Newcrest profit falls after mine sale

Australia's largest gold mining company suffered an 87 per cent fall in second-half profit this week, on the back of last year's decision to sell its stake in a mine.

Bloomberg has calculated that Newcrest Mining's net income in the first six months of 2007 reached $28 million, down from around $217 million in the same period in 2006.

Telfer is Newcrest's biggest mine at present and chief executive Ian Smith has outlined plans to make operations more effective at this location.

Last year's results were skewed by a considerable one-off payment and this contributed to the half-year profit decline from $87.5 million to $48.1 million.

Macquarie Bank analyst Jim Copland told Bloomberg: "They have yet to put some consistent numbers behind them on Telfer which the market has been focused on.

"But increasingly people are recognizing that Newcrest are more than a one mine company.''

Significantly, Mr Smith revealed after announcing the results that gold output this year may in fact increase by up to 19 per cent to 1.8 million ounces.

From Telfer alone, gold production is expected to increase to between 730,000 and 760,000 ounces this year, up from 627,077 ounces last year.