By Rhiannon Hoyle
SYDNEY--Sharp swings in global currencies have prompted Newcrest
Mining Ltd. to put one of Australia's biggest gold mines up for
sale.
A near-20% fall in the Australian dollar since the middle of
last year has made Newcrest's Telfer gold mine in Western Australia
state more profitable--and attractive to potential bidders--at a
time when the company needs money to bring its debt down.
A weakening local dollar means mining companies in Australia are
earning more for each ounce of gold they produce, giving them an
advantage over rival producers in nations such as China whose
currencies fluctuate less wildly against the U.S. dollar due to
narrow trading bands or fixed pegs.
Newcrest, Australia's largest listed gold-mining company, spent
heavily on expanding pits and buying new mines in countries
including Papua New Guinea and Ivory Coast during a bull run for
gold prices that lasted more than a decade.
But its aggressive expansion has left management and
shareholders with a big hangover--from the suspension of dividends
since 2013 to net debt rising to 4.29 billion Australian dollars
(US$3.32 billion) at the end of last year.
Newcrest has long been wondering what to do about Telfer, which
is on track to produce up to 560,000 troy ounces of gold and about
25,000 metric tons of copper in the year through June. Australia is
the world's biggest gold exporter, shipping about 9 million ounces
annually.
Its management had considered expanding one of Telfer's pits,
but Chief Executive Sandeep Biswas said he is also now open to
unloading the mine.
"I have always said if there are people out there who value our
assets higher than us they should talk to us, and this is just
opening that up as a possibility," Mr. Biswas said.
The mining company hasn't yet been approached by any prospective
buyers. Mr. Biswas said he expects to decide by October whether to
sell or invest further in Telfer, but is mindful that the company's
balance sheet remains stretched.
"It is an absolute focus to get the debt down and start paying
dividends again," he said.
Newcrest, which reported a A$200 million net profit for the six
months through December, is one of the world's biggest gold-mining
companies, competing with Goldcorp Inc., Barrick Gold Corp. and
Newmont Mining Corp.
Global mining deals have faced challenges amid a slowing
resources boom, with potential buyers cautious of overpaying for
assets after embarrassing write-downs by many of the world's
biggest mining companies.
Still, companies have shown interest in Australian gold assets.
Two years ago, South African mining company Gold Fields acquired
three mines from Barrick, and China Molybdenum Co. acquired the
massive Northparkes copper-and-gold mine from Rio Tinto PLC.
Telfer, in the remote Great Sandy Desert of the east Pilbara
region, was once Newcrest's largest gold mine. It was recently
overtaken by the Lihir mine in Papua New Guinea and Cadia, also in
Australia.
Gold prices have tumbled in recent years after the U.S. Federal
Reserve said it would cut back on the easy-money policies installed
to steady the U.S. economy. Copper prices have also taken a knock
on concerns of slowing growth elsewhere, particularly in China, the
world's biggest buyer of the industrial metal.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
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