Newcrest disclosure review finds no evidence of misconduct

Australia’s leading gold producer, Newcrest Mining, has been cleared of any wrongdoing relating to market disclosure guidelines after the publication of its self-commissioned review.

The report rejects claims the company selectively briefed analysts in recent meetings, instead claiming that a delayed reaction to old information led to several broker downgrades. The review, conducted by Australian Securities Exchange chairman Dr Maurice Newman, finds Newcrest met all of its continuous disclosure requirements.

Newman says Newcrest ‘provides ample information on a regular basis. [But] this information does not always appear to have been understood in the marketplace.’

He also draws attention to analysts’ and investors’ ability to understand Newcrest’s published material, adding that sliding gold prices had an unprecedented effect on the mining company’s business model.

‘Most analysts seemed to be slow to adjust their research to the changed conditions, presumably on the assumption the [gold price] slump would be temporary,’ Newman adds.

It was previously alleged that analysts had learnt of A$6 bn ($5.46 bn) worth of writedowns and plans to shelve planned expansions and explorations in advance of Newcrest’s meeting.

Though the report states there was no ‘smoking gun’ that might provide proof of Newcrest’s supposed misconduct, it finds many lesser occasions when the firm failed to adhere to its own guidelines surrounding meetings, including failing to make sure at least two Newcrest employees sit in on all investor and analyst meetings.

Newman adds that his review was hindered because the Australian Securities and Investments Commission (ASIC) is still carrying out its own investigation into the matter, with many brokers restricted from speaking to him. He also admits that he did not examine Newcrest’s email system, trading data surrounding a restructuring in June or the written records of analysts who downgraded the stock in question.

Nevertheless, Newman maintains he ‘reviewed a sufficiently large representative number to satisfy myself in reaching the conclusions I have.’ The ASIC investigation, meanwhile, could take at least a year to conclude.

It was also revealed this week that Newcrest’s chief executive, Greg Robinson, has seen his total annual pay cut from A$3.7 mn to A$2.73 mn in 2013, attributed to a failure to meet short-term incentives. Wages across the firm’s management team are significantly lower this year than last year.