Gold price gains as Australian gold miners announce soft March quarter results
Newcrest Mining’s board is likely to make a call on Newmont’s blockbuster merger offer for the company in mid-May, with the company saying the due diligence period expires on May 11.
Newcrest Mining’s board is likely to make a call on Newmont’s blockbuster merger offer for the company in mid-May, with the company saying the due diligence period expires on May 11.
Newmont improved its offer for the Australian gold major in April, offering a “best and final” 0.4 of its shares for every Newcrest share on offer, while allowing Newcrest to pay a $US1.10 a share special dividend without shifting the offer price.
While the company did not offer a timeline on when its board expects to make a recommendation on the bid, the company flagged the end of the exclusive due diligence period in its March quarter report on Thursday.
Newcrest will need to deliver its best operational quarter of the year to meet the bottom end of its guidance forecasts, after its global gold mines recorded a soft March quarter.
Newcrest produced 509,637 ounces in the March period, down slightly from 512,130.
But the company has so far produced only 1.59 million ounces for the nine months to the end of March, meaning its needs to produce more than 551,000 ounces in the June period – well above its best three-month effort this financial year of 527,115 ounces.
The company said it expected to meet annual guidance, however, flagging improved output in the June period as it has no scheduled maintenance and expects higher mill throughput at all of its mines.
Newcrest said its gold was produced at an average all-in-sustaining cost of $1012 an ounce, 7 per cent lower than the December period on the back of the strong copper price – which is credited against gold production costs – and lower production costs at its Lihir mine in Papua New Guinea, Telfer in Western Australia and at its Canadian operations.
Northern Star Resources also posted a weak quarter, lifting its average production cost guidance on the back of 9.7 per cent fall in output in the March period.
The company also said it was on track to meet its annual output guidance, but lifted its expected average production costs in the wake of mill issues in WA and Alaska.
Northern Star’s mines produced 362,750 ounces for the quarter, down 9.7 per cent compared to the three months to the end of December 2022, with the company blaming downtime at its processing operations at Kalgoorlie’s Super Pit and at its Pogo mine in Alaska.
The company said it was also having issues with “commissioning stability” at its Thunderbox mine in WA.
While Northern Star said it expected to recover lost production in the June quarter, and maintained its annual output guidance of 1.56 to 1.68 million ounces. It lifted all-in-sustaining cost guidance to $1730 to $1760 an ounce, from $1630 to $1690 an ounce.
Northern Star said it sold 363,081 ounces of gold in the March quarter, with AISC of $1813 an ounce.
With Regis Resources also posting lower-than-expected output for the March quarter, Pilbara gold miner Capricorn Metals became one of the few Australian gold miners to buck the trend, posting a 5 per cent lift in output for the period, to 30,841 ounces.
The production lift from its Karlawinda gold mine came despite a massive downpour in late March that flooded part of its open pit operations, halting work for a week, and an electrical fault that briefly put its processing plant out of commission.
Capricorn posted AISC of $1252 per ounce for the quarter, just below the top end of its $1160 to $1260 an ounce guidance range, and the company said it was on track to achieve the midpoint of its 115,000 to 125,000 ounce annual production target.
Gold was trading at $US2001 at the close of the ASX on Thursday, or $3021 in local currency.
Capricorn shares closed up 8c to $4.59, valuing the company at $1.7bn. Newcrest closed down 60c to $28.51, with Northern Star up 8c to $13.87, and Regis up 4c to $2.18.
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