Newcrest Says Ex-Rio Tinto Executive to Become CEO in July

Apr 23, 2014 3:30 am ET

(Updates to add closing shares in fifth paragraph.)

April 23 (Bloomberg) -- Newcrest Mining Ltd., Australia’s largest gold producer, said Sandeep Biswas will become chief executive officer on July 4 following a management clear out.

Biswas, formerly CEO of Rio Tinto Group’s Pacific Aluminum unit, joined in January as chief operating officer under a previously announced plan to succeed incumbent Greg Robinson, the Melbourne-based producer said today in a statement.

Robinson is being replaced after the company missed production targets, posted a record full-year loss on a A$6.2 billion ($5.8 billion) writedown and became the subject of a regulatory probe into its disclosure practices. Peter Hay was appointed as chairman in January, while the company in February selected a new executive general manager to oversee assets outside Australia, including Papua New Guinea’s Lihir, its biggest producing mine.

“Operational reliability, further cost cutting and simplification of the business are the three key things he needs to focus on,” said David Radclyffe, a Sydney-based analyst at CLSA Asia-Pacific Markets. “The absolute focus has to be on Lihir, because that’s where the market has most concern.”

Newcrest, the world’s fourth-largest producer by market value, rose 1 percent to close at A$10.12 in Sydney. It’s advanced 30 percent this year on improved production as the price for bullion has jumped 7 percent.

Annual Production

The company reiterated that it expects production in the 12 months to June 30 to meet the top end of a full-year forecast of 2 million ounces to 2.3 million ounces. That would be the highest since fiscal 2011, when it produced 2.7 million ounces, according to filings.

Production at Cadia Valley, its second-biggest mine, will fall in the 12 months to June 30, 2015 as grades decline, before rising to about 700,000 ounces in the subsequent 12 months, the company said. Output at Lihir in fiscal 2015 will probably match current production, it said today in a separate statement.

“The company has now pretty much locked in that this year will be the first up year after two years of declining production,” Radclyffe said.

Newcrest cut 208 jobs and 32 unoccupied roles at Lihir in the quarter amid efforts to trim costs, it said in the statement.

Gold output in the three months ended March 31 rose to 551,590 ounces from 514,421 ounces a year earlier, Newcrest said in its production statement. That missed the median estimate of 569,250 ounces from four analysts surveyed by Bloomberg News.

Costs Increase

“Sandeep’s focus on asset utilization, cost reduction, increasing free cash flow and simplicity of purpose will continue to accelerate the positive performance turnaround,” Hay, the company’s chairman, said today in a statement.

All-in sustaining costs rose to A$988 an ounce in the quarter, compared with A$921 an ounce in the previous three- month period, Newcrest said. The company had an operating margin in the quarter of A$462 per ounce, Robinson said in the statement.

Biswas will receive fixed compensation of A$2.3 million annually as well as short- and long-term incentive payments, the producer said. Robinson will step down from Newcrest’s board when he leaves his current post.