Newcrest Doubles Down On Gold Boom

By Glenn Dyer | More Articles by Glenn Dyer

The boom in gold prices has seen the country’s biggest miner, Newcrest up its investments in its two major mines to eke out small, but important gains in gold and copper output.

Gold prices have jumped 27% so far this year, hitting an all-time high of $US2,87 an ounce. It ended last week at $US1926 an ounce at settlement and rose another $US10 in after-hours dealings.

The surge has driven record gold exploration spending in WA in the June quarter and year to June and seen a number of deals, the biggest was the $4.1 billion paper and cash merger between North Star and Saracen.

Newcrest if heading another way, investing in its existing mines, obtaining a stock exchange listing on the Toronto Exchange in Canada where it is planning to expand output at the 70% owned Red Chris mine acquired in 2019.

Newcrest said on Friday that it will spend $236 million to expand its Cadia mine in NSW and boost recoveries at its Lihir operations in Papua New Guinea.

Newcrest on Friday said the stage two expansion at Cadia – Australia’s biggest gold mine – will involve a capital outlay of $175 million, about $5 million less than anticipated in October 2019.

Mine capacity will lift from 33 million tonnes to 35 million tonnes a year with higher gold and copper recoveries which are expected to increase by 3.5% and 2.7% respectively.

Cadia produced 843,338 ounces of gold in the year to June (of Newcrest’s 2.171 million ounces) and just over 96,000 tonnes of copper (137,000 company total). Lihir produced 775,978 ounces of gold in 2019-20.

The work is expected to be completed in the last year of 2021-22.

Newcrest says its all-in sustaining gold cost will fall by an estimated $22 an ounce with a payback period in 4.2 years.

The Lihir project looks like having the bigger benefit – Newcrest said production could rise by 224,000 ounces over the life of the mine (LOM).

The Lihir project “Primarily comprises the installation of flash flotation and additional cyclone capacity, as well as cyclone efficiency upgrades, to improve grinding classification and reduce gold losses through the flotation circuits.

Newcrest Managing Director and Chief Executive Officer, Sandeep Biswas said in Friday’s statement “It is an exciting time at Newcrest as we advance our growth pipeline with both of these projects adding value to our existing large scale, long-life operations while we pursue the development of Red Chris and Havieron and exploration opportunities globally.”

“Stage 2 of the Cadia Expansion Project increases plant capacity to 35mtpa, enabling an increase in gold and copper recoveries, an increase in production and a reduction in unit costs.

“Cadia is one of the largest, lowest cost, long-life gold mines in the world due to the application of Newcrest’s industry-leading block caving technology, and this investment helps Cadia maintain this industry-leading position.”

“The Lihir Front End Recovery Project is expected to deliver additional production through an improvement in gold recoveries over the life of the mine. Lihir’s long reserve life makes this improvement in gold recoveries particularly valuable to our shareholders.”

Newcrest shares rose 3.1% on Friday to end at $31.26. That reversed most of a fall for the week and the shares ended down 0.10%.

Glenn Dyer

About Glenn Dyer

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.

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