The Newcrest Mining Limited (ASX: NCM) share price is glistening today, pushing nearly 2% higher on the back of the ASX gold miner’s FY21 results.
Newcrest reaches new heights
Newcrest achieved gold production of 2.3 million ounces, slightly down on FY20’s levels, and record copper production of 142,700 tonnes.
Higher gold and copper prices supported 17% revenue growth over the prior year to hit US$4.6 billion, with copper representing around 22% of net revenue in FY21.
The company’s all-in sustaining cost (AISC) came in at $911/oz, delivering a record AISC margin of 49% or $876/oz.
Newcrest’s cash flow is also booming, generating $1.1 billion of free cash flow throughout the year. And its bottom line benefitted as well, delivering a statutory net profit after tax (NPAT) of $1.2 billion, up 83% on the prior year. On an underlying basis, NPAT still grew at an impressive clip, up 55%.
As a headline within one of the company’s investor slides succinctly put it: Strong production + higher prices = record profit & free cash flow.
Newcrest’s dividend run continues
Newcrest delivered its sixth consecutive year of increased dividends, announcing a final fully franked dividend of US 40 cents per share. This final dividend was more than double what was declared in the pcp, taking the total FY21 dividend to a record US 55 cents per share.
The full-year dividend equates to a 41% payout of FY21 free cash flow and puts Newcrest shares on a dividend yield of nearly 3%.
FY22 guidance
Newcrest provided a detailed table of FY22 guidance, which includes expectations for production levels, AISC and capital expenditure for each of its mines.
The company is guiding for total gold production between 1.8 million and 2 million ounces, and copper production between 125,000 and 130,000 tonnes. AISC, which includes production stripping and sustaining capital, is expected to land in the range of $1.7 billion to $1.9 billion.
The guidance is subject to market and operating conditions, and the production guidance numbers assume no COVID-19 related interruptions. What’s more, the AISC expenditure guidance includes an estimate for additional costs associated with managing the business in a COVID-19 environment in the order of $35-45 million.
Newcrest said it hasn’t experienced any material COVID-related disruptions to date. It incurred ~$70 million in COVID-19 management costs in FY21, of which $53 million was related to Lihir.
Summary
Newcrest’s run of records helped support its dividend payment at a time when competitor Evolution Mining Limited (ASX: EVN) cut its total dividend by 25%.
Newcrest could be a prime contender if you’re looking to get exposure to gold, but for those seeking a true hedge against volatility, physical bullion is an alternative to consider.
