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Newcrest Mining’s half-year profit takes a knock

15th February 2018

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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JOHANNESBURG (miningweekly.com) – Seismic activity at the Cadia mine in New South Wales and higher costs as a result of a stronger Australian currency have contributed to the large decrease in interim underlying profit that gold miner Newcrest Mining reported on Thursday.

For the six months ended December 31, the Australian company, which operates mines in four countries, reported a 48% decrease in statutory profit to $98-million and a 58% decrease in underlying profit to $116-million.

The $157-million drop in underlying profit was mainly as a result of lower gold and copper sales volumes, related to the effects of the April 2017 Cadia seismic event, higher depreciation expense and the unfavourable impact on costs of the Australian dollar against the US dollar, Newcrest said in its half-year report.

The company’s revenue fell by 5% year-on-year to $1.72-billion, comprising $1.46-billion in gold revenue, $249-million in copper revenue and $9-million in silver revenue.

Gold production of 1.14-million ounces was 8% lower than the prior period, mainly as a result of the temporary suspension and subsequent progressive restart of mining activities at Cadia East, coupled with lower gold head grade at Lihir, Telfer and Gosowong. This was partially offset by an increase in mill throughput at these mines, located in Papua New Guinea, Western Australia and Indonesia, respectively.

Copper production fell by 20% year-on-year in the six months to 39 000 t, primarily driven by lower mill throughput at Cadia.

All-in sustaining costs (AISC) jumped by 12% in the six months, as a result of the lower volume contribution from Cadia, higher production costs at Lihir and Telfer and the impact of the Australian dollar.

All but one of Newcrest’s operations was cash flow positive in the six months, which allowed the group to reduce its net debt position to $1.4-billion.

Newcrest MD and CEO Sandeep Biswas said that the group’s production would be stronger in the second half of the year and that its AISC spend would be potentially below its guidance range.

“Cadia is targeting a 30-million-tons-a-year annualised production rate by June 2048 and Lihir is targeting 15-million-tons-a-year annualised mill throughput by the end of June 2019,” he commented.

Biswas said that Newcrest would publish the Golpu feasibility study update by the end of March and that the Cadia mining and plant expansion prefeasibility studies would be completed by the end of August.

Newcrest declared an interim dividend of 7.5c a share.

Edited by Creamer Media Reporter

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