Newcrest glitters but pandemic costs set to tarnish returns

Newcrest warned it expected the cost of protecting its workforce and communities from the pandemic to double.

Newcrest said the cost of dealing with the coronavirus pandemic would be far larger than the $US30 million to $US40m it had previously estimated. Picture: AAP

Newcrest Mining’s output rose and costs fell in the December quarter as the company put in a solid performance, but warned it expected the cost of protecting its workforce and communities from the pandemic to double.

Australia’s biggest gold miner said it produced 535,477 ounces in the three months to the end of December, up 6.4 per cent from 503,089 ounces in the September period as it deferred maintenance at some of its operations.

Newcrest’s all-in-sustaining costs fell $US12 ($15.77) an ounce to $US968 an ounce in the period. A surging copper price in December helped underpin a solid quarter for the company, even though total copper output of 34,557 tonnes was down from 34,763 tonnes in the previous quarter. But the strong price ensured the 26,477 tonnes sold for its Cadia mine in NSW paid for its total production outlays, with the mine booking a total all-in-sustaining cost of negative $US6 an ounce, and a sales margin of $US1821 an ounce for the period.

But Newcrest said the cost of dealing with the coronavirus pandemic would be far larger than the $US30 million to $US40m it had previously estimated, saying it spent $US30m in the first half of the financial year. Newcrest is now tipping the total annual cost of coronavirus measures at $US60m to $US70m, citing the need for more extensive testing of its workforce, along with longer quarantine periods for workers.

Newcrest shares closed down 74c, or 2.8 per cent, to $25.33 on Thursday.