NEWCREST MINING LIMI

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Newcrest Mining : September 2020 Quarterly Report

10/28/2020 | 04:50pm

Quarterly Report

For the three months ended 30 September 2020

(figures are unaudited and in US$ except where stated)

Q1 in line with expectations as shareholder growth pursued in the Americas

  • September quarter in line with expectations and on track for meeting annual guidance following completion of major planned maintenance in the quarter:
  1. Group gold production of 503koz(1) and copper production of 35kt
    1. Group AISC of $980(1) per ounce, delivering a robust AISC margin of 46% or $847(2) per ounce o Cadia records lowest ever quarterly AISC at $113 per ounce
  • Gold and copper production expected to increase in the December quarter
  • Successful secondary listing on the Toronto Stock exchange supports Newcrest's growth strategy in the Americas and broadens its access to the large North American capital pool
  • Cadia and Lihir growth projects moved into execution phase with attractive rates of return and short payback
  • Lihir clay management studies improve confidence in production plan deliverability; mine optimisation study on track for completion by end December 2020
  • Havieron potential continues to grow as drill results return best intercepts to date; Initial Inferred Mineral Resource expected in December 2020 quarter (see Quarterly Exploration Report released today)
  • Industry-leadingTRIFR steady at 2.6 and no interruption to operations due to COVID-19

Newcrest Managing Director and Chief Executive Officer, Sandeep Biswas, said "Consistent with prior years we executed a number of planned shutdown events across our operations in the September quarter, which is reflected in our production and All-In Sustaining Cost per ounce. We expect production to be higher in the December quarter and the Company is on track to meet its FY21 production guidance. Our world-class Cadia asset continues to impress, reporting its lowest ever quarterly All-In Sustaining Cost of $113 per ounce, equating to an AISC margin of $1,724 per ounce for the quarter. This showcases the strength of Newcrest's unique technical capability as one of the few mining companies globally able to do block cave mining, which underpins Cadia's performance."

"In line with our strategy of pursuing growth in the Americas, we listed on the Toronto Stock Exchange in October. We believe that this secondary listing will improve the global visibility of the Company and broaden our access to the large North American capital pool following our acquisition of 70% of the Red Chris mine in Canada, our equity investments in Ecuador and our expanding portfolio of exciting exploration and early stage entry prospects in the Americas."

"In October, the Board approved Stage 2 of the Cadia Expansion Project and the Lihir Front End Recovery Project to the execution phase. The Cadia expansion is expected to increase plant capacity to 35mtpa, enabling an increase in gold and copper recoveries, an increase in production and a reduction in unit costs. The Lihir Front End Recovery Project is expected to deliver additional production through an improvement in life of mine gold recoveries."

"It's evident that the difficult near-term operating conditions we highlighted at Lihir earlier this year adversely impacted our recent share price performance, so I'm pleased to report that the ongoing Lihir studies have improved our confidence in production plan deliverability and our first quarter performance across the Group is in line with expectations. Lihir is a uniquely large, long-life asset and I remain confident we are on track to realise its full potential."

"Newcrest has uniquely long-life,low-cost production and an exciting pipeline of expansion and exploration projects. Our Quarterly Exploration Report, also released today, further highlights the potential of the Havieron project as it continues to expand its mineralisation and reports its best high-grade intercept to date."

"As we continue to deliver against the strongly value-accretive opportunities across our portfolio, including production growth to come from Havieron and Red Chris, I believe the considerable upside we see will be more broadly recognised" said Mr Biswas.

1 Includes 30koz and an estimated reduction of $10/oz based on Newcrest's 32% attributable share of Fruta del Norte through its 32% equity interest in Lundin Gold Inc. Please refer to the Appendix for calculation. 2 Newcrest's AISC margin for the September quarter has been determined by deducting the All-In Sustaining Cost attributable to Newcrest's operations of $990/oz from Newcrest's realised gold price of $1,837/oz.

Newcrest Mining Limited - Level 8, 600 St Kilda Road, Melbourne - Quarterly Report to 30 September 2020

1

Overview(3)

Gold production was 12% lower than the prior period across all operations. In line with prior years, a series of planned shutdown events reduced throughput rates at Cadia, Lihir and Telfer. Additionally, production was also impacted by lower grades at Cadia, Lihir and Red Chris, the impact of unplanned outages and autoclave availability at Lihir and lower recovery rates at Telfer, Red Chris and Lihir. These impacts were partially mitigated by an improvement in gold head grades at Telfer. Included within gold production for the September 2020 quarter is 30koz relating to Newcrest's 32% equity interest in Lundin Gold Inc which owns the Fruta del Norte mine.

Newcrest's AISC for the September 2020 quarter of $980(1) per ounce was $102 per ounce higher than the prior period. The 12% increase in AISC per ounce was primarily driven by the impact of a strengthening Australian dollar and Canadian dollar on the operating costs of Cadia, Telfer and Red Chris, lower gold production, an increase in stripping activity at Lihir and lower copper sales volumes. These impacts were partially offset by a higher realised copper price and the timing of sustaining capital expenditure.

