Newcrest Mining Concise Annual Report 2007 Newcrest Mining Limited ABN 20 005 683 625 Concise Annual Report 2007 Corporate Directory Newcrest is a leading gold and copper producer. It provides investors with an exposure to large, low-cost, long life and Investor Information Share Registry Other Offi ces small, high margin gold and copper mines. Registered and Principal Offi ce Link Market Services Limited Brisbane Newcrest Mining Limited Level 9 Exploration Offi ce It aims to be in the lowest quartile for costs. Level 9 333 Collins Street Newcrest Mining Limited 600 St Kilda Road Melbourne, Victoria 3000 Level 2 Newcrest has technical skills and mining Melbourne, Victoria 3004 Australia 349 Coronation Drive Australia Postal Address Milton, Queensland 4064 Telephone: +61 (0)3 9522 5333 Locked Bag A14 Australia experience to deliver strong fi nancial returns Facsimile: +61 (0)3 9525 2996 Sydney South, New South Wales 1235 Telephone: +61 (0)7 3858 0858 Email: Australia Facsimile: +61 (0)7 3217 8233 and growth through exploration success. [email protected] Telephone: 1300 554 474 Internet: www.newcrest.com.au Perth +61 (0)2 8280 7111 Exploration Offi ce & Its vision is to be the ‘Miner of Choice’. Company Secretary Facsimile: +61 (0)2 9287 0303 Telfer Project Group Bernard Lavery +61 (0)2 9287 0309* Newcrest Mining Limited Level 9 *For faxing of Proxy Forms only. Hyatt Business Centre Social responsibility, safety and sustainability 600 St Kilda Road Email: Level 2 Melbourne, Victoria 3004 [email protected] 30 Terrace Road are the fundamental guideposts to that vision. Australia Internet: www.linkmarketservices.com.au East Perth, Western Australia 6004 Telephone: +61 (0)3 9522 5371 ADR Depositary Australia Facsimile: +61 (0)3 9521 3564 Telephone: +61 (0)8 9270 7070 Email: [email protected] BNY – Mellon Shareowner Services Investor Services Facsimile: +61 (0)8 9221 7340 Stock Exchange Listings P.O. Box 11258 Company Events Australian Stock Exchange Church Street Station 1 November 2007 (Ticker NCM) New York, NY 10286-1258 Annual General Meeting at 10.00am Contents New York ADRs Telephone: Toll Free for domestic callers: Grand Waldorf Ballroom (Ticker NCMGY) Key achievements 2006–07 1 Board of Directors 42 1-888-BNY-ADRS or 1-888-269-2377 The Sebel Albert Park Performance in brief 2006–07 2 Corporate Governance 44 International Callers: +1-212-815-3700 65 Queens Road Chairman’s Report 4 Concise Financial Report 48 Email: [email protected] Melbourne, Victoria 3004 Managing Director and Directors’ Report 49 Internet: http://www.adrbny.com Chief Executive Offi cer’s Review 6 Remuneration Report 54 Financial Report 8 Auditor’s Independence Declaration Statement 75 Provinces 9 Discussion and Analysis Telfer Province 10 of the Financial Statements 76 Cadia Valley Province 14 Income Statement 79 Visit our website at Cracow Province 20 Balance Sheet 80 www.newcrest.com.au to view our key Gosowong Province 22 Statement of Changes in Equity 81 dates and features; current share price; Namosi Prospect 24 Statement of Cash Flows 82 market releases; annual, quarterly and Exploration 25 Notes to the Concise Financial Report 83 fi nancial reports; operations, project Mineral Resources and Ore Reserves 28 Directors’ Declaration 88 and exploration information; corporate, 2007 Mineral Resources 32 Independent Audit Report 89 shareholder, hedging, employment and 2007 Ore Reserves 33 Shareholder Information 90 sustainability information. Risk Management 34 Five Year Summary 92 Concise Annual Report Health and Safety 36 Corporate Directory IBC This is the Company’s Concise Annual Community Relations 38 Report for 2007. The full Financial Report Environment 40 and Auditor’s Report are available to members free of charge upon request. Annual General Meeting The 27th Annual General Meeting of Newcrest Mining Limited will be held at the Grand Waldorf Ballroom, The Sebel Albert Park, 65 Queens Road, Melbourne, Victoria on Thursday 1 November 2007 at 10.00am. Key Achievements 2006–07 – Total gold production increased to over 1.6 million ounces – Cash fl ow from operations increased by 47 percent to A$387.4 million – Telfer and Gosowong (Kencana) underground mines commissioned – Growth projects, including Cadia East, Ridgeway Deeps and Kencana, progressed – Copper production unhedged since June 2007 – Renewal of executive management and Board – A$2.042 billion Entitlement Offering to fund fi nancial restructure (post 30 June 2007) Relative Share Price Performance Index – 10 Years (A$) 1,200 1,000 800 600 400 200 0 Jun 97 Jun 98 Jun 99 Jun 00 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 Jun 06 Jun 07 ASX 200 NCM Limited Philadelphia Stock Exchange Gold & Silver Index Newcrest Mining Concise Annual Report 2007 1 2,000 120 300 100 250 1,500 80 200 1,000 60 150 40 100 500 20 50 0 0 0 03 04 05* 06 07 03 04 05 06 07 03 04 05 06 07 6% 12% 14% Increase Decrease Increase Performance in brief 