Newcrest Result Declines With Prices but Meets Our Expectations, Fair Value Maintained

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

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Morningstar, Inc.

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Equity Bottom-Up

There was nothing individually earth shattering at Newcrest’s 2016 investor day and we make no change to our AUD 21 per share fair value estimate. No-moat Newcrest remains close to fairly valued, which we think is relatively attractive in a generally overvalued market for miners, their prices inflated by the recent mini-boom in China. The briefing supports our view of a long-life, low operating cost producer with potentially valuable expansion and exploration options. Much has changed in the past few years under Sandeep Biswas’ stewardship. Most notably, costs have been cut and the balance sheet greatly improved. Newcrest is now on a sound operating and financial footing.We came away with a strong sense of a disciplined, methodical management team focused on incremental improvement. The most pleasing aspect is attention to detail. There were numerous examples of a back-to-basics approach where the fundamental limitations of the mines and processing plants were explored to deliver creative and innovative solutions. Debottlenecking of both the Lihir and Cadia operations stand out as examples. Newcrest has shown how it’s focusing to sweat both mines and the progress is pleasing. We think large, long life orebodies lend themselves to valuable options.Analyst: Mathew Hodge

There was nothing individually earth shattering at Newcrest’s 2016 investor day and we make no change to our AUD 21 per share fair value estimate. No-moat Newcrest remains close to fairly valued, which we think is relatively attractive in a generally overvalued market for miners, their prices inflated by the recent mini-boom in China. The briefing supports our view of a long-life, low operating cost producer with potentially valuable expansion and exploration options. Much has changed in the past few years under Sandeep Biswas’ stewardship. Most notably, costs have been cut and the balance sheet greatly improved. Newcrest is now on a sound operating and financial footing.We came away with a strong sense of a disciplined, methodical management team focused on incremental improvement. The most pleasing aspect is attention to detail. There were numerous examples of a back-to-basics approach where the fundamental limitations of the mines and processing plants were explored to deliver creative and innovative solutions. Debottlenecking of both the Lihir and Cadia operations stand out as examples. Newcrest has shown how it’s focusing to sweat both mines and the progress is pleasing. We think large, long life orebodies lend themselves to valuable options.Analyst: Mathew Hodge

Newcrest's Investor Day Highlights Sound Financial And Operational Footing

Newcrest Mining

Newcrest's Investor Day Highlights Sound Financial And Operational Footing