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Newcrest Says Cadia Project Facing Head Winds From Covid, Inflation — Commodity Comment

Newcrest Mining Ltd. on Thursday reported an increase in gold output for the three months through March, and revised estimates for fiscal-year output, costs and capital expenditure. Here are some remarks from its quarterly operations report.

 

On 3Q gold output:

"Gold production was 10% higher than the prior period driven by higher mill throughput at Cadia following completion of the SAG mill motor replacement and upgrade in the December 2021 quarter, the addition of production from Brucejack following completion of the transaction on 9 March 2022, and improved gold head grade and recovery at Lihir. Gold head grade [at Cadia] also increased in the quarter with a higher proportion of high grade stockpile fed to the mill to reduce stockpile levels following the SAG mill motor replacement in the prior period."

 

On FY gold output:

"Newcrest has updated its group guidance for FY22 following completion of the Pretium transaction on 9 March 2022. Higher gold production and a lower all-in sustaining cost is now anticipated, with production stripping and major capital expenditure expected to be lower due to Covid-19 related disruptions to projects and reduced activity at Lihir. Lihir is expected to deliver around the bottom of its original production guidance range (circa 700,000 [troy] ounces) for FY22 with a strong fourth quarter anticipated due to lower planned maintenance and improved pumping capacity in Phase 14 which is expected to increase delivery of higher grade ore to the mill."

 

On Cadia mine expansion:

"The two-stage Cadia Expansion Project is on track for completion during the September 2022 quarter with key activities well progressed including the development of Panel Cave 2-3, increasing mill capacity to 35 million [metric] tons per annum, improvements to enhance gold and copper recovery, and other associated infrastructure. Although the project remains on track, Covid-19 related disruptions continue to impact resourcing and costs remain under pressure due to inflation."

 

On Lihir operations:

"There was a significant improvement in mined volumes in Phase 14 compared to the prior period despite heavy rain continuing throughout the quarter. During the June 2022 quarter, mining will continue to focus on Phase 14 and Phase 15 to increase delivery of higher grade ore to the mill, which is well supported by resource definition drilling in these targeted ore zones. Mill throughput is also expected to improve in the June quarter following completion of a scheduled plant shutdown in March 2022."

 

On Brucejack mine:

"Newcrest has identified a range of opportunities to maximize the long-term potential and value of the Brucejack mine and associated district-scale potential. A three phase transformation program has commenced, which includes a range of initiatives that will leverage Newcrest's experience and expertise to deliver long term value for all stakeholders. As part of this transformation program, Newcrest is assessing the potential to increase the process plant capacity from the current permitted processing rate of 3,800 tons per day to between 4,500 to 5,000 tons per day."

 

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

 

(END) Dow Jones Newswires

April 27, 2022 19:58 ET (23:58 GMT)

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