By Barry FitzGerald
SHARPLY reduced costs and a robust balance sheet have enabled gold producer Newcrest to increase its December-half profit by 10 per cent to $266.6 million and declare a maiden interim dividend despite a fall in sales revenue.
The unfranked dividend of 5c a share will be paid on April 16 and comes as the group's debt remained at near-negligible levels despite heavy investment in growth projects.
The growth portfolio is set to expand in early April when the board of the Melbourne-based group will be asked to approve a $2 billion development of the Cadia East gold-copper project near Orange.
Newcrest has continued to add to its development portfolio, with an upgrade at the O'Callaghans tungsten-copper deposit near Newcrest's Telfer gold-copper mine in Western Australian confirming its world-class status.
The tungsten component also makes it a highly strategic deposit. Western consumers of the steel hardener are increasingly concerned by China's grip on world supplies - about 80 per cent of the market.
Newcrest's chief executive, Ian Smith, said that because of its market rating as a gold stock, Newcrest is looking to bring in a tungsten partner to handle the tungsten production from a future development. ''There are companies around the world who need tungsten but are finding it difficult at the moment to find access to long-term supply.''
He also revealed that a development of O'Callaghans had the potential to see production costs at the nearby Telfer mine driven down into the bottom quartile of the world's gold industry's cost curve - below $US360 ($406) an ounce - from its December quarter position of $US422 an ounce (in the second quartile).
The savings would come from sharing existing infrastructure.
AT A GLANCE
Sales $1.1b-8.2%