Newcrest sinks to 3-year low

Newcrest shares slumped to three-year low on Friday plummeting by as much as 9% as the gold miner underperformed the rest of the gold sector, which struggled due to the price of gold price dropping back below US$1800 an ounce.

Investors were not impressed with the $18 billion giant’s forecast of another quarterly improvement in production or despite saying it was on track to achieve annual guidance, albeit at the lower end.

Newcrest reported that gold production was 10% higher than the prior period mainly driven by higher mill throughput rates at Cadia, Lihir and Telfer. Cadia’s mill capacity increased in the December quarter, with completion of the replacement and upgrade of the SAG mill motor in November resulting in higher gold production during the period. Mill throughput rates were also higher at Lihir and Telfer with a reduction in planned and unplanned shutdown activities compared to the September quarter.

The company said remains on track to deliver its full year production guidance following completion of major planned maintenance in the September quarter and the completion of the Cadia SAG mill motor project. Lihir’s performance is expected to further improve in the second half through increased mining rates of higher grade ore from Phase 14, increasing high and medium grade ore from Phase 15 and lower plant maintenance, however, it is expected to deliver at the lower end of its production guidance range for FY22.

Newcrest’s AISC for the December 2021 quarter of $1,127/oz2 was 11% lower than the prior period, reflecting higher gold and copper sales volumes, a higher realised copper price, lower sustaining capital and production stripping expenditure as well as the benefit of a weakening Australian dollar against the US dollar on Australian dollar denominated operating costs. These benefits were partially offset by associated higher royalty payments and treatment, refining and transportation costs.

Newcrest Managing Director and Chief Executive Officer, Sandeep Biswas, said, “We maintained a strong operational focus on maintenance and productivity improvements during the quarter. Across all our operations, we are well positioned for a strong second half and remain on track to meet our FY22 guidance.”