Australia’s largest gold miner Newcrest Mining insists it can still meet its production targets despite a 16 per cent drop in gold production and cost blow-outs.
Shares in the miner slumped to an almost four-week low after Newcrest said it produced 587,296 ounces of gold in the three months to September 30, 16 per cent lower than the previous quarter.
The miner is forecasting output of 2.925 million ounces this financial year, compared to 2.527 million ounces last year.
Newcrest blamed the drop on maintenance shutdowns at its Lihir Island project in Papua New Guinea, Telfer in Western Australia and Gosowong in Indonesia, along with high rainfall at Lihir.
Newcrest shares slumped $2.30, or 6.4 per cent, to close at $33.45, the lowest since September 26.
Stock Resource managing director Grant Craighead described it as an “okay rather than excellent report”.
He said investors looking at buying Newcrest stocks would be doing so for its superior growth profile over the next five years … “which makes it stand out against it’s global peers”.
Newcrest is targeting a $9 billion ramp up of full-year production to four million ounces within five years.
That will be on the back of increased output at Cadia and Lihir, whose major expansion projects were both on track, the company said.
“I wouldn’t read too much into the drop in production,” Mr Craighead told AAP.
“It’s always disappointing when you’re a bit down but when you’ve got half a dozen operations, there’s always one or two going really well and one or two being a bit of a problem at any particular time.”
Production increased at Cadia Valley, near Orange in NSW.
Gross cash margins increased by 19 per cent to $A1,029 per ounce, on the back of a higher realised gold price of $A1,623 per ounce.
Gold hit a record high price of $US1,891.90 in late August.
However, cash costs blew out by 10 per cent from the last quarter to $A594 per ounce – worse than market expectations – reflecting lower gold production and higher maintenance costs associated with processing plant shutdowns.
Mr Craighead said he would be interested to see if the company changed under new chief executive Greg Robinson, who comes from a finance background in contrast to predecessor Ian Smith’s mining and engineering qualifications.
“Financial people are often there to watch the money rather than have a strategic mind or perspective,” he said.
“It’s a different skill-set and it will be interesting to see how he performs on that basis.”
September quarter copper production of 19,228 tonnes was slightly lower than the previous quarter.
The sale of Newcrest’s Cracow and Mt Rawdon mines to Evolution Mining – the company formed when Catalpa and Conquest merged – was on track for early November this year.
Newcrest will have a one-third stake in the new company after the sale of the mines for equity.
