ASX Appendix 4D Half-Year Financial Report

Transcription

1 ASX Appendix 4D Half-Year Financial Report 31 December 2011 NEWCREST MINING LIMITED AND CONTROLLED ENTITIES ASX APPENDIX 4D AND FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2011 ABN: ASX CODE: NCM

2 Table of Contents ASX Appendix 4D Results for Announcement to the Market 1 Directors Report 2 Management Discussion and Analysis 3 Auditor s Independence Declaration 20 Income Statement 21 Statement of Comprehensive Income 22 Statement of Financial Position 23 Statement of Cash Flows 24 Statement of Changes in Equity 25 Notes to the Half-Year Financial Statements 27 Directors Declaration 42 Independent Review Report 43 Newcrest Mining Limited Half-Year Financial Report to 31 December 2011

3 ASX APPENDIX 4D Results for Announcement to the Market Half-Year Financial Report to 31 December months 6 months Percentage 31 Dec Dec 2010 Increase/ $M $M (Decrease) Sales Revenue 2,342 1,966 19% Profit from continuing operations after tax attributable to members of the parent entity % Net profit attributable to members of the parent entity ( Statutory Profit ) % 6 Months 6 Months Dividends 31 Dec Dec 2010 Interim dividend per share 12 cents 10 cents Franked amount per share Nil Nil Record date for determining entitlement to dividend 23 March March 2011 Date dividend payable 17 April April 2011 For non-resident shareholders the dividend will be paid from conduit foreign income and is exempt from Australian withholding tax. The Dividend Reinvestment Plan (DRP) remains in place and will be offered to shareholders at a price determined by the volume weighted average price of shares traded on the ASX over the period 16 March to 22 March No discount applies. Shareholders have until 5pm AEST on 23 March 2012 to change their DRP election. 31 Dec 2011 $ 31 Dec 2010 $ Net tangible assets per share Review of Results Please refer to the Management Discussion and Analysis included in the Directors Report for the review of results. This interim financial report is to be read in conjunction with the most recent annual financial report. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 1 Page 1

4 DIRECTORS REPORT The Directors present their report on the Group consisting of Newcrest Mining Limited and the entities it controlled at the end of or during, the half-year ended 31 December Directors The following persons were directors of Newcrest Mining Limited during the half-year and/or up to the date of this report: Don Mercer Non-Executive Chairman Greg Robinson Managing Director and Chief Executive Officer Gerard Bond Finance Director and Chief Financial Officer (appointed 8 February 2012) Vince Gauci Non-Executive Director Winifred Kamit Non-Executive Director Richard Knight Non-Executive Director Rick Lee Non-Executive Director Tim Poole Non-Executive Director John Spark Non-Executive Director All Directors held their position as a Director throughout the entire half-year and up to the date of this report except as stated above. Principal Activities The principal activities of the Group during the half-year were exploration, development, mine operations and the sale of gold and gold/copper concentrate. There were no significant changes in those activities during the period. Consolidated Result The profit after tax attributable to Newcrest shareholders ( Statutory Profit ) for the half-year ended 31 December 2011 amounted to $659 million (31 December 2010: $438 million). The Statutory Profit for the half-year includes a net positive $48 million after tax (31 December 2010: negative $85 million after tax) impact due to the: Transfer of losses on restructured and closed-out hedge contracts associated with the restructure in the 2007 financial year from equity reserves to the Income Statement; Integration costs associated with the acquisition of Lihir Gold Limited ( LGL ) on 30 August 2010; and Gain on the divestment of Cracow and Mt Rawdon operations on 2 November Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 2 Page 2

5 MANAGEMENT DISCUSSION AND ANALYSIS 1 1. Overview Newcrest s financial performance for the six months ended 31 December 2011 was strong, achieving a record half year profit and operating cash flow. Statutory Profit 2 of $659 million for the six months ended 31 December 2011 was 50% higher than the corresponding prior period result of $438 million. Underlying Profit 3 of $611 million was 17% higher than the corresponding prior period result of $523 million. Operating cash flow of $1,009 million was a 9% increase from the corresponding prior period of $922 million. Consistent with the increase in profit and the company s dividend policy, Director s have announced a 20% increase in the interim dividend to 12 cents per share (unfranked). Gold sales volumes of 1,218,242 ounces were 1% higher than the corresponding prior period, while copper sales volumes were 8% higher and silver sales 26% higher. Average realised gold and copper prices increased in US$ terms for the half year, but the beneficial impact on A$ revenue was reduced due to the continued strength of the A$ against the US$. The average gold price for the half year of US$1,687 per ounce was a 31% increase on the corresponding prior period (US$1,283 per ounce). The average copper price of US$3.79 per pound was a 7% increase on the corresponding prior period (US$3.54 per pound). The A$:US$ average rate during the half year of $ represented a 9% strengthening of the exchange rate prevailing in the corresponding prior period ($0.9441). The Group EBITDA margin 4 of 50% and EBIT margin 4 of 38% for the half year were marginally lower than those in the corresponding prior period (52% and 40% respectively). Higher gold prices offset the cost pressures which continue to be experienced, particularly in energy, fuel, labour and maintenance costs. Major expansion projects continued to progress well with total capital expenditure of $1,254 million for the half year. Cadia East ($615 million) is more than 65% complete and remains on budget and on track for production ramp up during calendar year The Lihir Million Ounce Plant Upgrade ( MOPU ) ($220 million) continued to plan and is now 70% complete. The project remains on budget and schedule with upgraded production expected in the current calendar year. Major studies continued to progress well during the period. Pre-feasibility studies on Wafi-Golpu, Namosi and O Callaghans continued to progress, with tollgate decisions on Wafi-Golpu and O Callaghans expected in the next 6 months and Namosi is expected to reach a tollgate decision later in the year. Exploration expenditure during the half year period of $66 million was focused on study projects, improving existing resource and reserve positions and greenfields exploration in Cote d Ivoire and Indonesia. A high proportion of exploration expenditure continues to be capitalised ($33 million or 50% of expenditure). Heightened exploration activity will continue with 44 rigs drilling at exploration prospects, growth projects and operations. 1 All figures in this report relate to businesses of the Newcrest Mining Limited Group ( Newcrest or the Company ) for the 6 months ended 31 December 2011 ( 2011 ) compared with the 6 months ended 31 December 2010 (the corresponding prior period or 2010 ), except where otherwise stated. All reference to $ is a reference to Australian dollars unless specifically marked otherwise. 2 Statutory Profit is profit after tax attributable to owners of the parent. 3 Underlying Profit is profit after tax before hedge restructure and other significant items attributable to owners of the parent. Underlying Profit is non-ifrs financial information and has not been subject to review by the Group s external auditors. Refer to section 2.1 for further details. 4 EBITDA margin is calculated as operating EBITDA to operating sales revenue. EBIT margin is calculated as operating EBIT to operating sales revenue. Operating EBITDA and operating EBIT are non-ifrs financial information and have been extracted from Note 9 Segment Information to the financial statements, which have been subject to review by the Group s external auditors. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 3 Page 3

