Newcrest Cuts Costs as Gold Output Falls

Newcrest Mining’s NSW gold project is helping it keep on top of costs as it works to turn around its fortunes.

Australia’s largest gold miner has cut its “all-in sustaining costs”, a globally recognised measure of costs, by 20 per cent from a year ago, to $864 an ounce during the three months to the end of September.

But gold production in the September quarter fell to 561,731 ounces, down 12 per cent on the June quarter and four per cent on the same period in 2013.

Newcrest’s recently expanded mining operations in the Cadia Valley, in central west NSW, produced 153,119 ounces of gold, at a cost of only $207 an ounce.

That compares to its problematic Lihir mine in Papua New Guinea, which produced 153,826 ounces at a cost of $1,353 an ounce.

The average realised gold price for the quarter was $1,393 an ounce.

Newcrest’s lower production was expected, and was blamed on lower gold grades at its Gosowong mine in Indonesia, Cadia Valley and Lihir.

The company has re-affirmed its full year guidance of gold output of between 2.2 million to 2.5 million ounces.

Newcrest is coming off two consecutive years of financial losses.

Chief executive Sandeep Biswas told analysts a priority for Newcrest was implementing improvement programs to lift production, cost and cash performance.

A company-wide improvement program began earlier this month, aiming to uncover ways to improve the business and cut costs at all of its sites.

However Mr Biswas said Newcrest would not be able to drive cost improvements at Lihir until operational stability was achieved there, and shutdowns due to maintenance activity were reduced.

Meanwhile, the company’s head of investor relations Steve Warner – who held the position during Newcrest’s 2013 disclosure controversy – has resigned.

The company was subsequently fined $1.2 million for selectively briefing analysts ahead of a market announcement.

Mr Warner will pursue business interests outside of Newcrest, and is to be replaced by Christopher Maitland, from Rio Tinto’s investor relations team.

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