News gets worse for Newcrest investors

Newcrest management comes under fire as share price continues to tumble.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares in besieged gold miner Newcrest Mining (ASX: NCM) fell to their lowest level in eight years yesterday as investors continued to punish the company for its June 7 announcement of up to $6 billion in write-downs, pushing shares down to $11.21.

But the write-down announcement itself has caused a wave of new and potentially damaging problems for Newcrest completely separate to the rising costs and plunge in the gold price which sparked the write-downs.

First was the news Newcrest was to be investigated by the Australian Securities and Investments Commission on allegations it tipped off preferred analysts before the news was released to investors. Bloomberg's Business Week has named three companies, including Citigroup and UBS, that reportedly cut their ratings on Newcrest just days before the announcement was made, raising questions over continuous disclosure obligations.

The company was then put under scrutiny by exchange operator ASX (ASX: ASX) as to why it did not elect to halt shares from trading before the announcement. In response, legal firm Maurice Blackburn is investigating the possibility of filing a class action against Newcrest on behalf of shareholders for not meeting its continuous disclosure obligations.

In 2012 the Maurice Blackburn was involved in the settlement of a class action against National Australia Bank (ASX: NAB) on behalf of 15,000 shareholders for $115 million in relation to disclosure on NABs exposure to financial derivatives.

The Australian Shareholders Association has also called for Newcrest's chairman Don Mercer to step down according to The Australian, after the announcement debacle and continued problems with the company's performance. In particular focus is the company's Lihir Island mine in Papua New Guinea which is the source of more than half of the $6 billion write-downs.

Foolish takeaway

The sharp fall in gold price may have sparked Newcrest's problems, but the issues have been multiplied by the way management have handled this time of crisis. Investors should question if they still have faith in Newcrest's management team to turn things around, or if it's time to cut their losses and move on.

In the market for more high yielding ASX shares? Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading


Motley Fool contributor Regan Pearson does not own shares in any of the companies mentioned in this article.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »