Newcrest Mining optimistic despite weak result
Newcrest Mining has lifted its full-year guidance after buying Canadian miner Pretium Resources, but analysts say the company’s March quarter performance was weak.
Newcrest Mining has lifted its full-year guidance after buying Canadian miner Pretium Resources, but analysts say the company’s March quarter performance was weak despite improved output from its gold mines in the period.
Australias largest gold miner produced 478,839 ounces of gold in the March quarter, up nearly 10 per cent from the December period, with output lifting from its flagship Cadia mine after fixing a motor issue at the mine’s mill.
Newcrest also produced 31,035 tonnes of copper during the three-month period, up 17 per cent, with all-in sustaining costs falling 10 per cent over the quarter to $US1008 per ounce.
Newcrest managing director Sandeep Biswas lifted the company‘s annual 2022 guidance to 1.925 million to 2.025 million ounces of gold from the previous 1.8 million to 2.0 million ounce forecast after completing the $3.8bn Pretium deal in March. Pretium’s Brucejack mine will add between 95,000 and 115,000 ounces of gold to Newcrest’s output for the year.
“With the Cadia mill motor operating at full capacity and an improved performance at Lihir, gold and copper production increased for the third consecutive quarter, driving the continued decline in our all-in sustaining costs,” Mr Biswas said.
Despite the improved March quarter output figures, analysts said Newcrest’s performance was weaker than expected, with costs above analyst forecasts.
Barrenjoey analyst Daniel Morgan said Newcrest’s March production figures were 13 per cent below consensus expectations, with costs 8 per cent higher, noting that – outside the additional ounces flowing from the Pretium acquisition – Newcrest’s stable of mines may struggle to meet annual guidance estimates.
“We view the result as weaker than expected, but underlying financial year production guidance was not cut as we had thought was a risk, but narrowed to the bottom of the range,” he said in a client note on Thursday.
Newcrest said its struggles at its Lihir mine were continuing, saying that because of Covid-19 production would likely be at the bottom of its 700,000 to 800,000 ounce output guidance.
Mr Morgan said even that figure looked optimistic.
“For Lihir to make 700,000 ounces would imply 225,000 ounces in the final quarter – which would be an additional 33 per cent quarter on quarter, and the best quarter since Jun 2019.
“We imagine the market will be sceptical,” he said.
Newcrest shares closed down 26c or 1 per cent at $26.72.
