Newcrest Mining Ltd., the gold producer facing regulatory scrutiny over its disclosure, said staff met analysts before it announced a possible A$6 billion ($5.6 billion) writedown and that it’s begun an inquiry.
“We do not think we have done anything wrong,” Chairman Don Mercer told reporters today on a conference call. “If we have, we want to know about it and I can assure you we will hold people accountable from top to bottom.”
The Australian Securities and Investments Commission is examining a drop in Newcrest’s share price ahead of its June 7 announcement on the writedown. Credit Suisse Group AG, Citigroup Inc. and UBS AG were among banks that cut their ratings on Newcrest in the three days before its statement. Newcrest has said it didn’t selectively brief analysts ahead of the announcement.
Maurice Newman, a former chairman of the Australian Securities Exchange, will examine the company’s disclosure and investor-relations policies, Melbourne-based Newcrest said today in a statement. He will report his findings to the board within a few months, Mercer said on the call.
“We can then be in a position to determine what, if any, changes to our processes are necessary,” Mercer said.
Newcrest has had requests for information from ASIC and is cooperating, Chief Executive Officer Greg Robinson said on the call. The commission won’t comment on the inquiry, Troy Daniel, a spokesman for ASIC, said in an e-mailed statement.
Robinson said that Newcrest investor relations staff had met analysts before the June 7 statement, declining to provide details. “They had meetings under the normal IR (investor relations) procedures and standards, and we believe that they did their jobs,” he told reporters.
Downgrades by analysts ahead of the announcement were probably based on the company’s quarterly production statement on April 23, when it said it would review its strategy on the declining gold price, Robinson said
“We don’t believe our message changed,” Robinson said. “It takes time for people to review information and make recommendations.”
The CEO said his own job would be put in question if Newman’s inquiry uncovered any wrongdoing. Newman told reporters on the call that he owned 30,000 Newcrest shares and would be paid by the company.
Newcrest, which has a market value of A$7.1 billion after slumping 58 percent this year, will cut about 150 jobs at its Lihir mine in Papua New Guinea as part of its response to the plunge in bullion prices, it said earlier today. It had already said it would shed 250 employees and close a corporate office in Brisbane.
Concern over inquiries into its disclosures mean it is suffering more than its peers, Mercer said. The company has lost 30 percent of its market value since its June 7 statement. A Bloomberg Index of 14 large gold miners, including Newcrest, lost 21 percent over the same period.
Newcrest, Australia’s largest gold producer, fell as much as 4.9 percent before closing at A$9.30 in Sydney, the lowest since Sept. 15, 2003. Perseus Mining Ltd. lost 23 percent and Alacer Gold Corp. dropped 1.3 percent. Australia’s benchmark S&P/ASX 200 Index declined 0.3 percent.
Newcrest this month said it would take the writedown, the largest in gold mining history, as it reorganizes its operations. The amount includes the entire A$3.6 billion of goodwill on the Lihir mine in Papua New Guinea that it acquired in a A$9.7 billion takeover in 2010.
The Lihir cuts follow the completion of a $1.3 billion expansion program and a decision to reduce mining and focus on processing stockpiles at the plant, spokeswoman Kerrina Watson said by phone. Papua New Guinea Prime Minister Peter O’Neill is seeking talks with Newcrest over the cuts, his spokesman Daniel Korimbao said in a phone interview today from Port Moresby.
“The job cuts are a concern and he also has concerns about the impact this will have on revenue projections for the 2013 budget,” Korimbao said. “This is currently being assessed.”
Newcrest is prepared to meet O’Neill for talks, Watson said.
The Australian producer has ventures with Harmony Gold Mining Co. in Papua New Guinea at the Hidden Valley mine and the Wafi-Golpu exploration project, which Newcrest said Dec. 31 contains at least 12.4 million ounces of gold.
“We think the prospects for Wafi-Golpu remain good,” despite Newcrest’s cuts at Lihir, Korimbao said.