Newcrest Mining (NCM) confirmed yesterday that they had dodged the bullet from a series of adverse events in the six months to June.
As a result, the gold and copper miner says it is still on track to meet its full (June 30) year gold production targets. Copper output has been hit by the machinery problems at Cadia.
The shares edged up by 2.6% yesterday (a rising gold price also helped sentiment) to close at $13.88.
Newcrest said in its December quarterly and half year production reports that produced 620,691 ounces of gold in the December quarter, despite a breakdown in the major mill at its huge Cadia mine in central western NSW.
The December quarter figure was about 6% better than the September production, and means the company is still on track to meet its full year guidance.
Total gold production jumped to 1.204 million ounces for the December 31 half year from 1.138 million in the previous corresponding half year period.
"The increase in gold production during the December 2015 quarter was primarily driven by increased output at Lihir and Telfer, partially offset by lower production from Cadia following a five week outage caused by a previously announced issue with the Concentrator 1 SAG mill motor,” Newcrest said in yesterday’s statement.
Newcrest plans to produce between 2.4 and 2.6 million ounces of gold in the June 30 2015-16 financial year.
The mill breakdown at Cadia has been fixed and the mine is producing again, but the asset will eventually need a full repair.
NCM 1Y – Newcrest overcomes Cadia mishaps
The continuing improvement at the Lihir mine was a big surprise to some in the market as it has been the company’s achilles heel in the past few years.
Newcrest CEO Sandeep Biswas said in yesterday’s statement, “We have had a good quarter in which we maintained our strong focus on safe production and delivered an increase in gold production and lowered our All-In Sustaining Cost, despite operational challenges at our two largest mines, Cadia and Lihir".
“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.
"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,” said Mr Biswas.
Copper production has been slower than expected, with the outage at the copper-rich Cadia mine reducing output.
Newcrest has produced 38,918 tonnes of copper during the past six months, down 24% from the 50,339 tonnes produced in the first half of the previous year.
The company said yesterday that a pre-mine development agreement for Golpu is currently being negotiated with the PNG government and progress is expected in 2016.
Newcrest shares last traded at $13.52.
Gold prices rose to their highest levels in more than a month earlier this week, and the yellow metal was fetching $US1,124 per ounce on Thursday.
Buried in yesterday’s statement was the news that Newcrest had moved to $US reporting along with BHP Billiton, Rio Tinto, QBE and Fortescue Metals, among others.
