Newcrest Warns Up To $2.5 Billion Could Be Written Off Its Assets

Loading gold and copper concentrate in Western Australia. Image: Newcrest Mining.

Gold miner Newcrest Mining is warning investors to expect an asset impairment of up to $2.5 billion.

The miner’s shares were trading down 4.7% at $10.95 a short time ago.

The company is currently assessing productivity levels and asset values, including all operating costs at its Lihir project in Papua New Guinea, as well as the impact of the high Australian dollar and its long-term exchange rate assumption of $US0.80 which hasn’t eventuated.

There’s a final decision to come but Newcrest today revealed it’s likely to book an asset impairment in the range of $1.5 to $2.5 billion after tax.

While an impairment has no impact on cash flows, reducing book values could impact gearing. Newcrest estimates this could increase its debt ratio by between 3% and 6%.

In 2013 the company handed down a $47 million after tax impairment over its West African exploration assets.

Newcrest is due to release its 2014 financial results on August 18.

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