Newcrest swallows A$6.2B writedown

Newcrest Mining’s (TSX:NM; ASX: NCM) warning in early June that it would be taking up to a A$6-billion writedown on its various gold mining assets around the world has come to pass, and the bite is a little deeper than first anticipated at A$6.2 billion.

The writedowns comprise: the Lihir gold mine in Papua New Guinea, US$3.24 billion (all in goodwill); the Hidden Valley mine in PNG, US$380 million; Bonikro and other exploration assets in Cote d’Ivoire, US$480 million; and the Telfer gold mine in Western Australia, A$1.2 billion.

In Australian dollars, Newcrest calculates the writedowns of the four groups of assets at A$5.6 billion, after tax.

On top of that, Newcrest is writing down by A$273 million its 32.63% shareholding in Evolution Mining (US-OTC: CAHPF; ASX: CAH), which owns and operates five gold and silver mines in Queensland and Western Australia. Evolution was created in late 2011 through the merger of Catalpa Resources and Conquest Mining, into which was placed Newcrest’s interests in the Cracow and Mt. Rawdon mines.

Another A$360 million is being written down on a variety of Newcrest assets including fixed assets, inventory, exploration and the de-recognition of previous tax losses.

In the boardroom, lawyer and businessman Peter Hay has been appointed a non-executive director. Hay is chairman of the advisory board of Lazard & Co. Pty Ltd and has been a director of Australia and New Zealand Banking Group Ltd since October 2008.

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