Gold still shines for Newcrest despite falls
Gold’s failure to fire after Donald Trump’s victory has not fazed the CEO of Australia’s biggest gold producer.
Gold’s failure to fire up in the wake of Donald Trump’s election victory has not fazed the chief executive of Australia’s biggest gold producer, Newcrest’s Sandeep Biswas.
While most pundits had gold adding $US100 an ounce on a Trump victory — and falling $US100 an ounce on a Hillary Clinton victory — the yellow metal has plunged by close to $US100-$US1212 an ounce.
“I think the markets have realised that Donald Trump is not necessarily going to do all the things he said he would do,’’ Mr Biswas said yesterday.
“So I think you have seen a bit of that fear factor come out of the market.’’
Mr Biswas said it was the broader trading range of the past three years that was important to Newcrest, one of the lowest-cost gold producers in the world ($US790 an ounce all-in sustaining costs an ounce in the September quarter).
“My perspective is that despite Brexit, despite Donald Trump, despite the threatened increase in (US) interest rates, the gold price over the past three years has hovered between $US1100 and $US1300 an ounce most of the time.
“And that is a pretty healthy gold price. As long as it sticks in that sort of range, it is perfectly fine for Newcrest,’’ Mr Biswas said.
He was speaking after a three-hour investor and analyst briefing in Sydney, the highlight of which was Newcrest’s organic growth opportunities at its two major mines — Cadia near Orange in NSW and the once troublesome Lihir mine in PNG.
Cadia is already one of Australia’s biggest mines of any description with forecast output in the 2017 financial year of 730,000-820,000 ounces of gold and 65,000 tonnes of “byproduct’’ copper production.
That comes from the treatment of 26 million tonnes of ore on an annual basis. But because of the operation’s strong performance and its massive underpinning reserve/resource base, Newcrest is now contemplating an eventual annual treatment rate of 40 million tonnes a year.
Before it reaches that conceptual target, Newcrest plans a debottlenecking program to lift the treatment rate to 28 million tonnes a year ahead of a push to 32 million tonnes, which the mine is currently approved to do.
There are three options to get to the 32 million tonne rate, with the cost ranging from $US185 million by simply modifying the existing plant, through to a $US310m option that would include pre-investment in equipment for the eventual push to an annual rate of 40 million tonnes.
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