Production Highlights

Metric

Sep 2020 Qtr

Jun 2020 Qtr

FY20

FY21 Guidance(4)

Group(1)

- gold

oz

503,089

573,175

2,171,118

1,950-2,150koz

- copper

t

34,763

40,196

137,623

135-155kt

- silver

oz

214,412

252,205

983,431

Cadia

- gold

oz

196,504

236,705

843,338

680-760koz

- copper

t

25,329

27,634

96,042

95-105kt

Lihir

- gold

oz

177,337

207,233

775,978

720-820koz

Telfer

- gold

oz

86,452

113,797

393,164

360-420koz

- copper

t

2,384

4,162

16,278

10-20kt

Red Chris(5)

- gold

oz

12,636

15,440

38,933

45-55koz

- copper

t

7,050

8,401

25,302

25-30kt

Gosowong(6)

- gold

oz

-

-

103,282

Fruta del Norte(1),(7) - gold

oz

30,160

0

16,422

95-110koz

Fatalities

Number

0

0

0

TRIFR(8)

mhrs

2.6

2.6

2.6

All-In Sustaining Cost(1),(9)

$/oz

980

878

862

All-In Cost(10)

$/oz

1,275

1,108

1,044

All-In Sustaining Cost margin(2)

$/oz

847

768

668

Realised gold price(11)

$/oz

1,837

1,646

1,530

Realised copper price(11)

$/lb

2.97

2.47

2.57

Realised copper price(11)

$/t

6,548

5,445

5,666

Average exchange rate

AUD:USD

0.7147

0.6557

0.6715

Average exchange rate

PGK:USD

0.2872

0.2898

0.2927

Average exchange rate

CAD:USD

0.7504

0.7210

0.7452

All figures are shown at 100% unless stated otherwise.

  1. See information under heading "Non-IFRS Financial Information" on Page 15 of this report for further information.
  2. The achievement of guidance is subject to market and operating conditions. Newcrest's guidance for Fruta del Norte is an annualised figure based on Lundin Gold Inc's production guidance for 1 July 2020 to 31 December 2020. See Appendix for further details.
  3. The figures shown represent Newcrest's 70% share of the unincorporated Red Chris JV. Production outcomes for FY20 are reported from the date of acquisition (15 August 2019).
  4. The figures shown represent 100%. Prior to the divestment on 4 March 2020, Newcrest owned 75% of Gosowong through its holding in PT Nusa Halmahera Minerals, an incorporated joint venture. Production and financial outcomes for FY20 represent Newcrest's period of ownership to the divestment date.
  5. The figures shown represent Newcrest's 32% attributable share, through its 32% equity interest in Lundin Gold Inc. No production was reported in the June 2020 quarter due to the temporary suspension of operations following concerns of a spread of COVID-19 in Ecuador. Operations were resumed on 5 July 2020.
  6. Total Recordable Injury Frequency Rate (injuries per million hours). TRIFR for FY20 includes safety results for Red Chris from acquisition. Excluding Red Chris, TRIFR for FY20 was 2.1.
  7. Due to the negligible impact of Fruta del Norte on Newcrest's Group AISC for FY20 it has been excluded from the calculation.
  8. From Newcrest's operations only and does not include Newcrest's 32% attributable share of Fruta del Norte through its 32% equity interest in Lundin Gold Inc.
  9. Realised metal prices are the US$ spot prices at the time of sale per unit of metal sold (net of Telfer gold production hedges), excluding deductions related to treatment and refining charges and the impact of price related finalisations for metals in concentrate. The realised price for the June and September quarters and for FY20 has been calculated using sales ounces generated by Newcrest's operations only (i.e. excluding Fruta del Norte).

Newcrest Mining Limited - Level 8, 600 St Kilda Road, Melbourne - Quarterly Report to 30 September 2020

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Operations

Cadia, Australia

Highlights

Metric

Sep 2020 Qtr

Jun 2020 Qtr

FY20

FY21 Guidance

TRIFR

mhrs

3.6

6.1

4.9

Total production

- gold

oz

196,504

236,705

843,338

680-760koz

- copper

t

25,329

27,634

96,042

95-105kt

Head Grade

- gold

g/t

1.02

1.09

1.14

- copper

%

0.40

0.39

0.39

Sales

- gold

oz

195,146

236,980

848,959

- copper

t

24,596

26,924

96,437

All-In Sustaining Cost

$/oz

113

170

160

All-In Sustaining Cost margin

$/oz

1,724

1,476

1,370

Cadia's gold production of 197koz was 17% lower than the prior period driven by a 10% reduction in throughput and a 6% reduction in gold head grade. The lower throughput in the period was primarily due to planned maintenance shutdown events in July and September. The lower gold grade in the period was in line with expectations.

Cadia's AISC of $113 per ounce is its lowest on record, primarily driven by a higher realised copper price and timing of sustaining capital expenditure. These benefits were partially offset by lower gold production, an increase in operating costs associated with the planned shutdowns, the impact on operating costs from the strengthening of the Australian dollar against the US dollar and lower copper sales volumes.

