Newcrest has dropped 13 percent in Sydney trading in the past six months, compared with an 8.5 percent gain in the benchmark index. “Short-term challenges” at projects including the Lihir mine in Papua New Guinea have resulted in missed targets at the asset that Newcrest bought in 2010, Catherine Raw, a BlackRock fund manager, told reporters in Hong Kong.
“Newcrest is in a difficult situation because it made a lot of promises on the Lihir acquisition and they are not being delivered,” Raw said. “We’ve tried to persuade them to pay the interim dividend, but they don’t like to do that. There is room for maneuver there to appease the market.”
Newcrest has three-year dividend growth of 47 percent, according to data compiled by Bloomberg. The company has a 12- month net dividend yield of 1.06 percent, the data show. The gold miner may declare a 20 Australian-cent (21 U.S.-cent) dividend in August, according to Bloomberg dividend forecasts.
“Newcrest on a payout ratio pays quite a good dividend relative to the gold sector as a whole,” Raw said. “But they have very low gearing, very strong cash flows.” The company’s growth profile makes it attractive, she said. Raw helps manage the $14 billion World Mining Fund at BlackRock, which holds 12.6 percent of Newcrest, according to data compiled by Bloomberg.
Two calls to Melbourne-based Newcrest outside normal business hours went unanswered.
“Newcrest is a fantastic long-term hold,” Raw said. “We see it as very high quality, delivering lower-than-average cost growth into a high gold-price environment.”
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