Gold miner Newcrest is poised for deeper cost cutting after slicing quarterly production costs by 16 per cent.
In addition to the cuts, Australia’s largest gold miner lifted production six per cent in the December quarter, largely due to a 27 per cent spike at its Telfer mine in Western Australia.
The company expects overall full year output to be near the top of its guidance range, but said production at Telfer would be lower in the second half.
Chief executive Greg Robinson said cost cutting had been an enormous focus for Newcrest Mining, but he was unable to put a figure on future cuts over the next 12 to 24 months.
“I think there’s more, but I’m not going to be specific about the number,” Mr Robinson told analysts on Thursday.
“We’re working very hard to take those costs out.”
Analysts praised the company’s cost cutting efforts, but wanted more clarification around targets.
Newcrest has attributed recent cost reductions to increased production and sales, and lower levels of production stripping plus sustaining capital and a continuing “cost-out” focus.
“The company’s aim is to drive this stuff low and we’ve shown over the last three quarters that it is something we can be successful doing,” Mr Robinson said.
He added that some of the reductions were related to supply logistics contracts and foreign exchange variations.
Newcrest recorded an average realised gold price of $1,372 per ounce during the December quarter, while the all-in sustaining cost of production fell 16 per cent to $921 per ounce.
The company lifted gold production to 621,125 ounces during the quarter, up from 586,573 tonnes in the previous quarter.
It expects to produce around 2.3 million ounces of gold during the 2013/14 financial year, which is at the top of its previous guidance.
Mr Robinson predicts gold grade will be marginally lower at Telfer following large-scale job losses at the WA mine last year.
Meanwhile, the miner lifted its copper production 15 per cent to 22,603 tonnes during the quarter.
Mr Robinson also declined to comment on an ongoing shareholder class action against the company over the announcement of a $6 billion writedown and a downgrade in production forecasts last year.
The corporate regulator is investigating possible breaches of disclosure laws, due to speculation analysts were given market sensitive information before it was released to the wider investment market.
Newcrest recently extended its debt facility by more than $200 million ahead of the legal action.
The company has weathered a difficult couple of years, with its share price now trading at less than a third of its value since early 2012 amid a slide in the gold price.
Newcrest shares dropped 21 cents, or 2.25 per cent, to $9.13.
