Newcrest flags $2.5 bn impairment

Gold miner reviews Lihir cost assumptions, lifts FY gold and copper production.

Newcrest Mining (NCM) has warned of an asset impairment of between $1.5 billion to $2.5 billion after tax, mainly due to a review of the operating cost assumptions for its Lihir gold mine. 

The miner said the cost performance of Lihir, in Papua New Guinea, was disappointing compared to an improvement in costs elsewhere in the group.

Newcrest said it is looking for ways to lower costs at the mine, after scaling back mining and processing ore from stockpiles to cut expenses this year.

The impairment is in addition to the $47m charge already booked in its half-year results on its West African exploration assets. 

The miner said it is also reviewing exchange rate assumptions as the Australian dollar holds well above its long-term expectation of US80c.

Meanwhile, Newcrest lifted full-year gold and copper production above guidance and also reported a fall in costs.

Full-year 2014 gold production was 2.396 million ounces, a 14% lift on full-year 2013 and above the top end of the guidance range of 2.3 million ounces.

Copper production rose 7% to 86,118 tonnes in the year, above the upper guidance of 85,000 tonnes.

Newcrest's all-in sustaining cost of $976 per ounce was 24% lower than the previous year. 

The miner reiterated fiscal 2015 guidance it announced last month, subject to the board's final approval, of 2.2 million to 2.4 million ounces of gold and 75,000 tonnes to 85,000 tonnes of copper.