Across May and June 2020, Newcrest successfully raised A$1.2bn of equity through a A$1.0bn placement to institutional investors and a A$200m Share Purchase Plan. The funds raised were used to fund the acquisition of finance facilities for the Fruta del Norte mine, with the remainder directed to funding Newcrest’s organic growth options such as the commencement of declines at both Havieron and Red Chris.
On 13 May 2020, Newcrest issued US$1.15bn of senior unsecured notes, comprising 10-year bonds totalling US$650m (maturing in 2030) and 30-year bonds totalling US$500m (maturing in 2050). The proceeds from the new bonds were used to repay all of the Company’s notes due in 2021 and to repay all but $380m of the notes due in 2022.
The combined transactions have ensured that Newcrest’s balance sheet remains strong, smooths and extends Newcrest’s weighted average debt maturity profile to ~16 years (previously ~7 years) and secures long term debt funding at coupons much lower than the existing corporate bonds.
Newcrest’s net debt at 30 June 2020 was $624m. This comprises $2,013m of capital market debt, lease liabilities of $58m and $4m relating to a loan acquired through the acquisition of Red Chris, less $1,451m of cash.
At 30 June 2020, Newcrest had $3,451m of liquidity coverage, comprising $1,451m of cash and $2,000m in committed undrawn bilateral bank debt facilities with maturity periods ranging from 2021 to 2023.
Newcrest’s financial objectives are to meet all financial obligations, maintain a strong balance sheet to withstand cash flow volatility, be able to invest capital in value-creating opportunities, and be able to return excess cash generated to shareholders. Newcrest looks to maintain a conservative level of balance sheet leverage.