Newcrest flags dividend growth on output rise
Newcrest chief executive Greg Robinson. Photo: Craig Abraham
NEWCREST Mining has told shareholders to expect a period of strong dividend growth, with capital spending on growth projects about to peak and deliver higher rates of gold production.
Speaking at the company's annual meeting in Melbourne, Newcrest chairman Don Mercer said the imminent completion of two major growth projects would see capital spending reduce at a time when production rates and gold prices are tipped to rise.
''Other things being equal, this should allow for greater dividend distribution to shareholders in the future, if gold prices remain strong,'' he said.
The comments were reinforced by Newcrest chief executive Greg Robinson, who said gold producers were in a struggle to differentiate themselves from gold-focused exchange traded funds, and dividends were one of the few ways that differentiation could be achieved.
''A differentiator for us will be the ability to pay a reasonable dividend,'' he said.
''There is a heavy expectation we would pay higher dividends.''
Mr Robinson said the traditional correlation between the gold price and the share price of goldminers was starting to return after a period of decoupling.
Newcrest has been criticised for suffering numerous delays and missteps at its growth projects, particularly the Lihir expansion in Papua New Guinea.
Those problems have caused numerous downgrades to the company's gold production forecasts in recent years, but Mr Robinson said the project could offer more gold production than previously thought.
Newcrest has promised Lihir will produce 1.2 million ounces of gold by 2017 and the company will spend the next year investigating whether that figure can be lifted to 1.4 million ounces.
The investigations will focus on other options for flotation in the production process.
''At the moment, 80 per cent-plus of our effort there is going into making the plant reliable and ensuring that drumbeat of production, day in, day out, for weeks and months, meets our expectations,'' Mr Robinson said. Newcrest shares fell 48¢ to $26.01 on the back of a slight slip in the gold price to $US1715 per ounce.