Tuesday 24 June 2014 by Legacy

Newcrest Mining Limited – high yielding USD investment grade bonds

We have initiated coverage of Newcrest Mining Limited with a positive credit view.

Executive summary

  • Newcrest Mining Limited (ASX:NCM) is Australia’s largest ASX listed gold producer and ranked in the top five global producers by output. With a current market capitalisation of $8.3bn it is ranked as one of the top 20 companies on the ASX by market capitalisation
  • The company owns six operations across four countries in the Asia Pacific and Africa. Almost 50% of revenue is generated from its Australian operations
  • Gold accounts for ~84% of revenue followed by copper ~15% while silver accounts for just over 1% (based on FY13 actual results)
  • Current gold reserves are approx. 80Moz and resources 148Moz which ranks it in the top three in the world and based on current production levels has a reserve life of 33 years
  • Newcrest is on track to provide full year gold production for FY14 around the top end of their guidance at 2.3Moz
  • All-in sustaining costs (YTD to Mar 14) have reduced 22.2% year on year from A$1,283/oz to A$998/oz. A key contributor to keeping these costs low and possibly lower is the Cadia Valley mine which has an all in cost of A$325 YTD
  • Newcrest have recently undertaken substantial capital expenditure at two of its primary operations which has been funded by bank debt. Debt levels are currently at peak levels with the impact from this capital expenditure now expected to flow through to the cash flow position with improvement in both production output as well as a lower overall all-in cost of gold

Wholesale clients can access the full research report at the following link (using their login and password).

USD DirectBonds

FIIG Securities has two high yielding investment grade USD Newcrest DirectBonds available to wholesale clients in minimum (face value) parcel sizes of USD $10,000. Both bonds are issued by Newcrest Finance Pty Ltd but are guaranteed by Newcrest Mining Limited (and other subsidiaries).

Details of the two bonds, including indicative pricing, are in the following tables. Given the positive credit view and significant size and stature of the Newcrest Mining Group on a global scale, we consider the bonds to offer attractive USD returns for the risk involved. Further, investment parcels are as little as USD $10,000.  

Please speak to your FIIG representative if you are interested in the USD Newcrest Finance Pty Ltd bonds.

All prices and yields are a guide only and subject to market availability. FIIG does not make a market in these securities.

The Newcrest Finance Pty Ltd USD bonds are only available to wholesale investors and in minimum parcel sizes from USD $10,000.