Newcrest's tight spot

Gold miner Newcrest is facing fine margins on gold and expects production to fall in the first three months of this financial year.

Newcrest Mining, Australia’s biggest gold producer, says its all-in cash costs in its 2013 financial year have been on average $1283 an ounce, higher than the spot price of gold at times this year.

At 0954 AEST spot gold was at $US1319.71, according to Bloomberg data, up 9.9% from a low this year on June 27 of $US1200.65. Newcrest mines gold from six deposits in Australia, Papua New Guinea, Indonesia and Cote d’Ivoire. The company got $1434 an ounce for its gold in the three months to June 30.

“Due to the substantial fall in gold and copper prices during the June 2013 quarter, the timing effect between shipment and final settlement is expected to result in unfavourable quotation period adjustments of around $50 million,” Newcrest said in an ASX statement.

“Newcrest expects all-in sustaining cash costs in financial year 2014 resulting in lower levels of stripping and lower levels of capital expenditure,” the company added.

Newcrest shares have plunged 43% so far this year. The company said on June 6 it was writing off as much as $6 billion in value of its gold deposits because of the fall in the price of gold (see Tim Treadgold's Digging down into the Newcrest cave-in). Spot gold has fallen 31% from $US1900.23 on September 5, 2011.

The Melbourne-based miner expects its 2014 financial year gold output to be between 2 million ounces and 2.3 million ounces compared with 2.1 million ounces of gold in the 12 months to June 30. But the miner says its 2014 first quarter gold production is expected to fall from the three months to June 30.

Newcrest produced 80,366 tonnes of copper in its 2013 financial year and expects to produce between 75,000 and 85,000 tonnes in 2014. Total mine, milling, administration and other costs were $2.43 billion in its 2013 financial year.

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