6 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 1. Overview (continued) Newcrest s financial position remains very strong, with gearing of 8% as at 31 December 2011 and undrawn bilateral debt facilities at half year end of US$1,730 million. Newcrest raised US$1,000 million in November 2011 through the issue of corporate bonds in the United States Rule bond market. The proceeds were used to repay existing unsecured indebtedness and to fund a portion of Newcrest s major growth projects. On 2 November 2011, Newcrest sold the Cracow and Mt Rawdon assets to Evolution Mining Limited (Evolution). As consideration, Newcrest acquired a 38.95% interest in Evolution, which was subsequently diluted to 33% following an equity raising which Newcrest did not participate in. Newcrest recognised a gain of $55 million on the divestment. 2. Discussion and Analysis of Operating Results and the Income Statement 2.1 Profit Overview The record half year Statutory Profit of $659 million was 50% higher than the corresponding prior period result of $438 million. Underlying Profit of $611 million was also a record, up 17% from the corresponding prior period result of $523 million. Underlying Profit has been presented to assist in the assessment of the relative performance of the Group. The differences between Statutory Profit and Underlying Profit are quantified in the table below and reflect: - Non-cash impacts of Newcrest s September 2007 equity raising and subsequent gold hedge book close-out and debt repayment; - Acquisition and integration costs related to the LGL acquisition; and - Profit on the divestment of Newcrest s Queensland assets in November The increase in Underlying Profit from the corresponding prior period is mostly due to the higher realised gold prices on a sustained level of gold sales. Higher copper and silver revenue also contributed to an overall increase in sales revenue of 19% to $2,342 million. The average realised gold price for the half year of A$1,636 per ounce was 20% or A$277 per ounce higher than the corresponding prior period. Gold sales volumes of 1,218,242 ounces were 1% higher than the corresponding prior period. This increase in sales volume reflected a full six months activity at Lihir and Bonikro (compared with four months in the corresponding prior period), the ramp up of the block cave at Ridgeway and the sale of inventory. These increases in sales volume were partly offset by lower production from Telfer, Lihir, Cadia Hill and Gosowong and the divestment of the Queensland assets in November The average copper price for the half year of A$3.67 per pound was 2% or A$0.08 per pound lower than the corresponding prior period. Copper sales volumes of 39,397 tonnes were 8% higher than the corresponding prior period, broadly in line with higher production overall and primarily due to the Ridgeway ramp up more than offsetting the interruption to production from Cadia Hill. Gold and copper sales volumes were both slightly higher than the production volumes in the period due to a drawdown in concentrate inventories during the half year. Cost of sales was 22% higher in the current period compared to the prior corresponding period. This reflects the increased period of ownership of Lihir and Bonikro, a higher level of maintenance and mining activity in the period, and industry wide cost pressures in relation to energy, fuel, labour and maintenance costs. Exploration expenditure during the half year was $66 million with $33 million charged to profit, an increase in exploration expense of $5 million over the corresponding prior period. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 4 Page 4

7 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 2.1 Profit Overview (continued) The table below reconciles Statutory Profit to Underlying Profit. 6 months ended 31 Dec Dec 2010 $M $M Profit after tax attributable to Newcrest shareholders ( Statutory Profit ) Losses on restructured and closed-out hedge contracts (after tax) 5 52 Other close-out related costs (after tax) - 2 Business acquisition and integration costs (after tax) 2 31 Business divestment gain (after tax) (55) - Profit after tax before hedge restructure and other significant items attributable to Newcrest shareholders ( Underlying Profit ) The table below outlines the key differences in Underlying Profit between the current period and the corresponding prior period, described in more detail later in this report: $M $M Underlying Profit for the half year ended 31 December Changes in revenues: Volume: Gold 14 Copper 23 Silver 6 Price: Gold 334 Copper (10) Silver Changes in mine costs: Mine production cost (287) Deferred mining and inventory movement 90 Treatment, realisation and royalty (18) Depreciation (26) (241) Other costs: Corporate administration (31) Exploration (5) Other income/expense 18 Net finance costs (4) (22) Tax and non-controlling interest: Income tax expense (28) Non-controlling interest 3 (25) Underlying Profit for the half year ended 31 December Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 5 Page 5

8 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 2.2 Revenue 6 months to % 31 Dec Dec 2010 Change Production volumes Gold 1,2,3 oz 1,166,370 1,222,437 (5) Copper 1 t 37,398 35,406 6 Silver oz 1,099, , Sales volumes Gold oz 1,218,242 1,208,168 1 Copper t 39,397 36,603 8 Silver oz 1,120, , Realised prices Gold A$/oz 1,636 1, Copper A$/lb (2) Silver A$/oz Average AUD:USD Revenue Gold $m 1,989 1, Copper $m Silver $m Total Sales Revenue $m 2,342 1, The higher gold price has driven the 21% increase in gold revenue. Increased copper sales volumes more than offset the lower realised copper price to increase copper revenue by 4%. Silver revenue has also increased following large increases in both the silver price and silver sales volumes. Consistent with strategy, gold revenue continues to dominate Newcrest s activities, accounting for 85% of total sales revenue (2010: 83%). Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 6 Page 6

9 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 2.2 Revenue (continued) Gold production and sales by site: Ounces 6 months to 31 Dec months to 31 Dec 2010 Gold Production Gold Sales Gold Production Gold Sales Cadia Hill 156, , , ,589 Ridgeway 109, ,925 67,048 74,776 Cadia East 1 2,412 2,412 1,643 - Telfer 272, , , ,511 Gosowong 187, , , ,802 Lihir 2 291, , , ,685 Hidden Valley 51,695 52,337 48,156 47,795 Bonikro 46,511 48,186 27,399 25,129 Cracow 3 23,787 24,688 36,215 34,616 Mt Rawdon 3 24,198 27,256 31,053 33,265 Total 1,166,370 1,218,242 1,222,437 1,208, Production and sales for the six months to 31 December 2011 includes 2,412 pre-production gold ounces and production of1,643 gold ounces in the six months to 31 December These ounces have been capitalised and excluded from the unit cost calculations and profit and loss reporting. 2. Production from Lihir, Bonikro and Mt Rawdon in the 6 months to December 2010 contains four months of production only, from acquisition date. 3. Production from Cracow and Mt Rawdon in the 6 months to December 2011 contains four months of production only, up to the date of divestment of 2 November Copper production and sales by site: Tonnes 6 months to 31 Dec months to 31 Dec 2010 Copper Production Copper Sales Copper Production Copper Sales Cadia Hill 8,055 8,518 11,380 12,188 Ridgeway 14,204 14,422 7,560 8,465 Cadia East Telfer 14,905 16,223 16,226 15,950 Total 37,398 39,397 35,406 36, Production and sales for the six months to 31 December 2011 includes 234 copper tonnes for the Cadia East project, and production of 240 copper tonnes in the six months to 31 December These tonnes have been capitalised and excluded from the unit cost calculations and profit and loss reporting. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 7 Page 7

10 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 2.2 Revenue (continued) Total gold sales volume of 1,218,242 ounces was a 1% or 10,074 ounce increase on the corresponding prior period. Gold sales volume was higher than production volume for the half year due to a drawdown of concentrate inventory during the period. Total gold production of 1,166,370 ounces was a reduction of 5% or 56,067 ounces compared to the corresponding prior period. Movements by operation were as follows: Cadia Hill production decreased 11% or 19,613 ounces. Heavy rainfall in November 2011 caused a ground slip in the open pit, ceasing mining operations for the remainder of the half year. Lower grade ore stockpiles were fed through the mill in the interim, with mining having re-commenced in late January; Ridgeway production increased 64% or 42,668 ounces due to increased block cave ore production and mill throughput in addition to higher grade; Cadia East s development production increased by 47% or 769 development ounces. Revenue is capitalised as part of the project; Telfer production decreased 20% or 66,511 ounces due to lower feed grade from the open pit impacting recoveries and lower mill throughput; Gosowong production decreased 14% or 30,531 ounces largely in line with an expected reduction in gold grade. This was partly offset by record mill throughput delivering an 11% improvement over the corresponding prior period; Lihir production increased 5% or 13,783 ounces. The current period included a full six months of ownership, though production was adversely impacted by heavy rainfall and subsequent flooding in the open pit, reducing access to higher grade ore. Mill throughput was also restricted due to power interruptions and a major planned maintenance shutdown in August 2011; Hidden Valley production increased by 7% or 3,539 ounces due to increased mill throughput and recoveries offsetting the adverse impacts of lower head grade; Bonikro production increased 70% or 19,112 ounces with the inclusion of a full six months of production; Cracow and Mt Rawdon production were down due to the divestment in November Total gold revenue in the six months ended 31 December 2011 grew by 21% to $1,989 million (2010: $1,641 million), driven by a 20% increase in the gold price to A$1,636 per ounce (2010: A$1,359 per ounce). Gold sales volumes were marginally higher than the corresponding prior period. The US$ gold price reached record highs (US$1,921 per ounce during the half year), however the impact on A$ revenue was reduced due to the continued strength of the A$ (average rate for the six months ended 31 December 2011 of $ compared to the corresponding prior period rate of $0.9441). Copper revenue increased by 4% to $316 million due to an 8% increase in sales volumes, though this was slightly offset by lower realised prices. The 2% lower price of A$3.67 per pound compared to the prior corresponding period is the result of a 7% stronger US$ price more than offset by a 9% stronger A$ against the US$. Silver revenue increased by 68% from $22 million to $37 million due to higher silver prices and higher silver ounces sold. Sales volumes increased by 26% to 1,120,790 ounces primarily due to increased production at Hidden Valley. The average silver price of A$32.83 per ounce was 34% higher than the A$24.56 per ounce of the corresponding prior period. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 8 Page 8

11 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 2.3 Costs Cost of sales $M 31 Dec Dec Increase/ % Change (Decrease) % Change Attributable to Price % Change Attributable to Volume Employee Salaries Maintenance incl Contract Labour Mining Contracts Fuel & Lubes Utilities & Power Liners & Grinding Mining Consumables Other Input Costs Mine production costs 1, Deferred Mining Costs (58) (17) (241) Inventory Movements (94) (45) (109) Treatment & Realisation Royalties Depreciation Cost of Sales 2, 3 1,356 1, The corresponding prior period comparatives have been restated in line with the new Newcrest Group cost model. 2. Costs of Cracow and Mt Rawdon included to the date of divestment on 2 November Costs from the former LGL operations included from the acquisition date of 30 August Total cost of sales have increased by 22%. Comparability of the period-on-period change is challenged by: This current period including a full six months of activity for Lihir and Bonikro compared with four months in the corresponding prior period, and Ownership of Cracow for four months of the current period only compared with six months in the corresponding prior period. The increased costs also reflect a higher level of maintenance and mining activity in the period and industry wide cost pressures in relation to energy, fuel, labour and maintenance costs. Employee costs increased by $37 million or 25%. This includes the additional period of activity at Lihir and Bonikro and a change in roster arrangements at Telfer. The rate of salary and wage increases reflects tight labour markets, particularly in Australia and Indonesia. Maintenance costs have increased $73 million or 37%, reflecting major planned plant shutdowns at Lihir, Cadia Valley and Telfer. Other impacts included higher material movements at Telfer and higher mobile fleet maintenance rates also at Telfer with longer term, lower cost contracts rolling off. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 9 Page 9

12 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 2.3 Costs (continued) Mining contract costs have increased by $76 million or 127%. This large increase has been primarily driven by Telfer Stage 4 open pit waste stripping, a full six months of operations at Lihir and Bonikro. The price increase reflects the competitive market for material movements, particularly in Western Australia and West Africa. Costs for fuels and lubes have increased by $24 million or 44% due a combination of increased price and volume. The benchmark diesel price has increased 34% in US$ terms, but the impact on Newcrest has been reduced by the stronger A$ compared to the US$ and hedging arrangements. Diesel consumption was higher following increased activity in Telfer s open pit with the commencement of Stage 4 waste stripping, increased activity at Ridgeway resulting in increased equipment numbers and loader hours, and a full six months of operations at Lihir and Bonikro. Group power costs have increased by $24 million or 32%, driven by higher unit prices and increased activity. Costs have been impacted by contract renewal at a higher price at Cadia Valley. Power generation costs at Lihir, Gosowong and Hidden Valley have been adversely impacted by the increase in diesel and heavy fuel oil prices. Group power demands have increased with a full six months of operation at Lihir and Bonikro, plus higher mill throughput at Gosowong. Liners and grinding media costs have increased by $3 million or 5%. Consumption has increased in line with the increased activity at Ridgeway, a full six months of operations Lihir and Bonikro, and additional milling capacity at Cadia Valley and Gosowong. Mining consumables costs have risen $15 million or 12%. This category includes costs such as heavy equipment tyres, explosives, and chemical reagents. The cost of consumables has risen with the increase in activity at Ridgeway whilst the waste stripping activity at Telfer has increased explosives and tyre costs. Reagent costs have increased due to additional dump leach activity at Telfer, an increase in mill utilisation at Hidden Valley, and a full six months of operations at Lihir and Bonikro. Other input costs, including mine site overheads, have increased by $35 million or 36% this period. In addition to the impact of a full half year of costs from Lihir and Bonikro, flight and accommodation costs at Telfer have been higher with increased numbers on site due to the Stage 4 cutback and amended roster arrangements. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 10 Page 10

