Telfer disappoints in strong quarter for Newcrest Mining
Newcrest Mining has lifted full-year guidance as it taps into the latest addition to its global mining portfolio in Canada.
Australia’s biggest gold miner is now forecasting group-wide gold production of between 1.925 and 2.025 million ounces.
The increase comes a month after Newcrest closed the deal on its $3.8 billion cash and scrip acquisition of Pretium and its Tier 1 Brucejack operation within British Columbia’s famed Golden Triangle, and despite a big fall in output from its Telfer operations in the Pilbara.
Third-quarter results released on Thursday showed Telfer production of 96,388oz was down 14 per cent from 112,726oz in the previous period, driven by lower gold head grade due to a higher proportion of lower grade open pit mill feed and lower mill throughput, with reduced mill availability following unplanned outages.
Telfer’s all-in sustaining costs of $1411/oz were 4 per cent higher, which Newcrest attributed to lower gold and copper sales volumes, partly offset by a higher realised copper price. But the miner said operation were not impacted by WA’s wave of Omicron infections.
The fall at Telfer was offset by higher output at its Cadia mine in NSW — up from 115,362oz to 149,568oz — and Lihir in Papua New Guinea — up from 163,937oz to 169,486oz.
Total gold production hit 479,839oz in the quarter, up from 436,085 in the pervious period, while copper and silver production also recorded significant increases at all-in sustaining costs of $1008/oz.
Chief executive Sandeep Biswas said the third-quarter result had helped the miner build momentum for a strong finish to the financial year.
“With the Cadia SAG mill motor operating at full capacity and an improved performance at Lihir, gold and copper production increased for the third consecutive quarter, driving the continued decline in our all-In sustaining cost,” Mr Biswas said.
“In March 2022, we completed the Pretium acquisition, adding the world class Brucejack mine to our already exceptional asset portfolio, generating immediate gold production and cash flows this quarter.
“We have commenced the early stages of our three phase transformation program at Brucejack to maximise its long-term potential and unlock further value for our shareholders.”
The mine, which only turned out first gold four years ago, has estimated production of 311,000oz a year at costs of $US743/oz over a projected 13-year mine life.
Analysts at RBC Capital Markets were less upbeat about the quarter’s results, saying gold output was 9 per cent off its expectations, led by big misses at Cadia and Lihir.
“New FY22 guidance including Brucejack has effectively been tightened,” they said.
“The lower top-end of guidance allows for some weakness at Lihir and Cadia. Newcrest still expect Lihir to reach the bottom end of its guidance.
“AISC has been helped in FY22 by a strong copper price, and guidance has also been tightened. Expansion drilling at Brucejack was a positive in the quarter.”
Newcrest said strong drilling results at its Red Chris in Canada and its Havieron underground mine joint venture with Greatland Gold in the east Pilbara continue to expand the higher grade footprint
“Havieron also continues to deliver encouraging results, with several high grade drill results in target areas including the Eastern Breccia that sit outside of our inferred mineral resource estimate,” Mr Biswas said.
Newcrest shares continued their sell-off and were down another one per cent to $26.76 at 8.40am.
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