Law firm Maurice Blackburn is investigating a shareholder class action against Newcrest Mining Limited for potential breaches of continuous disclosure laws.
Maurice Blackburn Principal and head of class actionsAndrew Watson said: "The nature and extent of the write-downs raises real issues regarding the adequacy of Newcrest's disclosure to the market. It beggars belief that
Newcrest knew nothing of the catastrophic impact that the gold price slump would have on the value of its assets until the day it announced the write-down."
In August 2010 Newcrest purchased the Lihir gold mine in Papua New Guinea for an extraordinary price of $10.5 billion of which $4.3 billion was goodwill. Between October 2012 and 8 April 2013 the price of gold fell 12% and from 9 April to 15 April 2013 it slumped 13.5%.
On 14 May 2013 Newcrest gave a presentation to a conference in Barcelona in which it said, amongst other things, that it had a "conservative balance sheet to absorb gold price volatility" and it projected that it would "grow cashflow" and "return cash to shareholders."
On 7 June 2013 Newcrest announced a massive write-down of up to $6 billion of the value of its assets, that there would be no final dividend and that there would be no "free cashflow in 2013-2014. The goodwill value of Lihir was reduced by $3.8 billion alone. The announcement caused Newcrest's share price to drop sharply.