Australia's Newcrest Mining Reports Half-Yearly Profits Down 50 Percent

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Australia's largest gold miner Newcrest Mining Ltd. said Tuesday its half-yearly profit plunged 50 percent to 37 million Australian dollars (US$29.4 million; euro22.34 million) after the company restructured its hedge strategy.

But the company's stock jumped 5.85 percent to A$23.87 (US$31.45; euro23.90) as investors took a positive view of indications that the troubled mine project Telfer was turning around.

Production problems at Telfer, in Western Australia state, have been a constant headache for Newcrest, which anounced in January that reserves at the mine have been cut 12 percent with further significant downgrades likely to follow.

But Chief Executive Ian Smith on Tuesday announced the underground mine has reached output of 4 million metric tons ahead of the March target promised to the market.

Earnings for the half-year ending Dec. 31, 2006, compares to A$74.2 million for the previous corresponding period.

The Melbourne-based company said the profit had been affected by the restructure of its hedge book and, excluding this impact, net profit for the half climbed 5 percent to A$84 million (US$66.6 million; euro50.61 million) from A$80.3 million (US$63.7 million; euro48.4 million).

Newcrest said the hedge restructure carved A$47.6 million (US$37.77 million; euro28.7 million) from earnings before interest and tax and A$36.6 million (US$29 million; euro22.04 million) from net profit.

The company had previously disclosed plans to restructure its hedging strategy, and analysts said the half-yearly result was slightly ahead of expectations.

AP

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