Newcrest Mining slashes gold production guidance at PNG Lihir mine
Newcrest has given up hope of cracking the million ounce production mark, slashing output estimates by almost 20pc.
Newcrest Mining has slashed its production guidance for the second half of the year on the back of new problems at its giant Lihir gold mine in Papua New Guinea, cutting more than 11 per cent off its expected annual output.
On Wednesday, the gold major cut 335,000 ounces from the top end of its production guidance, it expects to produce 2.1 to 2.2 million ounces of gold this financial year, down from previous guidance of 2.38 to 2.54 million ounces.
While some of that downgrade comes from the sale of its Gossowong mine in Indonesia, the bulk comes from renewed problems at Lihir, where Newcrest has again given up hopes of cracking the million ounce production mark, slashing output estimates by almost 20 per cent.
Rather than producing 930,000 to 1.03 million ounces this financial year, Newcrest boss Sandeep Biswas said output at Lihir will now come in between 775,000 and 825,000 ounces.
Newcrest blamed “difficult geothermal conditions” at the mine, which is built in the bowl of an extinct volcano and where temperatures beneath the pit can approach 80 degrees only a few dozen metres below surface.
“From a mining perspective, access to ex-pit ore has been delayed due to difficult mining and geothermal conditions that has required re-sequencing of the mine to focus on the less productive eastern side of the mine,” the company said.
“Both ex-pit and stockpile ore fed to the mill have proven to be problematic for gold grade, recovery and mill throughput in this financial year.”
Newcrest also downgraded expectations at its Telfer operations, from 400,000 to 460,000oz to 360,000 to 400,000oz.
It upgraded guidance for its Red Chris mine by 10,000oz to 35,000 to 45,000oz, and added 20,000oz from its Fruta del Norte mine in Ecuador to its expected production after declaring the start of commercial production at the Lundin Mining operated asset in February.
Newcrest shares were down $2.22, or 7.6 per cent, to $26.94 in the middle of the trading day.
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