As previously announced on 9 October 2020, the Board approved Stage 2 of the Cadia Expansion Project to the execution phase. Stage 2 of the Expansion Project is expected to increase plant capacity to 35mtpa, enable higher gold and copper recoveries, drive an increase in production and reduce unit costs. The estimated capital cost is expected to be $175 million(12), which is $5 million lower than the estimate announced in October 2019. The project is expected to be completed in late FY22.

Engineering and geotechnical verification work for the Pre-Feasibility Study (PFS) for the repair of the Northern Tailings Storage Facility (NTSF) was concluded in the quarter. Prior to finalisation, the PFS is undergoing a Competent Independent Review (CIR) process. Subject to the outcomes of that review process, commencement of the Feasibility Study is expected in the first half of calendar 2021. The estimated cost of the preferred 'go-forward' option remains below A$100 million, though the estimated time to complete the repair has been extended to the second half of 2023 (prior to any contingency in timing for approvals, weather and technical delays) primarily as a result of changes in volumes of material to be moved to effect the repair.

To date, Cadia has not experienced any COVID-19 related disruptions to the supply of goods or services or to its workforce. Cadia is primarily a residential workforce and otherwise largely draws on resources from within the State of New South Wales.

12 Stage 2 of the Cadia Expansion Feasibility Study has been prepared with the objective that its findings are subject to an accuracy range of ±10-15%. The findings in the Study and the implementation of the Cadia Expansion Project are subject to all the necessary approvals, permits, internal and regulatory requirements and further works. The estimates are indicative only and are subject to market and operating conditions. They should not be construed as guidance.

Newcrest Mining Limited - Level 8, 600 St Kilda Road, Melbourne - Quarterly Report to 30 September 2020

3

Lihir, Papua New Guinea

Highlights

Metric

Sep 2020 Qtr

Jun 2020 Qtr

FY20

FY21 Guidance

TRIFR

mhrs

0.5

0.8

0.6

Production

- gold

oz

177,337

207,233

775,978

720-820koz

Head Grade

- gold

g/t

2.34

2.46

2.38

Sales

- gold

oz

210,831

193,851

760,724

All-In Sustaining Cost

$/oz

1,283

1,352

1,206

All-In Sustaining Cost margin

$/oz

554

294

324

Gold production of 177koz was 14% lower than the prior period primarily due to lower throughput, grade and recovery. Mill throughput was 9% lower than the prior period reflecting the impact of the planned maintenance shutdowns and unplanned downtime due to crusher outages. Gold head grades were 5% lower than the prior period reflecting a lower proportion of higher grade ex-pit ore feed. Gold recovery of 72.6% was 1% lower than the prior period driven by lower feed grade and an increase in flotation due to a reduction in autoclave availability following planned and unplanned downtime.

Clay management studies have allowed an increased understanding of the argillic ores within the overall distribution of argillic ores that have recently unfavourably impacted plant performance. Importantly, these studies also identified reduced quantities of these argillic ores which has informed ore scheduling and process plant upgrade studies and has improved confidence in FY21 production plan deliverability. Additionally, conveyor and chute modifications were completed during the September 2020 smart shutdown to improve the handling of these ores.

The mine optimisation study remains on-track to be completed in December 2020. The study is focused on improving ore presentation to the processing plant, accounting for clay management study outcomes and optimising the integration sequence of the seepage barrier project with the mine schedule.

Lihir's AISC was $69 per ounce lower than the prior period primarily driven by timing of sustaining capital expenditure and higher gold sales in the period from the sale of lower cost inventory on hand. This was partially offset by an increase in stripping activities in Phases 15 and 16 and higher royalties associated with the higher gold sales and higher gold price.

As previously announced on 9 October 2020 the Board approved Lihir's Front End Recovery Project to the execution phase. This project is expected to deliver additional production through an improvement in gold recoveries over the life of the mine.

In August 2020, Newcrest confirmed that it was managing its first positive case of COVID-19 in its isolation and treatment facility at Lihir Island. The individual, a PNG national, tested positive whilst in quarantine following his arrival on the island. Though asymptomatic, he was further quarantined in a separate isolation facility at Lihir until he made a full recovery. Lihir's early detection and controls effectively detected the virus and prevented a potential spread to others at Lihir.

To date, Lihir has not experienced any COVID-19 related disruptions to the supply of goods or services or disruption to operations. To manage the potential impacts of COVID-19 to production, Lihir has increased its key inventory holdings to mitigate against disruptions to the supply chain, implemented longer rosters and regularly engages with key service providers.

National travel restrictions to reduce the risk of COVID-19 have been in place since March 2020. Having obtained the necessary approvals, Lihir received its first incoming flight allowing a change of workforce on 13 June 2020. All incoming passengers are screened using health declarations and a new thermal imaging camera installed at the airport. Passengers are then transported to a dedicated isolation camp and tested before undergoing a compulsory 14-day isolation period, which includes COVID-19 Polymerase Chain Reaction (PCR) testing on days 0, 5 and 14.

Newcrest Mining Limited - Level 8, 600 St Kilda Road, Melbourne - Quarterly Report to 30 September 2020

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Newcrest Mining Limited published this content on 29 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 October 2020 21:49:01 UTC

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