13 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 2.3 Costs (continued) $M % Change 31 Dec Dec 2010 Change $M Increase/ (Decrease) Mine production costs by site 1, Cadia Valley Telfer Gosowong Lihir Hidden Valley Bonikro Cracow (1) (5) Mt Rawdon 1, Costs from the former LGL operations included from the acquisition date of 30 August Costs of Cracow and Mt Rawdon included to the date of divestment on 2 November Continued ramp up of the Ridgeway Deeps block cave has driven Cadia Valley s 25% cost increase. This is visible in higher maintenance, mining contracts, mining consumables and power costs. Power costs also increased due to an electricity contract renewal at a higher price reflecting higher energy costs generally. Telfer s mine production costs increased by 28%, reflecting a full six months of contract waste stripping for Stage 4 of the Main Dome open pit. Fuel and consumables also increased to support this activity. Given the stripping focus, the majority of this expenditure has been capitalised as deferred mining costs. Price increases were mainly labour and increased maintenance rates for mobile equipment. Gosowong s mine production costs have increased by 27%, with the ramp up of the open pit cutback leading to an increase in mining, maintenance and fuel costs. Fuel costs have also been adversely impacted by increased diesel prices. Labour pressures have increased salary costs while the mill optimisation has resulted in record mill throughput but with concurrent higher power and mill consumables Lihir s mine production costs have increased by 58%, with the inclusion of a full six months of operations being the primary driver. Maintenance costs were also impacted by a planned total plant shutdown. Fuel and power were affected by higher prices and consumption. Hidden Valley s mine production costs have increased by 30%, in line with increased activity in its second year of operation and general cost pressures. The ramp-up in mill utilisation and mining has driven increased mining contracts, power and mining consumables costs. Costs were also affected by the recommissioning of the overland conveyor and increased trucking as the conveyor continues to ramp- up. Bonikro s mine production costs have increased by 113% with the inclusion of six months of production in the current period. This compares to four months in the corresponding prior period. Mining activity in the current period has exceeded mill capacity resulting in an increase in costs transferred to ore inventories. Changes in the mine production costs at Cracow and Mt Rawdon reflect the divestment of these operations on 2 November 2011 and similar cost pressures experienced by the other Australian operations. Deferred mining The level of net costs capitalised as deferred mining during the period increased to $58 million compared with the $17 million in the corresponding prior period. This large movement in deferred mining reflects the lower rate of amortisation at Cadia Valley and an increase in waste stripping activity, particularly at Telfer. The lower amortisation from Cadia Valley was a result of the ground slip in the open pit in the current period, reducing the level of open pit mining activity. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 11 Page 11

14 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 2.3 Costs (continued) Inventory movements A net inventory movement increase of $94 million compared to $45 million in the corresponding prior period. This $49 million difference is primarily due to: - $86 million build up of ore inventory due to mining activity exceeding mill throughput at most sites, and - $25 million build up of dump leach stocks at Telfer, offset by - $58 million draw down on concentrate stocks, predominantly at Telfer and Cadia Valley. Treatment, realisation and royalty costs The treatment and refining costs ( TC/RC ) of $70 million have increased by 13% or $8 million on the corresponding prior period, predominantly due to higher concentrate volumes and increased TC/RC unit rates and freight rates. The impact of these rate increases have been reduced in A$ terms due to the strengthening A$ against the US$ in the period. Royalties of $67 million for the period are an increase of 18% on the corresponding prior period (2010: $57 million), consistent with the increase in sales revenue. Depreciation Site depreciation expense included in cost of sales increased by $26 million to $267 million. The increase was driven by higher levels of production from Ridgeway Deeps and a full six months production at Bonikro. Depreciation costs of $229 per ounce sold were higher than the $202 per ounce in the corresponding prior period due to a higher proportion of sales from the newly acquired LGL assets and the recently commissioned Ridgeway Deeps. Corporate Administration Costs The corporate administration cost of $66 million was $31 million higher than the prior corresponding period (although only $8 million higher than the six months ended June 2011) reflecting an increase in expenditure on technology, an increase in expenditure on safety and health initiatives, and the relative effect of a full six months of a post LGL corporate expense rather than the four months in the prior period. The increased investment in innovation and technology is aimed at generating significant, step-change improvements in production. Effort has focused on mining methods to accelerate the ramp-up of underground production rates, earlier waste rejection to improve mill throughput and reduce energy consumption, and composite gravity test work targeting improved metallurgical recoveries. A significant amount of effort was also invested in safety and health initiatives in the period including major hazard management and an extensive review of transportation arrangements following the helicopter accident in Indonesia in August Total corporate costs remain lower than the pre-merger aggregate corporate costs with savings in line with projected synergies. Exploration Total exploration expenditure for the half year was $66 million (2010: $62 million) with $33 million charged against income compared to $28 million in the corresponding prior period. The current period capitalisation rate of 50% reflects the continued concentration of the exploration effort on brownfields and reserve definition activity. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 12 Page 12

15 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 2.4 Other Income/(Expense) Other Income/(Expense) was an inflow of $13 million (2010: $5 million expense). 6 months ended 31 Dec Dec 10 $M $M Net foreign exchange gain/(loss) (4) (20) Fair value gain on gold & copper derivatives 22 8 Cadia Valley royalty dispute - 11 Other (5) (4) Other Income/(Expense) 13 (5) The fair value gain on gold and copper derivatives relates to the movement in spot prices impacting the quotational period adjustments in sales. Newcrest locks in the copper price for concentrate shipments at the time of sale to minimise this impact. Gold prices are not locked in at the time of shipment due to the shorter quotational period for gold (usually one month for gold versus three or four months for copper). With gold prices increasing during the half year the one month quotational period adjustments were positive. The foreign exchange loss is due to the effect of the strengthening A$:US$ exchange rate on US$ denominated concentrate debtors. 2.5 Finance Costs Finance costs of $20 million were 9% lower than the corresponding prior period (2010: $22 million). Gross finance costs increased by $9 million due to a higher level of debt drawdown during the period. Interest of $11 million was capitalised during the year in relation to the Cadia East development project and MOPU. 2.6 Income Tax Expense The income tax expense in the current period profit before income tax was $242 million (2010: $187 million), resulting in an effective tax rate of 26% (2010: 29%). This is lower than the Australian company tax rate of 30% primarily due to Research and Development benefits of $13 million in relation to previous financial years and the utilisation of capital losses to shelter tax on the divestment of Cracow and Mt Rawdon. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 13 Page 13

16 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 2.7 Hedge Restructure & Other Significant Items Hedge Restructure and Other Significant Items resulted in a $45 million pre-tax gain (2010: $115 million pre-tax loss). 6 months ended: 31 Dec Dec 10 $M $M Losses on restructured and closed-out hedge contracts (7) (75) Other close-out related losses - (2) Business acquisition and integration costs (3) (38) Gain on business divestment 55 - Hedge Restructure and Other Significant Items (pre-tax) 45 (115) Income tax benefit/(expense) 3 30 Hedge Restructure and Other Significant Items (post-tax) 48 (85) Losses on restructured and closed-out hedges During the 2008 financial year, Newcrest closed out its gold hedge book and realised the gold hedging losses and extinguished any future obligation with respect to the hedge contracts. Accounting standards require the accumulated losses on the contracts closed out to remain deferred in the Hedge Reserve within equity. The losses in the Hedge Reserve are transferred to the Income Statement in future periods in line with the original sales to which they were designated. A pre-tax loss on restructured and closed out hedge contracts of $7 million has been recognised in the current period (2010: $75 million). This Hedge Reserve has now been fully released to the Income Statement. There are no liabilities remaining for the closed-out contracts. The profit impact in the current period is a non-cash item. Other close-out related losses The other close-out related impacts in the corresponding prior period relate to the fair value loss of $2 million on gold put options. Newcrest purchased the gold put options following the close out of the gold hedge book in September 2007 in order to manage its exposure to commodity price risk. The put options over the remaining 250,000 ounces have a carrying value of nil. These are due to expire in April Business acquisition and integration costs The LGL acquisition resulted in transaction and integration costs of $3 million for the period (2010: $38 million). Business divestment A$55 million gain was recognised on the disposal of the Cracow and Mt Rawdon assets during the period as summarised below. The proceeds from the sale were non-cash, taking the form of a share investment in the acquirer of those assets, Evolution. Evolution is a growth focused Australian gold company, owing and operating four gold and silver mines in Queensland and Western Australia, and is amongst the largest five Australian gold producers. Following Newcrest s non participation in a subsequent capital raising, Newcrest holds a 33% interest in Evolution. Going forward, Newcrest s share of after-tax profit from its investment in Evolution will be included in the Income Statement each reporting period. 6 months ended: 31 Dec 11 $M Consideration received 390 Carrying value of assets sold (327) Disposal costs (8) Gain on business divestment 55 Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 14 Page 14

17 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 3. Discussion and Analysis of the Cash Flow Statement 3.1 Cash Flow Operating Activities Operating cash flow for the half year increased by 9% or $87 million to $1,009 million (2010: $922 million), with the higher gold price more than offsetting higher operating costs and tax payments. The increase in operating cash flow is less than the rate of increase in profit due to the cash impact of higher levels of waste stripping, and inventory build compared to the corresponding prior period. 3.2 Cash Flow Investing Activities Net cash used in investing activities for the period of $1,329 million was an increase of 17% or $190 million over the prior period (2010:$1,139 million). Major project capital expenditure was focused on projects at Cadia East ($615 million), Lihir s MOPU ($220 million) and pre-feasibility at Wafi-Golpu ($20 million). Larger items of sustaining capital expenditure were incurred at Lihir ($101 million), Telfer ($44 million), Cadia Valley ($17 million) and Bonikro ($11 million). 6 months ended: 31 Dec 2011 $M Capital Expenditure: - Sustaining Development 65 - Projects Constructions & Studies 986 1,254 Exploration 66 Interest capitalised on development projects 11 Net proceeds from business divestment (2) Total 1,329 Exploration expenditure Exploration expenditure during the period has been focused on near province opportunities, improving existing resource positions and converting these resources to reserves. During the period, this included: Wafi-Golpu extensive resource definition drilling program on the Golpu porphyry deposit with expectation of updates in June Telfer - continued drilling of the Vertical Stockwork Corridor located below the Telfer Deeps sublevel cave mine, and West Dome. Gosowong drilling to the north and south of the previously mined Toguraci open pit. Papua New Guinea continued drilling at Lihir. Namosi continued drilling in the Waivaka corridor. Initial results from greenfields exploration programs in Cote D Ivoire and Tandai, Indonesia, have been encouraging. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 15 Page 15

18 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 3.2 Cash Flow Investing Activities (continued) A breakdown of exploration and evaluation expenditure by nature was: 6 months ended: 31 Dec 11 $M Greenfields 21 Brownfields 18 Reserve Definition: - Hidden Valley and Wafi-Golpu 11 - Lihir 7 - Telfer 5 - Other 4 27 Total 66 A breakdown of exploration expenditure by region was: 6 months ended: 31 Dec 11 $M Papua New Guinea 24 Australia 18 Indonesia 12 Cote d Ivoire 9 Fiji 3 Total Cash Flow Financing Activities Cash flows used in financing activities were an inflow of $403 million, compared with an outflow of $203 million in the corresponding prior period. For the current period, financing cash flow included net proceeds from the issue of US corporate bonds of an A$ equivalent value of $963 million, which were mostly used to repay existing bilateral facilities. Outflows for the period included; Net repayment of $219 million on the Bilateral Facility; Payment of a final and special cash dividend to Shareholders of Newcrest of $276 million; Payments for share buy-back of $40 million. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 16 Page 16

19 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 4. Discussion and Analysis of the Balance Sheet 4.1 Net Assets and Total Equity Newcrest s Net Assets and Total Equity increased by $879 million during the half year to $14,754 million. This was mainly due to the profit for the period and the effect of translation of US$ functional currency entities into A$. Newcrest has carry forward tax losses of $173 million recognised as an asset as at 31 December This is a net reduction of $57 million from 30 June 2011 and represents utilisation of losses by the Newcrest Australian Tax Group. The assets recognised on tax losses are as follows: $M Newcrest Australian tax consolidated Group 148 PNG Morobe Mining Joint Ventures 25 Asset on losses at 31 Dec Net Debt and Gearing As at 31 December 2011, Newcrest had net debt, comprising total borrowings less cash, of $1,336 million, $721 million higher than the 30 June 2011 net debt position of $615 million, as outlined in the table below. The primary driver of the movement during the period was the issue of US$1,000 million of corporate bonds, the proceeds of which were used to repay existing unsecured debt and for funding a portion of the Group s major growth projects. $M Net debt at 30 June Issue of USD corporate bonds 963 Net decrease in bilateral debt (219) Retranslation of USD denominated debt 59 Increase in cash balances (80) Repayment of finance leases (2) Net movement for the half year 721 Net debt at 31 Dec ,336 The gearing ratio (net debt to net debt plus equity) as at 31 December was 8% (30 June 2011: 4%). $M 31 Dec Jun 2011 Total debt 1, Less cash and cash equivalents (265) (185) Net debt 1, Equity 14,754 13,875 Net debt and equity 16,090 14,490 Gearing (net debt/net debt and equity) 8% 4% Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 17 Page 17

20 MANAGEMENT DISCUSSION AND ANALYSIS (continued) 4.3 Liquidity and Debt Facilities In November 2011, Newcrest issued US$1,000 million in USD Corporate Bonds ( notes ). The notes were sold in accordance with Rule 144A and Regulation S of the Securities Act of the United States. The notes consist of: US$750 million Senior Unsecured Notes due 15 November 2021 with a coupon of 4.45% US$250 million Senior Unsecured Notes due 15 November 2041 with a coupon of 5.75% Newcrest has US dollar bilateral facilities of US$2,000 million, with US$270 million drawn down as at 31 December These are unsecured revolving facilities with maturities ranging between December 2012 and February Interest is based on LIBOR plus a margin. Newcrest also has US$350 million of long-term senior unsecured notes issued into the North American Private Placement market. The notes, comprising five tranches, have a repayment profile from May 2012 to May The vast majority of the notes are at an average fixed interest rate of 5.6%. The notes due for repayment in May 2012 of US$120 million (A$118 million) have been classified as current borrowings. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 18 Page 18

21

22 Auditor s Independence Declaration to the Directors of Newcrest Mining Limited In relation to our review of the financial report of Newcrest Mining Limited for the half-year ended 31 December 2011, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. Ernst & Young Rodney Piltz Partner 9 February 2012 Liability limited by a scheme approved under Professional Standards Legislation

23 INCOME STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER 2011 Consolidated 31-Dec Dec-10 Note $M $M Operating sales revenue 3(a) 2,342 1,966 Cost of sales 3(b) (1,356) (1,115) Gross profit Exploration expenses (33) (28) Corporate administration expenses 3(c) (66) (35) Other income/(expenses) 3(d) 13 (5) Losses on restructured and closed-out hedge contracts 3(g) (7) (75) Other close-out related losses 3(h) - (2) Business acquisition and integration costs 3(i) (3) (38) Gain on business divestment 3(j) 55 - Profit before interest and income tax Finance income 1 7 Finance costs 3(e) (20) (22) Profit before income tax Income tax expense 4 (242) (187) Profit after income tax Profit after tax attributable to: Owners of the parent Non-controlling interest Earnings per share (cents per share) Basic earnings per share Diluted earnings per share The above Statement should be read in conjunction with the accompanying notes. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 21 Page 21

24 STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2011 Consolidated 31-Dec Dec-10 Note $M $M Profit after income tax Other comprehensive income Cashflow hedges Losses on restructured hedge contracts transferred to the Income Statement 3(g) 7 75 Other cashflow hedges deferred in equity (5) 3 Income tax expense/(benefit) - (23) 2 55 Available-for-sale investments Net gain deferred in equity Foreign currency translation Translation of foreign operations 527 (1,410) 527 (1,410) Other comprehensive income/(loss) for the period, net tax 529 (1,353) Total comprehensive income/(loss) for the period 1,213 (887) Total comprehensive income/(loss) attributable to: Owners of the parent 1,181 (905) Non-controlling interest ,213 (887) The above Statement should be read in conjunction with the accompanying notes. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 22 Page 22

25 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2011 Consolidated 31-Dec Jun-11 Note $M $M Current assets Cash and cash equivalents Trade and other receivables Inventories Financial derivative assets 1 15 Other assets Total current assets 1,486 1,542 Non-current assets Other receivables - 2 Inventories Property, plant and equipment 3,418 3,310 Exploration, evaluation and development 8,649 7,675 Goodwill 3,772 3,621 Other intangible assets Deferred tax assets Other financial assets 10 9 Investment in associates Other assets Total non-current assets 17,551 15,740 Total assets 19,037 17,282 Current liabilities Trade and other payables Borrowings Provisions Financial derivative liabilities 22 7 Income tax payable Total current liabilities Non-current liabilities Borrowings 1, Provisions Deferred tax liabilities 1,729 1,674 Total non-current liabilities 3,432 2,590 Total liabilities 4,283 3,407 Net assets 14,754 13,875 Equity Issued capital 7 13,559 13,569 Retained earnings 2,524 2,171 Reserves 8 (1,437) (1,964) Parent entity interest 14,646 13,776 Non-controlling interest Total equity 14,754 13,875 The above Statement should be read in conjunction with the accompanying notes. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 23 Page 23

26 STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2011 Consolidated 31-Dec Dec-10 Note $M $M Cash flows from operating activities Receipts from customers 2,503 1,969 Payments to suppliers and employees (1,341) (990) Interest received 1 9 Interest paid (14) (18) Income taxes paid (140) (48) Net cash provided by operating activities 1, Cash flows from investing activities Payments for property, plant and equipment (203) (90) Mines under construction, development and feasibility expenditure (1,041) (709) Exploration and evaluation expenditure (66) (62) Information systems development (10) (2) Interest capitalised on development projects (11) - Proceeds from non-participation in rights issue Payments for business divestment transaction costs 10 (8) - Acquisition of Lihir Gold Limited, net of cash acquired - (272) Payment for investments - (4) Net cash (used in) investing activities (1,329) (1,139) Cash flows from financing activities Proceeds from borrowings: US dollar bilateral debt US dollar bonds Repayment of borrowings: US dollar bilateral debt (1,086) (135) Other - (52) Net repayment of finance lease principal (2) (2) Share buy-back (40) - Dividends paid: Members of the parent entity 5 (276) (126) Non-controlling interest (23) (23) Net cash (used in)/provided by financing activities 403 (203) Net increase/(decrease) in cash and cash equivalents 83 (420) Cash and cash equivalents at the beginning of the half-year Effects of exchange rate changes on cash held (3) (17) Cash and cash equivalents at the end of the half-year The above Statement should be read in conjunction with the accompanying notes. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 24 Page 24

27 STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2011 Attributable to Equity Holders of the Parent Noncontrolling Total FX Equity Fair Issued Translation Hedge Settlement Value Retained Interest Capital Reserve Reserve Reserve Reserve Earnings Total $M $M $M $M $M $M $M $M $M Balance at 1 July ,569 (2,026) ,171 13, ,875 Profit for the period Other Comprehensive Income for the period Total Comprehensive Income for the period , ,213 Transactions with owners in their capacity as owners Share-based payments Dividend Reinvestment Plan Shares issued Share buy back (40) (40) - (40) Dividends (306) (306) (23) (329) Balance at 31 December ,559 (1,506) ,524 14, ,754 The above Statement should be read in conjunction with the accompanying notes. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 25

28 STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2011 Attributable to Equity Holders of the Parent Noncontrolling Total FX Equity Fair Issued Translation Hedge Settlement Value Retained Interest Capital Reserve Reserve Reserve Reserve Earnings Total $M $M $M $M $M $M $M $M $M Balance at 1 July ,640 (124) (90) 36-1,492 4, ,010 Profit for the period Other Comprehensive Income for the period - (1,399) (1,342) (11) (1,353) Total Comprehensive Income for the period - (1,399) (904) 17 (887) Transactions with owners in their capacity as owners Share-based payments Dividend Reinvestment Plan Acquisition of Lihir Gold Limited 9, , ,982 Dividends (153) (153) (23) (176) Balance at 31 December ,612 (1,523) (35) ,777 13, ,960 The above Statement should be read in conjunction with the accompanying notes. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 26 Page 26

29 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Corporate Information Newcrest Mining Limited is a company limited by shares, domiciled and incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange ( ASX ) and on the Port Moresby Stock Exchange ( POMSOX ). The registered office of Newcrest Mining Limited is Level 9, 600 St Kilda Road, Melbourne, Victoria, 3004, Australia. The nature of the operations and principal activities of Newcrest Mining Limited and its controlled entities ( the Group or Consolidated Entity ) are exploration, mine development, mine operations and the sale of gold and gold/copper concentrate. The financial report of Newcrest Mining Limited for the half-year ended 31 December 2011 was authorised for issue in accordance with a resolution of the Directors on 9 February Basis of Preparation and Accounting Policies (a) Basis of Preparation This general purpose financial report for the half-year ended 31 December 2011 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act The Half-Year Financial Report does not include all notes of the type normally included within the Annual Financial Report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Group as the full financial report. It is recommended that the Half-Year Financial Report be read in conjunction with the Annual Financial Report for the year ended 30 June 2011 and considered together with any public announcements made by Newcrest Mining Limited during the half-year ended 31 December 2011 in accordance with the continuous disclosure obligations of the ASX listing rules. (b) Basis of Consolidation The half-year consolidated financial statements comprise the financial statements of Newcrest Mining Limited and its controlled entities as at 31 December All intercompany balances and transactions, including unrealised gains and losses arising from intra-group transactions, have been eliminated in preparing the consolidated financial statements. Controlled entities are consolidated from the date on which control commences until the date that control ceases. Non-controlling interest in the results and equity of the entity that is controlled by the Group is shown separately in the Income Statement, Statement of Comprehensive Income and Statement of Financial Position respectively. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 27

30 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Basis of Preparation and Accounting Policies (continued) (c) Significant Accounting Policies The Group did not adopt any new and/or revised Standards, Amendments and Interpretations from 1 July 2011 which had an effect on the financial position or performance of the Group. The Group has not elected to early adopt any other new standards, amendments or interpretations that are issued but are not yet effective. Apart from the accounting policy noted below, the accounting policies, methods of computation and areas of critical accounting judgements, estimates and assumptions are the same as those adopted in the most recent annual financial statements for the year ended 30 June Investment in Associates The Group s investment in an associate is accounted for using the equity method. An associate is an entity in which the Group has significant influence. Under the equity method, the investment in the associate is carried on the Statement of Financial Position at cost plus post acquisition changes in the Group s share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. The Income Statement reflects the Group s share of the results of operations of the associate. When there has been a change recognised directly in the equity of the associate, the Group recognises its share of any changes and discloses this, when applicable, in the Statement of Changes in Equity. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate. The Group s share of profit of an associate is included in the Income Statement. This is the profit attributable to equity holders of the associate and, therefore, is profit after tax and non-controlling interests in the subsidiaries of the associate. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on its investment in its associate. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the Income Statement. Upon loss of significant influence over the associate, the Group measures and recognises any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 28

31 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Revenue and Expenses Profit before income tax includes the following revenues, income and expenses whose disclosure is relevant in explaining the performance of the Group: Consolidated 31-Dec Dec-10 $M $M (a) Operating Sales Revenue Gold 1,989 1,641 Copper Silver Total Operating Sales Revenue 2,342 1,966 (b) Cost of Sales Mine production costs 1, Royalty Concentrate treatment and realisation Deferred mining adjustment (58) (17) Inventory movements (94) (45) 1, Depreciation Total Cost of Sales 1,356 1,115 (c) Corporate Administration Expenses Corporate costs Corporate depreciation 8 7 Equity settled share-based payments 5 4 Total Corporate Administration Expenses Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 29

32 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Revenue and Expenses (continued) Consolidated 31-Dec Dec-10 $M $M (d) Other Income/(Expenses) Net foreign exchange gain/(loss) (4) (20) Net fair value gain on gold and copper derivatives 22 8 Royalty dispute - 11 Other (5) (4) Total other income/(expenses) 13 (5) (e) Finance Costs Interest costs: Interest on loans Other: Facility fees and other costs 7 7 Discount unwind on provisions Interest capitalised (11) - Total finance costs (f) Depreciation and Amortisation Depreciation and amortisation included in: Cost of Sales (note 3(b)) Corporate Administration (note 3(c)) 8 7 Total depreciation and amortisation expense Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 30

33 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Revenue and Expenses (continued) Consolidated 31-Dec Dec-10 $M $M (g) Losses on Restructured and Closed-Out Hedge Contracts Losses on restructured and closed-out hedge contracts transferred from reserves (Note 8(b)) 7 75 Applicable income tax expense/(benefit) (2) (23) Total losses on restructured and closed-out hedge contracts (after tax) 5 52 (h) Other Close-Out Related Losses Fair value loss on gold put options - 2 Applicable income tax expense/(benefit) - - Total Other Close-Out Related Losses (after tax) - 2 (i) Business Acquisition and Integration Costs Acquisition related costs (1) - 15 Integration costs (1) Applicable income tax expense/(benefit) (1) (7) Total Business Acquisition and Integration Costs (after tax) 2 31 (1) Represents costs associated with the acquisition and subsequent integration of Lihir Gold Limited on 30 August (j) Gain on Business Divestment Consideration received Written down value of net assets sold (327) - Disposal costs (8) - Applicable income tax expense/(benefit) - - Gain on Business Divestment (1) 55 - (1) Represents gain on the divestment of the Cracow and Mt Rawdon operations on 2 November Refer Note 10. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 31

34 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Income Tax Expense Consolidated 31-Dec Dec-10 $M $M Accounting profit before tax Income tax expense calculated at 30% (2010: 30%) Investment, research and development allowance - (2) - Non-deductible expenses Effect of different tax rates in foreign jurisdictions (4) (10) - Capital losses brought to account (16) (1) - (Over) provided in prior years (1) (23) - Income tax expense per the Income Statement (1) The over provision primarily relates to higher research and development allowance claimed for prior years. 5. Dividends (a) Dividends declared and paid The following dividends were paid during the half-year: Final ordinary dividend for the financial year 30 June 2011: 20 cents per share (unfranked), paid 21 October 2011 Special dividend for the financial year 30 June 2011: 20 cents per share (unfranked), paid 16 December 2011 Final ordinary dividend for the financial year 30 June 2010: 20 cents per share (unfranked), paid 22 October 2010 Participation in the Dividend Reinvestment Plan reduced the cash amount paid to $276 million (2010: $126 million). 31 Dec 2011 $M Consolidated 31 Dec 2010 $M (b) Dividend proposed and not recognised as a liability Subsequent to the end of the half-year the Directors determined the following dividend: Interim ordinary dividend for the financial year 30 June 2012: 12 cents per share (unfranked), proposed to be paid 17 April Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 32

35 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Other Assets Consolidated 31 Dec Jun 2011 $M $M Current Deferred mining Prepayments and other Total current other assets Non-current Deferred mining Prepayments and other 7 6 Total non-current other assets Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 33

36 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Issued Capital Consolidated Half-year ended Full year ended 31-Dec Jun-11 $M $M Opening balance 13,569 3,640 Shares issued: Dividend reinvestment plan (b) Acquisition of Lihir Gold Limited (c) - 9,947 Share issue costs (c) - (2) Share buy-back (31) (28) Shares reclassified as treasury shares (9) (30) Total issued capital 13,559 13, Share Capital Issued No. No. Comprising: Shares held by the public 764,479, ,412,847 Treasury shares 480, ,153 Total Issued Capital 764,960, ,000,000 Number of Ordinary Shares Half-year ended Full year ended Movement in Issued Ordinary Shares 31-Dec Jun-11 Opening number of shares 764,412, ,498,777 Shares issued: Share plans (a) 337, ,086 Dividend reinvestment plan (b) 850,080 1,085,162 Acquisition of Lihir Gold Limited (c) - 280,987,564 Employee share acquisition plan (d) 39,088 39,257 Share buy-back (e) (889,811) (754,621) Shares reclassified as treasury shares (270,000) (786,378) Closing number of shares 764,479, ,412,847 Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 34

37 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Issued Capital (continued) Half-year ended Full year ended 31-Dec Jun-11 No. No. Movement in treasury shares for the year Opening number of shares 587,153 - Purchases 270, ,378 Issued pursuant to share plans (376,458) (199,225) Closing Number of Shares 480, ,153 (a) Represents options and rights exercised under the Company s share-based payments plan. (b) The Dividend Reinvestment Plan provides shareholders with an opportunity to reinvest all or part of their dividend entitlements at the market price at the time of issue. (c) Represents issue of shares on 13 September 2010 pursuant to the Scheme of Arrangement between Lihir Gold Limited and its ordinary shareholders which became effective on 30 August Transaction costs associated with the issue amounted to $2 million. (d) The Employee Share Acquisition Plan is a broad based employee share plan. During the half year, the plan offered eligible employees fully paid shares for $nil consideration. (e) Comprises of the following on-market buy-backs: Shares Bought Back and Cancelled Date No Average Low High Price 17 Nov , Nov , Dec , ,811 Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 35

38 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Reserves Consolidated Half-year ended Full year ended 31 Dec Jun 2011 $M $M Equity Settlements Reserve Foreign Currency Translation Reserve (a) (1,506) (2,026) Hedge Reserve (b) Total Reserves (1,437) (1,964) a) Foreign Currency Translation Reserve The Foreign Currency Translation Reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations. It is also used to record gains and losses on hedges of net investment in foreign operations. During the period, the Group issued US$1,000 million in US denominated corporate bonds. This debt has been designated as a hedge of the net investment in a foreign operation (Lihir Gold Limited). The exchange gains or losses upon subsequent revaluation of this US dollar denominated debt, in an effective hedge relationship, from the historical drawdown rate to the period-end spot exchange rate are deferred in equity in the foreign currency translation reserve. These cumulative gains or losses will remain deferred in equity and will only be transferred to the Income Statement in the event of the disposal of the foreign operation. During the period $9 million (net of tax) was deferred to the reserve in respect of this net investment hedge. b) Hedge Reserve The Hedge Reserve is used to record the effective portion of changes in the fair value of the cash flow hedges. The components of the Hedge Reserve at period end were as follows: 31 December June 2011 Net Gross Tax Gains/ Gains/ Tax impact (Losses) (Losses) impact $M $M $M $M $M $M Gross Gains/ (Losses) Net Gains/ (Losses) FX gains on US dollar denominated debt: - Private placement notes 30 (9) (9) 21 Losses on hedge contracts (i) (7) 2 (5) Other cashflow hedges (3) 1 (2) 2 (1) 1 (i) Losses on Hedge Contracts 27 (8) (8) 17 Losses on hedge contracts incurred in previous years (which were restructured / closed out in previous years) were released to the Income Statement in line with the original sales to which they were designated. These losses have now been fully realised in the Income Statement. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 36

39 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Segment Information The Group s operating segments are based on the internal management reports that are reviewed and used by the Group s Executive Committee (the chief operating decision makers) in assessing performance. The operating segments represent the Group s operating mines and projects which are organised and managed according to their location. The Group s reportable operating segments are: Cadia Valley, NSW, Australia Telfer, WA, Australia Cracow JV (70% interest) and Mt Rawdon, QLD, Australia Gosowong, Indonesia Lihir, Papua New Guinea Hidden Valley JV (50% interest), Papua New Guinea West Africa (includes Bonikro operations and exploration and evaluation activities in Cote d Ivoire) Exploration and Other Cracow JV and Mt Rawdon were sold on 2 November Refer Note 10 for further details. Exploration and Other mainly comprises projects in the exploration, evaluation and feasibility phase and includes Namosi in Fiji, Wafi-Golpu in PNG, Marsden and O Callaghans in Australia. a) Segment Results and Segment Assets The measurement of segment results is in line with the basis of information presented to management for internal management reporting purposes. The performance of each segment is measured based on their revenues, costs and operating EBIT (Segment Result). Segment revenues represent gold, copper and silver sales at unhedged prices. All segment revenue is derived from external customers. Operating EBIT is earnings before interest and income tax. Operating EBIT attributable to the operating mines does not include the allocation of copper hedging and litigation settlements. These are included in Corporate. Segment assets exclude intercompany receivables. Segment liabilities exclude intercompany payables. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 37

40 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Segment Information (continued) 31 Dec 2011 Cadia Valley Telfer Mt. Rawdon & Cracow (ii) Gosowong Lihir Hidden Valley West Africa Total Operations Exploration & Other Corporate (i) Total Group $M $M $M $M $M $M $M $M $M $M $M Segment revenue , ,342 Segment EBITDA ,253 (33) (45) 1,175 Depreciation and amortisation (54) (95) (11) (28) (44) (18) (17) (267) - (8) (275) Segment result (Operating EBIT) (33) (53) 900 Finance income 1 1 Finance costs (20) (20) Losses on restructured and closedout hedge contracts (7) (7) Business acquisition and integration (3) (3) Gain on business divestment Profit before income tax (27) 926 Segment Assets: At 31 Dec ,375 1, , , ,037 At 30 Jun ,851 2, , , ,282 Segment Liabilities: At 31 Dec , , ,222 4,283 At 30 Jun , , ,370 3,407 Notes: (i) Includes eliminations. (ii) Segment Result attributable to Mt. Rawdon and Cracow is for the period 1 July to 2 November Refer Note 10. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 38

41 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Segment Information (continued) 31 Dec 2010 Mt. Total Cadia Rawdon & Hidden West Exploration Total Valley Telfer Cracow (ii) Gosowong Lihir (iii) Valley Africa (iii) Operations & Other Corporate (i) Group $M $M $M $M $M $M $M $M $M $M $M Segment revenue , ,966 Segment EBITDA ,092 (28) (33) 1,031 Depreciation and amortisation (37) (84) (15) (30) (50) (19) (6) (241) - (7) (248) Segment result (Operating EBIT) (5) (28) (40) 783 Finance income 7 7 Finance costs (22) (22) Losses on restructured and closedout hedge contracts (75) (75) Other close-out related losses (2) (2) Business acquisition and integration (38) (38) Profit before income tax (170) 653 Notes: (i) Includes eliminations. (ii) Segment Result attributable to Mt. Rawdon is for the period 30 Aug to 31 Dec (iii) Segment Result is for the period 30 Aug to 31 Dec Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 39

42 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Business Divestment On 2 November 2011, the Group sold its 70% interest in the Cracow gold mine and exploration joint ventures and its 100% interest in the Mt Rawdon gold mine ( the Assets ). The Assets were sold to Evolution Mining Limited ( Evolution ), which was a company formed through the merger of Catalpa Resources Limited and Conquest Mining Limited. Newcrest received 231,082,631 shares in Evolution as consideration for the Assets, resulting in an initial 38.95% interest in Evolution. This interest was subsequently diluted to 32.96% following a 3 for 17 accelerated renounceable entitlement offer ( rights issue ) undertaken by Evolution, in which Newcrest had agreed not to take up its entitlement. Newcrest received $10 million from its non-participation in the rights issue. Gain on Divestment The gain on the divestment of the Assets was as follows: Consolidated $M Note Consideration received 390 (a) Written down value of net assets sold (327) (b) Disposal costs (8) Applicable income tax - (c) 55 (a) (b) Represents 231,082,631 shares in Evolution at $ per share, based on the quoted price of Evolution shares at the divestment date (2 November 2011). Represents the carrying values of the net assets disposed, as detailed below: Consolidated Book Value on Divestment $M Assets Inventories 10 Deferred mining 57 Property, plant and equipment 52 Exploration, evaluation and development 229 Goodwill 53 Total Assets 401 Liabilities Provisions 14 Deferred tax liabilities 60 Total Liabilities 74 Net assets divested 327 (c) The Group has utilised previously unrecognised capital losses to offset the taxable capital gain. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 40

43 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER Contingent Liabilities There were no material changes in contingent liabilities from those disclosed in the 30 June 2011 annual financial report. 12. Events Subsequent to Reporting Date On 9 February 2012, the Directors of Newcrest Mining Limited determined an interim unfranked dividend on ordinary shares in respect of the 2011 financial year. The total amount of the dividend is $92 million, which represents an unfranked dividend of 12 cents per share. The dividend has not been provided for in the 31 December 2011 financial statements. There are no other matters or circumstances which have arisen since 31 December 2011 that have significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial periods. Newcrest Mining Limited Half-Year Financial Report to 31 December 2011 Page 41

44