to Ernst & Young Australia
Fees for auditing the statutory financial report of the parent covering the group and auditing the statutory financial
reports of any controlled entities
Fees for assurance services required by legislation to be provided by the auditor
Fees for other assurance and agreed-upon-procedures services:
–
Investigating accountant services
– Transaction accounting services
– Sustainability assurance services
– Audit-related assurance services
Fees for other services
Total
(b) Fees to Other Member Firms of Ernst & Young Australia
Fees for auditing the financial report of any controlled entities
Total
Total fees to Ernst & Young
(c) Fees to Other Auditors
Audit or review of financial reports of subsidiaries
2023
US$’000
2022
US$’000
2,713
–
475
–
324
9
808
–
2,118
–
–
29
284
7
320
–
3,521
2,438
336
336
3,857
276
276
2,714
26
33
38. Parent Entity Information
The summarised Income Statement and Statement of Financial Position in respect to the parent entity (‘Company’) is set out below.
(a) Income Statement
Profit/(loss) after income tax
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
(b) Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Equity settlements reserve
Foreign currency translation reserve
Accumulated losses
Total equity
(c) Commitments
Capital expenditure commitments
Company
2023
US$m
2022
US$m
654
(355)
299
97
8,807
8,904
259
540
799
8,105
13,764
167
(1,053)
(4,773)
8,105
666
(642)
24
92
8,997
9,089
272
540
812
8,277
13,759
151
(698)
(4,935)
8,277
11
6
Newcrest Annual Report 2023
171
(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 39. 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.
39. 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
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
2023
US$m
2,568
(1,468)
1,100
(33)
(129)
(73)
(8)
(8)
849
26
(127)
748
(255)
493
2022
US$m
2,495
(1,365)
1,130
(38)
(130)
(92)
(5)
(19)
846
7
(94)
759
(284)
475
172
Notes to the Consolidated Financial Statements continued
For the Year Ended 30 June 2023
39. Deed of Cross Guarantee continued
Statement of Financial Position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other assets
Total current assets
Non-current assets
Other receivables
Investment in subsidiaries
Property, plant and equipment
Other intangible assets
Deferred tax assets
Other financial assets
Other assets
Investment in associates
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Current tax liability
Lease liabilities
Other financial liabilities
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred tax liabilities
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Total equity
Consolidated
2023
US$m
2022
US$m
206
156
238
4
36
640
212
7,726
4,437
25
39
106
2
68
12,615
13,255
572
99
35
16
33
755
1,935
274
469
16
2,694
3,449
9,806
13,764
(2,683)
(1,275)
9,806
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
40. Events Subsequent to Reporting Date
Subsequent to year end, the Directors have determined to pay a final dividend for the year ended 30 June 2023 of US 20 cents per share, which will be fully
franked. The dividend will be paid on 18 September 2023. The total amount of the dividend is US$179 million. This dividend has not been provided for in the
30 June 2023 financial statements.
A New South Wales Legislative Council Committee has commenced an inquiry into current and potential community impacts of the gold, silver, lead and
zinc mining industries in the state. Newcrest will provide a submission to the committee.
Other than matters disclosed in the Notes to the financial statements, there are no other matters or events that have occurred subsequent to 30 June 2023
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 2023
Directors’ Declaration
173
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 2023 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 2023.
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
11 August 2023
Melbourne
174
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 2023, 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 2023
and of its consolidated financial performance for the year ended on that date; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
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Newcrest Annual Report 2023 175
1. Assessment of the carrying value of non-current assets
Why significant
At 30 June 2023 the Group’s consolidated statement
of financial position includes property, plant and
equipment of $12,996 million, goodwill of $686
million and other intangible assets of $32 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 2023:
a. An assessment of the indicators of impairment or
impairment reversal was required to be
undertaken by the Group and impairment testing
was performed for the Lihir and Telfer CGUs, as
set out in Note 12 of the financial report.
b. The Red Chris and Brucejack CGUs have been
tested for impairment due to the associated
goodwill balances.
c. On 15 May 2023, the Group entered into a
binding Scheme Implementation Deed (‘SID’) with
Newmont Corporation (‘Newmont’) to acquire
100% of issued share capital of the Group. The
consideration under the SID represents a
premium over the net assets of the Group as at
30 June 2023. Accordingly, the Group
considered if previous impairment of the Telfer
and Lihir CGU assets, other than goodwill, should
be reversed, concluding that an impairment
reversal was not required.
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.
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.
How our audit addressed the key audit matter
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.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
176
Independent Auditor’s Report continued
2. Mine rehabilitation provisions
Why significant
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 2023, the Group’s consolidated
statement of financial position includes $505
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.
How our audit addressed the key audit matter
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.
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 2023 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Newcrest Annual Report 2023 177
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.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
178
Independent Auditor’s Report continued
We communicate with the Directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the Directors' Report for the year ended
30 June 2023.
In our opinion, the Remuneration Report of Newcrest Mining Limited for the year ended
30 June 2023, 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
Glenn Carmody
Partner
Melbourne
11 August 2023
Richard Bembridge
Partner
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Newcrest Annual Report 2023 Shareholder Information
ISSUED CAPITAL (ON 18 AUGUST 2023)
Title of Class
Ordinary
TWENTY LARGEST SHAREHOLDERS AS AT 18 AUGUST 2023
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BNP PARIBAS NOMS PTY LTD
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