Newcrest production falls, but targets remain in place
miningweekly.com
17th February 2022
By: Esmarie Iannucci
Creamer Media Senior Deputy Editor: Australasia
PERTH (miningweekly.com) – Gold miner Newcrest Mining is on track to meet its full-year production guidance for 2022, despite a tough first half.
Gold production for the six months ended December was down 20% on the previous corresponding period, to 832 298 oz, while copper production was down 27% to 50 945 t. Revenue in the same period dropped 21%, to $1.7-billion, while earnings before interest, taxes, depreciation and amortisation reached $740-million, down 35% on the previous corresponding period.
The miner said on Thursday that the six months under review reflected lower gold and copper sales volumes, driven by lower production, a lower realised gold price, higher concentrate freight costs due to the global tightness and challenges in the sea freight market, and the unfavourable impact on operating costs from the strengthening of the Australian dollar against the US dollar.
Operating costs were also impacted by labour and consumable cost pressures owing to rising demand, constrained supply and underlying commodity price increases. Newcrest told shareholders that it continues to collaborate with its suppliers to identify ways to manage these cost pressures.
The increase in operating costs was partially offset by a higher realised copper price, lower income tax expense as a result of the company’s decreased profitability in the current period, lower overall operating costs owing to the lower sales volumes, lower gold price and volume-linked costs such as royalties, a lower depreciation expense, and an increase in Newcrest’s share of profits from its associates.
“We have taken a big step forward in our profitable growth agenda during the first half of 2022. The depth and quality of our global organic growth portfolio was demonstrated through the announcement of the findings of the Cadia PC1-2, Red Chris block cave, Haverion Stage 1 and Lihir Phase 14A prefeasibility studies,” said MD and CEO Sandeep Biswas.
“Each of these studies indicate excellent rates of return and we are projecting a material growth in our operating margin and cash flow over the next decade. Progressing each one of these studies makes compelling financial sense and we are excited by the significant potential beyond the base case projections.
“Strategic, value-adding mergers and acquisitions have been a feature of our growth in recent years and we are also looking forward to completing the Pretium Resources (Pretivm) transaction this quarter and adding the world-class Brucejack mine to our unrivalled portfolio of assets. The addition of Brucejack will drive a material increase in mineral resources, ore reserves, annual gold production and cash flows, enhancing the quality of our portfolio for many years to come. We will have exposure to six Tier 1 orebodies, five of which will be operating and, pleasingly, we will continue to maintain our long reserve life advantage compared to our peers.”
Newcrest last year announced the $2.8-billion takeover offer for TSX- and NYSE-listed Pretivm, which holds the Brucejack mine 140 km from Newcrest’s Red Chris mine, in British Columbia.
Brucejack started commercial production in mid-2017, and is one of the highest grade gold mines in the world. A 2020 technical report estimated gold production of 311 000 oz/y, at an all-in sustaining cost of $743/oz, over a projected mine life of 13 years. In 2021, the mine is anticipated to produce between 325 000 oz and 365 000 oz of gold.
“The transaction will enable Newcrest to expand in one of the premium gold districts in the world and increase our production to well over two-million ounces of gold per year until at least 2030. We are confident that our long life, high margin production will be delivered at an extremely competitive all-in sustaining cost,” said Biswas on Thursday.
“The outlook for the commodities that we mine is strong, and we have additional opportunities to further enhance our gold and copper production profile. Our team continues to pursue the potential for further openpit and underground opportunities to extend the life of Telfer, the development of Wafi-Golpu and potentially Namosi, all of which represent upside opportunity to our current base case projections.”
“We have also progressed plans to expand Cadia during the period, Red Chris and Havieron continue to deliver exceptional drilling results, and we are already working with the Pretivm team to drive further shareholder value at Brucejack. We also safely delivered the replacement and upgrade of the semi-autogenous grinding mill motor at Cadia, which is now operating at full capacity, setting us up for a strong second half of 2022 and beyond for Cadia.
“Following a solid start to the financial year, Newcrest is well placed to deliver a strong second half, to continue to pursue profitable growth, and to progress our Forging an Even Stronger Newcrest plan,” said Biswas.
For the full year, the miner is targeting group gold production of between 1.8-million and 2-million ounces of gold, and between 125 000 t and 130 000 t of copper. |
