Newcrest Mining Ltd. (ASX:NCM, Financial) announced its financial results for the first six months of fiscal year 2017 on Feb. 13.
In the first half of 2017, Newcrest generated revenue of $1.807 billion, a 16.9% increase on a year-over-year basis. Of that, more than 84% came from the production and sale of gold.
Copper and silver contributed to approximately 0.7% and 13.4% of the revenue.
Newcrest generated higher revenue during the first half of fiscal 2017 compared to the same period in 2016 due to increasing gold prices and more ounces of gold sold. The realised gold price was $1,277 per ounce, a 14.7% increase on a year-over-year basis. It sold 1.217 million ounces, a 1.4% increase on a year-over-year basis.
The company said the increase in gold ounces sold during the period was a “result of higher mill throughput” at Cadia mine.
Concerning gold production for the first half of the year, Newcrest dug up 1.23 million ounces of gold at an all-in sustaining cost of $770 per ounce.
Lower cost of sales, administrative expenses, financial and non-controlling interest expenses, higher income tax expenses and a stronger Australian dollar led to an underlying profit of $273 million in the first six months of 2017. This represents a 333% increase from the same period in 2016.
Cash flow generated by operations was $601 million, a 64% increase on a year-over-year basis. This cash flow, which was partially offset by higher capital expenditures for enhancing milling capacity and operating efficiency at Lihir mine, led to free cash flow of $258 million.
Part of this free cash flow will be distributed to shareholders in the form of a dividend. The company will pay a dividend of 7.5 cents to shareholders on April 28.
As of Dec. 31, 2016, the Australian gold producer recorded total gold, silver and copper proven and probable reserves of 65 million ounces, 38 million ounces and 11 million ounces.
Newcrest Mining is trading around 22.72 Australian dollars ($17.44) per share, up 18 cents or 0.80% from the previous trading day, with a price-book (P/B) ratio of 2.47 and a price-sales (P/S) ratio of 5.28.
The company has a market capitalization of AU$17.4 billion and an enterprise value of AU$20.17 billion.
The company has 765.79 million shares outstanding, of which 760.72 million is float.
As of the most recent quarter, the company had $203 million in cash on hand and total debt of $2.116 billion.
The average analyst target price is AU$17.52 per share, which ranges between a low of AU$11.06 per share and a high of AU$25 per share.
The majority of analysts suggest holding shares of Newcrest Mining with a recommendation rating of 2.9. The recommendation rating ranges between 1.0 (Strong Buy) and 5.0 (Sell).
Disclosure: I have no positions in Newcrest Mining Ltd.
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