The Newcrest share price will come under pressure today after more problems at the company’s huge Cadia gold mine in the central West of NSW.
The problems come as the huge mine, Australia’s largest (and its a big producer of copper as well), is in the process of ramping up production after being damaged by an earthquake almost 12 months ago.
Operations at one of Australia’s largest gold mines have been temporarily suspended after a partial wall collapse at one of the mine’s tailings dams late last week.
The wall collapse at the Cadia mine comes just a few days after two earthquakes hit the area, located just south of Orange. One of the quakes measures 2.7 – smaller than the 4.3 quake which damaged the underground mine’s working panels on Good Friday 2017.
Newcrest shares ended last week on $21.59, down 2.8% on the day (thanks to a weaker gold price). In a statement, Newcrest was unable to confirm whether the recent earthquakes had contributed to the dam’s wall failure but said it was conducting a thorough investigation.
Newcrest said that safety was its highest priority as it worked to assess the impact of the wall break.
“The Cadia tailings dams have been regularly inspected, reviewed and monitored; and have been fully certified to industry standards by independent third parties.
“As a precaution Newcrest stopped depositing tailings into both dams on 9 March. Operations were subsequently progressively suspended pending further investigation.
“We are monitoring the impact carefully, and have observed no environmental damage. We believe there is no threat to personal safety.”
On Thursday, two earthquakes were recorded in the area, 10 seconds apart and just over two kilometres from the mine. The earthquake had a magnitude of 2.7 and was reportedly felt in the area.
Last year’s quake meant the mine was shut down for several months while the damaged parts were repaired and rehabilitation work carried out. It slashed gold production, revenue and profits for the year to June 30 2017 and in the first half of 2017-18. It cost Newcrest $157 million in pre tax earnings in the December half year.
Production restarted in late 2017 and has been ramping up.
Cadia produced more than 168,000 ounces in the March quarter of 2017, but this fell to 76,000 ounces in the June quarter in the wake of the quake. At its peak it can produce well over 650,000 ounces a year.
The Cadia Valley Mine is located 25 kilometres south of Orange in the state’s central west. Newcrest is working on the feasibility of a major expansion of the mine and its processing plant. That is due to be done by August this year.
With the ramp up of output Newcrest says it is targeting an annual mining rate at Cadia of 30 million tonnes. In a statement, the NSW Environmental Protection Agency said it was aware of the collapse and was inspecting the site. They also said they understood that the tailing had been contained.