Mixed results for Newcrest in PNG

NEWCREST Mining has posted a solid quarter of production, with Lihir’s performance improving, but the troubled Hidden Valley mine placed under review.
Mixed results for Newcrest in PNG Mixed results for Newcrest in PNG Mixed results for Newcrest in PNG Mixed results for Newcrest in PNG Mixed results for Newcrest in PNG

Group gold production jumped to 620,691 ounces of gold from 583,745oz in the September quarter, while copper production dropped to 17,581 tonnes from 21,337t.

All-in sustaining costs dropped by 3.6% to $US757 an ounce for an AISC margin of $343/oz.

The increase in gold production and reduction in costs was driven by a strong performance at Lihir in Papua New Guinea, and Telfer in Western Australia, but partially offset by lower output at Cadia in New South Wales due to a five-week concentrator outage.

Importantly for Newcrest, Lihir - its largest mine - achieved an annualised milling throughput rate of 12.4 million tonnes per annum, beating the September quarter's rate of 11.2Mtpa.

Lihir's production jumped by around 50,000oz to 240,423oz, while its AISC dropped 19% to $803/oz.

Newcrest managing director and CEO Sandeep Biswas said it had been a good quarter.

"Lihir's performance was very pleasing, surpassing its 12Mtpa target by achieving a record mill throughput, at an annualised rate of 12.4Mtpa, and delivering a significant improvement in its all-in sustaining cost per ounce," he said.

"The improved performance is a result of the effort of the entire team at Lihir.

"Cadia's processing rate of 24.3Mtpa annualised during December was also very pleasing, reflecting a strong performance after the five-week outage of its main SAG mill."

Full-year guidance of 2.4-2.6 million ounces of gold was left unchanged, though Lihir and Bonikro output is expected to be at the top of their ranges, offsetting Telfer and Hidden Valley, which are likely to be at the lower end.

All of Newcrest's operations recorded AISC below $1000/oz - except for the 50%-owned Hidden Valley mine in PNG, which posted AISC of $1589/oz.

The operation did improve, with AISC down from $2222/oz in the September quarter and production up to 17,190oz from 11,123oz, but the operation is still recording a negative AISC margin of $489/oz.

Newcrest blamed poor grade and road closures for the performance, but has suspended pre-strip activities until metal prices improve.

The company said accessible ore sources remain available through to the end of the year, with the focus to be running the mine at a free cashflow neutral or better position.

However, Newcrest said it and partner Harmony Gold were assessing all strategic options in regards to the future of the asset.

Also under review by Newcrest and Harmony is the feasibility study for Golpu stage one and the prefeasibility for Golpu stage two.

The studies are with the owners' teams ahead of submission to the boards. The partners are in negotiations with the PNG government for a pre-mine development agreement.

Newcrest was increasingly active on the exploration front, intersecting a new zone of mineralisation at Wamum in PNG, as well as announcing new farm-ins in Nicaragua, Ivory Coast and Indonesia.

Shares in Newcrest closed at $A13.52 yesterday.


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