Lihir gold mine finally in sight of million ounce mark: Newcrest
Newcrest Mining is finally within sight of turning its Lihir gold mine in Papua New Guinea into a million ounce a year producer.
Newcrest Mining boss Sandeep Biswas says the company is finally within sight of turning its Lihir gold mine in Papua New Guinea into a million ounce a year producer, as the company delivered record profits last financial year.
Fabled as the island of gold, Lihir is also the mine that nearly brought Newcrest down as it struggled to realise the promise of the former Rio Tinto mine as the gold price tumbled after its $10 billion cash-and-scrip merger with Lihir Gold in 2010.
Lihir has never quite managed to live up to the promise of delivering sustainable production above the million ounce a year mark since the acquisition, as Newcrest struggled with the complex and costly processing required to turn its refractory ore into ingots.
But Mr Biswas said on Thursday, as Newcrest delivered its annual profit result, that a new mining method could cheaply open up higher grade areas of the mine, lifting gold output without requiring the processing of additional tonnes.
“Given it‘s grade driven, with a little bit of extra recovery, that gives us a lot of confidence around the 1 million plus ounces of production, versus if I was relying on just throughput alone,” he said.
Newcrest has booked a record profit of $US1.16bn for the full financial year, lifting its final dividend to US40c a share as the company’s suite of gold mines threw off $US1.2bn in cash over the year.
Mr Biswas said the final dividend took the company’s annual return to shareholders to US55c a share, or about 41 per cent of its free cash flow for the year.
The gold giant finished June with net cash of $US176m, on revenue of $US4.58bn for the year and earnings before interest, tax, depreciation and amortisation of $US2.44bn.
Its gold mines produced 2.1 million ounces of gold last financial year, at an average all-in-sustaining cost of $US911 an ounce.
Newcrest said it had incurred $US70m in additional costs through the year to manage the coronavirus pandemic, with the overwhelming majority incurred at its Lihir operations in Papua New Guinea, where the company has been at pains to try to keep the island community safe from the ravages of the deadly disease.
Newcrest shares closed up 27c to $25.54 on Thursday.
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