Hidden Valley under review

NEWCREST Mining chief executive officer Greg Robinson expressed frustration with the performance of the Hidden Valley gold and silver mine in an analyst webcast yesterday.
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This mine in Papua New Guinea is yet to hit nameplate capacity of 250,000 ounces per annum gold since it started production in September 2010.

A belt failure on the overland conveyor in March of 2011 was a big setback that forced the mine to rely on trucks to haul ore.

In the webcast, Robinson said Hidden Valley was "really our most disappointing asset".

"Its production guidance is reduced for the year," Robinson said, with Newcrest's quarterly suggesting it would come in below guidance at 90,000oz for the financial year.

"The crusher installation at the top of the overland conveyer is two months late and that is a key for us to demobilise expensive trucks that are taking ore to the mills and we won't really improve that production or that cost performance until that crusher's in place and that overland conveyor is ramped back up," Robinson said.

"So that is now scheduled for April and we expect the performance to improve in that last quarter."

The CEO revealed that the mine's half owner, Harmony Gold, was also scoping out remedies.

"Newcrest and Harmony are reviewing at the moment all aspects of this operation in the next month ahead and that includes the entire cost base, to really look at what we can do there in a shorter-term basis."

Gold production at Hidden Valley was 20,649oz in the December quarter, which was a 6.7% drop from the previous quarter. The lower production helped push up cash costs 17% quarter-on-quarter to $A1584/oz.

Meanwhile, Newcrest's Lihir gold mine in PNG produced 147,126oz in the December quarter at $649/oz - with production up 14% from the September quarter.

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