Newcrest Mining (ASX:NCM) share price on watch as profit jumps 55%

The gold miner has reported a prosperous year…

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The Newcrest Mining Ltd (ASX: NCM) share price will be one to watch when trading resumes on Thursday. That's after the company released its full-year results for FY21.

At close of trade yesterday, shares in the mining company were swapping hands for $25.27 each – down 1.06%. The S&P/ASX 200 Index (ASX: XJO), for context, ended the day 0.12% lower.

Let's take a closer look at today's news.

Newcrest share price in focus with $4.6 billion in revenue

  • Revenue rose 17% on the prior corresponding period (pcp) to $4.6 billion.
  • Earnings before interest, taxes, depreciation, and amortisation (EBITDA) jumped 33% to $2.4 billion.
  • Underlying and statutory profit of $1.2 billion. Underlying profits increased 55% and statutory profit appreciated 80%.
  • Basic earnings per share of US $1.425 – up 71% on the pcp.
  • Final year dividend of US 40 cents per share for full-year payment of US 55 cents per share (approx. 76 cents AUD). The final year dividend is a 129% rise on the pcp and the full-year payment equates to a dividend yield of 3.0% on the current Newcrest share price.

What happened in FY21 for Newcrest?

FY21 was not a great year for the Newcrest share price – it fell almost 20% in that time. As one of the largest gold miners in the world, its financial fate is largely tied to that of the hyper-conductive element.

According to the website Trading Economics, while there was an initial spike in the market price of gold, it quickly fell after August 2020. This may partly explain the depreciating Newcrest share price during the year.

Outside of the mines and in the boardroom, Newcrest appointed a new Chief Financial Officer after its previous one announced his retirement in May.

Management commentary

Newcrest Managing Director and CEO Sandeep Biswas said:

Newcrest has delivered a strong operational and financial performance for the 2021 financial year, producing 2.1 million ounces of gold at an AISC [all-in sustaining cost] of $911 per ounce. Together with the benefit of higher gold and copper prices, this translated into a record statutory and underlying profit of $1.2 billion and a record free cash flow of $1.1 billion.

He added:

In the coming months we look forward to finalising key Pre-Feasibility Studies for Red Chris, Havieron and Lihir. We are striving to bring Havieron and the Red Chris block cave into production as soon as possible. Phase 14A at Lihir represents further upside from the current mine plan and brings forward our aspiration for Lihir to be a 1 million ounce plus annual producer.

What's next for Newcrest?

In other news that may affect the Newcrest share price, the company announced an "attractive return" from pre-feasibility studies at its future Cadia gold and copper mine in New South Wales.

Mr Biswas said of the findings:

The development of the PC1-2 cave is the next step in Cadia's block caving journey. The Study underpins an optimised mine design which we expect will deliver higher gold and copper grades and enable the deferral of capital expenditure in the medium term.

This project, together with the expansion project currently in progress, is expected to sustain Cadia's position as one of the largest, lowest cost and long-life gold mines in the world.

Newcrest share price snapshot

Year-to-date, the Newcrest share price has fallen around 2%. In fact, just in the last month, its share price is down 6%.

Newcrest Mining has a market capitalisation of around $20.7 billion.

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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