PERTH (miningweekly.com) – Gold major Newcrest Mining on Thursday warned of a possible combined asset impairment of between A$1.5-billion and A$2.5-billion at its Lihir, Telfer and Bonikro assets during the full year ended June.

This was in addition to the A$47-million after tax impairment of its West African exploration assets, which was recorded during the interim period ending December.

At the end of the last financial year, Newcrest reported a A$5.5-billion impairment on its four producing assets.

The company told shareholders on Thursday that the most recent value impairment was related to a review of exchange rate assumptions, an assessment of timing, cost and resource use at the Bonikro operation, in Côte d'Ivoire, and a review of the operating cost assumptions at the Lihir operation, in Papua New Guinea, taking into account recent cost performances after a full year of operation following the plant expansion.

Although the impairment charges would have no impact on cash flow, it was expected to impact Newcrest’s gearing by between 3% and 6%. However, the miner remained confident that this level of gearing in the short to medium term would not affect the group’s cash flow growth outlook.

Meanwhile, Newcrest on Thursday also reported that group gold production for the year ended June was 14% higher than the previous financial year, reaching 2.4-million ounces, while copper production was up 7% year-on-year to 86 118 t.

Gold production exceeded the guidance range of between 2-million and 2.3-million ounces, while copper production also exceeded the guidance of between 75 000 t and 85 000 t.

During the three months to June, gold production was 636 736 oz, up 15% on the previous quarter, while copper production was 9% higher than the March quarter at 22 871 t.

Newcrest MD and CEO Sandeep Biswas said that the improved operational results reflected the company’s focus on safety, cost reduction and cash generation.

“Newcrest is firmly focused on realising the full potential of each of the company’s assets, prioritising operating discipline and maximising cash across all sites. All sites achieved production and cost guidance for the year, with some performing significantly better.”

He pointed out that gold production during the June quarter increased at all the company’s assets, apart from Bonikro, as the operation was impacted by a decline in gold grade and reduced mill throughput owing to increased maintenance activity.

The key drivers responsible for the increased production at Newcrest’s other operations included higher gold grades and plant throughput at the Gosowong mine, in Indonesia, increased mining rates at Ridgeway, in Australia, the continued ramp-up of the Cadia East operation, also in Australia, and higher gold recoveries at Lihir.

“Looking ahead, the main focus will continue to be on the improvement of operational and safety performance. The sustainable generation of strong free cash flow will produce a higher return on invested capital and enable the company to reduce debt and progressively return to paying dividends,” Biswas said.

Gold production in the September quarter was expected to be lower than the June quarter, owing to lower gold grades, particularly at Gosowong, as well as the planned autoclave shutdown at Lihir.