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S&P raises Newcrest's ratings to BBB with stable outlook

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Essential Metals & Mining Insights - September 2021


S&P raises Newcrest's ratings to BBB with stable outlook

S&P Global Ratings raised its issuer credit rating on Newcrest Mining Ltd. and the issue ratings on its debt to BBB from BBB-, with a stable outlook.

The rating agency said it expects Newcrest to sustain its strong credit metrics due to its low-cost production, low gearing, and stable operations at the Lihir gold mine in Papua New Guinea and the Cadia gold mine in New South Wales.

The stable outlook is based on the company's conservative financial policies, low-cost position, and its long reserve life compared to peers. The ASX-listed miner is also expected to generate positive free cash flows after capital expenditure.

S&P said Sept. 6 the gold price is anticipated to stay stable for the next two years at US$1,250 per ounce, however, a trade war between the U.S. and China can result in a higher demand for the traditional safe heaven, leading to an increase in prices.

Meanwhile, the company's credit metrics are negatively exposed to the company's limited product diversity, significant dependence on a few large operations, and exposure to country risks in Papua New Guinea.

Newcrest's net profit for fiscal 2018 fell to US$202 million, or 26.2 US cents per share, from US$308 million, or 40.0 cents per share, booked a year ago, mainly due to impairments.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings document referred to in this news brief can be found in the sources section.