Gold production hiccups matter less under QE3: Macquarie

MACQUARIE Private Wealth analysts are not too concerned about recent production impacts at Newcrest’s Lihir and Ridgeway underground mines as they believe the latest round of US central bank stimulus will heat up the whole gold mining scene.
Gold production hiccups matter less under QE3: Macquarie Gold production hiccups matter less under QE3: Macquarie Gold production hiccups matter less under QE3: Macquarie Gold production hiccups matter less under QE3: Macquarie Gold production hiccups matter less under QE3: Macquarie

"We believe the macroeconomic headwinds of QE3 will continue to drive upside for the entire gold space which in the current environment will outweigh concerns regarding operational underperformance," MPW said in maintaining its outperform rating for Newcrest.

In Papua New Guinea, Lihir's output was impacted by a landowner dispute in August.

More recently the mine slipped to 25% of its capacity due to an electrical problem with the main oxygen plant.

Repairs to a damaged section of conveyor at the Ridgeway mine, part of Newcrest's Cadia Valley Operations in New South Wales, are also expected to take about half of this month to complete.

MPW believes Newcrest will find it hard to make up for the lost ounces of production this quarter.

It consequently downgraded its estimate of the miner's total production for the financial year by 5% to 2.185 million ounces at "higher cash costs of $A695 per ounce".

The gold production estimate contrasts with Newcrest's unchanged guidance range of 2.3-2.5Moz.

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