Lacklustre Newcrest punished

The below-expectations effort came on top of a four-day slide in the gold price, prompting investors to send Newcrest shares $2.30, or 6.4 per cent, lower to $33.45.

It is not the sort of treatment that Newcrest is used to, priding itself as it has in recent years on not springing negative surprises on the market.

But the 16 per cent slump in September-quarter production to 587,296 ounces of gold from the 700,124 ounces produced in the preceding June quarter was as much as 100,000 ounces of gold short of some market estimates, even if the maintenance and weather issues behind the fall should have been well known in the market.

The saving grace for Newcrest was that the September quarter was a bumper one in terms of average gold prices.

The group's average realised gold price of $A1623 an ounce delivered a 19 per cent increase in gross cash margins on production of $A1029 an ounce. Recent weakness in the US dollar gold price, and renewed strength in the local dollar, has since seen the local gold price fall below $A1600 an ounce.

The US gold price had lost $US56, or 3.3 per cent, by the opening of trade on the local market yesterday. So the Newcrest share price would have been under pressure anyway. Other gold stocks were also beaten up. OceanaGold fell 8.4 per cent to $2.18, Alacer was off 2.8 per cent at $9.91 and St Barbara fell 4 per cent to $2.11.

Newcrest's quarterly cash cost of production was $A594 an ounce, up from $A542 an ounce previously. The group's Cadia Valley operations in NSW were again the star performers (cash costs of $A281 an ounce). But the group's former flagship mine, the Telfer mine in Western Australia, was uncomfortably high at $A827 an ounce, as was the Hidden Valley operation in Papua New Guinea at $A898 an ounce.

Despite the shocker first quarter, Newcrest has maintained its guidance that full-year production would be 2.77-2.92 million ounces, suggesting it plans to make up the lost ground in coming quarters.