Newcrest Quarterly Gold Output Slides 11% to Miss Estimates

  • Production declines on Gosowong disruption, Cadia grades
  • Gold suppliers benefitting on metal’s gains this year

Newcrest Mining Ltd., Australia’s biggest gold producer, said that fourth-quarter output fell 11 percent due to a disruption at its Gosowong mine in Indonesia and lower grades at its Cadia operation.

Output declined to 598,037 ounces in the three months to June 30, from 673,542 ounces a year earlier, the Melbourne-based company said in a statement on Monday, missing the 628,000 ounce median estimate among three analysts surveyed by Bloomberg. Net debt fell 27 percent to $2.1 billion as of June 30 on cash generation from a stronger gold price, Newcrest said.

Gold miners have benefited from surging prices as the Federal Reserve’s pause on tightening and concern that global growth may be slowing boost bullion demand. The rally is set to continue with the U.S. presidential election seen as the next big catalyst, according to Bill Beament, managing director at Northern Star Resources Ltd, Australia’s third-largest producer.

Newcrest’s shares fell 2.2 percent to A$23.52 at 10:50 a.m. in Sydney, paring their advance this year to 81 percent. Spot gold traded at $1,317.88 an ounce at the same time, 24 percent higher this year. Newcrest’s realized price in the quarter was $1,255 an ounce, compared with $1,193 in the corresponding period in 2015.

Lower-Grade Ore

Output fell “principally due to the extended suspension of production at Gosowong following the previously announced geotechnical event in February 2016 and lower-grade ore processed at Cadia,” the company said. “This was partially offset by a strong result at Lihir, which recorded a record quarterly gold production result under Newcrest ownership.”

The result brings Newcrest’s annual output to 2.44 million ounces, from 2.42 million ounces last year. That compared to company guidance of between 2.4 million to 2.6 million ounces. Australian producers Evolution Mining Ltd. and St. Barbara Ltd. last week reported record full-year production for 2016.

Newcrest’s all-in sustaining costs, a measure that includes spending on production, administration, capital and exploration, rose to $783 an ounce in the June quarter from $723 an ounce in the previous three months, according to the statement. Costs climbed at Cadia, the producer’s second-largest mine, on lower copper by-product credits and as the company purchased items to replace a concentrator mill motor, it said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE