Newcrest Confirms Cadia Delays May Be Extensive
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Newcrest Mining shares fell yesterday for the 6th session in a row as the company battles with the impact of the partial failure of a tailings dam wall at its huge Cadia gold and copper mine in central NSW.
Newcrest shares fell half a per cent to $19.87. the shares are down almost 10% in the past six trading sessions
That was after the company told an analysts briefing yesterday that it been forced to declare force majeure on the delivery of copper concentrates from the mine until further notice.
Analysts said after the briefing that Cadia could be shut for months - which if it happens will slash revenue for the company, threatens the dividend because the company will almost certainly make a loss
That was after the company confirmed that the Cadia mine “is not expected to meet its production guidance for the 2018 financial year.”
Newcrest had been looking for Cadia to produce between 680,000 to 750,000 ounces of gold in the year to June and around 70,000 tonnes of copper.
The news almost certainly means the company will struggle to make overall guidance for the year of 2.4 to 2.7 million tonnes of gold and 80,000 tonnes of copper. At best it will probably make the lower level of the gold range, while the copper figure is uncertain.
Newcrest says it’s disappointed that part of a tailings dam collapsed at its Cadia mine in NSW a week ago today and is still searching for answers on why the breach happened.
There were two small ground quakes reported early last week near the mine. That news that recalls the Good Friday 4.3 tremor last year that damaged the panels in the underground mine and led production to be suspended for months.
Newcrest was forced to halt production at its biggest and lowest-cost mine at the weekend after a breach in the northern tailings dam on March 9 resulted in material flowing into the adjacent southern tailings dam.
Newcrest chief executive Sandeep Biswas says the company is still conducting assessments and is considering how and when it can restart production.
"I do want to say how disappointed I am that this has happened," Mr Biswas said on Thursday. "We're committed to understanding how it happened and what we can learn from it.
Newcrest told analysts that it was assessing options of recommencing underground operations and stockpiling material and that work on the expansion of the mine would "continue in parallel with recovery program.”
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.