Newcrest Mining
(ASX:NCM), the country’s biggest gold miner, is going to be under enormous pressure to try and avoid falling short on full year gold and copper guidance after a weak opening for the 2022-23 financial year.
The company told the market on Thursday in its first quarter production report that it saw a 17% fall in gold output to 527,115 ounces and a 16% slide in copper production to 32,459 tonnes.
The company’s sliver output also tumbled to 361,959 ounces in the quarter from 435,587 a year earlier.
Seeing the year’s guidance for gold production is the range of 2.1 million to 2.4 million ounces, the company is going to have to produce gold at a rate of 600,000 ounces for the next three quarterly periods. The richer grades at the Brucejack mine in Canada should allow that to happen.
Copper production guidance for the year is 135,000 to 155,000 tonnes, so production is going to have to be close to 40,000 tonnes a quarter to reach the midpoint of that range.
The company said gold production was “lower than the prior period with lower mill throughput across all operations following planned maintenance shutdowns in the September 2022 quarter, consistent with prior years.”
“Gold production was also impacted by lower gold head grade at Lihir, Cadia and Brucejack.
But management assured investors that output of both minerals will improve in the December quarter with on lower maintenance planned for the period.
Newcrest said its AISC of $US1,098/oz for the quarter was 23% higher than the prior period, “driven by lower gold and copper sales volumes with lower production following planned maintenance, and a lower realised copper price.”
” This was partly offset by the benefit of a weakening Australian and Canadian dollar against the US dollar on operating costs.
“With a significant proportion of operating costs exposed to the Australian and Canadian dollars, continued weakness of these currencies against the US dollar will favourably impact AISC.” (Like Fortescue Metals is seeing.)
In the release, CEO, Sandeep Bidwas said the company delivered a solid performance during the September quarter “which reflected our normal cadence for planned major maintenance shutdowns across our operations during this period.”
“Our group gold and copper production has increased substantially from a year ago, reflecting maintenance and productivity improvements at Cadia and Lihir, and additional ounces from Brucejack.
“Following this strong start to the year we expect gold and copper production to be higher in the December quarter on lower planned maintenance and remain on track to meet FY23 guidance.”
“Cadia marked further significant milestones with the first draw bell for PC2-3 successfully fired to enable the commencement of undercutting and completion of the two-stage plant expansion which is now in commissioning.
“We continued to make great progress on our Brucejack transformation program and remain relentlessly focused on disciplined capital management as we extend the Havieron Feasibility Study to allow time for further project optimisation.”
“With a focus on capital management, continued strong operating performance in line with our guidance and a clear pathway to materially increase our already significant copper production in the future,” said Mr Biswas.
Investors ignored the detail and accepted the company’s assurance of a recovery and focused on the two-week high for gold at $US1,670 an ounce on Comex in New York.
Newcrest shares added 3.2% to $17.93.