2006–07 – 1,617,251 ounces of gold and 88,940 tonnes of copper produced – Group cash costs (at achieved prices) increased to A$280 per ounce – Group total costs (at achieved prices) increased to A$419 per ounce – Gold Ore Reserves remained the same at 33 million ounces of gold – Copper Ore Reserves increased by 13 percent to 2.7 million tonnes – Full year profi t after tax was A$72 million – Full year profi t after tax and minority interest from continuing operations before hedge restructure was A$194.5 million – Group safety and environmental performance improved – Market capitalisation increased 9 percent to A$7.7 billion (as at 30 June) – A fi ve cent unfranked fi nal dividend declared – Ridgeway Deeps Project Development was approved – Memorandum of Understanding to establish joint venture for gold/copper exploration at Namosi, Fiji – Partial restructure of the gold hedgebook completed – Legacy copper hedging positions completed – Gearing reduced to 46 percent 2 Newcrest Mining Concise Annual Report 2007 150 300 400 250 120 300 200 90 150 200 60 100 100 30 50 0 0 0 03 04 05 06* 07 03 04 05 06 07 03 04 05 06 07 45% 18% 47% Decrease Decrease Increase 12 months to 12 months to 30 June 2007 30 June 2006 Gold produced (ounces) 1,617,251 1,529,866 Copper produced (tonnes) 88,940 100,521 Gold price realised ($ per ounce) 682 564 Sales revenue ($ million) 1,555.0 1,393.1 Operating EBITDA before hedge restructure ($ million) 587.2 456.6 Net profi t after tax and minority interest ($ million) 72.0 349.5 Net profi t after tax and minority interest from continuing operations ($ million) 72.0 131.3 Capital expenditure (cash fl ow basis including exploration) ($ million) 400.7 544.9 Basic earnings per share from continuing operations after minority interest (cents per share) 21.5 39.6 Return on capital employed (ROCE) (EBIT/average capital employed) (percent) 5.9 8.4 Net debt/(net debt plus equity) (percent) 46 50 (All $ are Australian denominated unless stated otherwise.) Newcrest Mining Concise Annual Report 2007 3 The 2006–07 period was a signifi cant that will provide the foundations for future Chairman’s Report year for the Company as it consolidated growth. After a problematic beginning, further its position as Australia’s leading the renewed Telfer operation has begun independent gold producer. to perform in line with the Company’s revised expectations, as management This was achieved through the has gained a better understanding continued delivery of its growth strategy, of the complex characteristics of the as well as through a number of Telfer orebody. fundamental changes, which together have enhanced its capacity to generate The development projects in the Cadia wealth for shareholders. Valley at Ridgeway Deeps and at the very large Cadia East deposit, as well In July 2006, the Board commenced as the Kencana expansion at Gosowong, the task of rebuilding the senior will maintain the strong pipeline of management team under the new growth projects in the short to medium Managing Director, Mr Ian Smith term. Through those developments, and Mr Greg Robinson, who joined the Company will consolidate its the Company as the Executive Director competitive advantage and add to Finance in November that year. its existing levels of production. The The new management team, as well technical know how and human capital as a realigned management structure, that the Company has built up to enable is now in place and functioning well. specialised underground mining Those changes have reinforced the techniques to be used in those new culture of performance and accountability mines will also enhance the Company’s through all levels of the organisation and competitive position. have been fundamental to the Company’s improving operating profi le. Historically, exploration has been a key value driver for Newcrest. The At the same time, the Board initiated commitment to both early stage and a process of its own renewal. This has advanced exploration will be maintained enabled fi ve new Directors, including a and progressively increased. Early and new Chairman, to be appointed bringing advanced exploration plays will be a wide variety of expertise, skills and sustained to ensure that an attractive fresh perspectives to the Board to add profi le for growth is maintained. The to the insight and depth of experience commitment to exploration will be of those Directors who have served the supported by a new focus on early Company so well to date. The Company merger and acquisition opportunities. acknowledges, and is grateful for, the contribution of those Directors who have Newcrest’s gold inventory of more stepped down during the year. than 55 million ounces of estimated resources and more than 33 million The Board has reaffi rmed the ounces of estimated reserves continues Company’s strategy of maintaining to place it among the leaders of the improving Newcrest’s position world gold companies.