Melbourne - Newcrest (ASX: NCM) (TSX: NCM) (PNGX: NCM) Managing Director and Chief Executive Officer, Sandeep Biswas, said, 'Newcrest delivered a strong fourth quarter to achieve our group gold production for the year.
Over the last four quarters we have steadily increased our gold and copper production, driving lower group All-In Sustaining Costs and delivering a record breaking annual cost performance at Cadia. We were particularly pleased to record a fourth consecutive quarter of lower group costs during this challenging inflationary environment.'
'The three phase transformation program at Brucejack continues to progress well and we have a range of initiatives underway to maximise the long-term potential of this asset and district. We are on track to provide an update on our Brucejack uplift road map, together with the outcomes of the Cadia PC1-2 Feasibility Study, later this quarter.'
'Our Respect@Work program continued to progress during the quarter with Newcrest focused on creating a workplace where everyone feels safe, respected and valued. We also established our Newcrest Sustainability Fund this month, highlighting our commitment to achieving a better and more sustainable future for all our people, and the wider communities in which we operate.'
'As we move into FY23, we will continue to progress our exciting pipeline of organic growth projects, remaining focused on superior operational performance with an unwavering commitment to the health and safety of our people,' said Mr Biswas.
Overview
Newcrest achieved gold production guidance for FY22, with copper production 3% lower than FY22 guidance, predominantly driven by lower mill throughput at Red Chris and Telfer. Full year AISC was 2% higher than FY22 guidance due to lower copper production and a lower realised copper price, timing of Cadia copper sales and higher production stripping at Lihir and Telfer. Market guidance for FY23 will be released with the Full Year results on 19 August 2022 and will outline Newcrest's views of the risk of cost inflation on AISC and capital expenditure, and the associated mitigation strategies underway.
Gold production was 31% higher than the prior period5 driven by higher mill throughput and gold head grade at both Lihir and Cadia, and the addition of a full quarter of production from Brucejack. Gold production was also higher at Red Chris and Telfer compared to the prior period.
Newcrest's AISC for the June 2022 quarter of $896/oz2 was 10% lower than the prior period, driven by higher gold and copper sales volumes, and lower site operating costs on a dollar per ounce basis with higher production. There was also an additional benefit of a weakening Australian dollar against the US dollar on Australian dollar denominated operating costs. These benefits were partly offset by a lower realised copper price compared to the prior period.
Injury rates were higher than the prior period at Cadia, Telfer and Red Chris. The Safe Hands intervention program continues to focus on reducing the risk of hand injuries across Newcrest sites. Injury rates were reviewed during the quarter with previously reported frequency rates at Lihir, Cadia, Red Chris and the Group restated following an update to working hours in FY22 at Lihir, and an internal review of injury classifications at Cadia and Red Chris.
Cadia's TRIFR of 11.5 recordable injuries per million hours was higher than the prior period, mainly driven by hand injuries. Cadia is focused on improving injury rates with the Safe Hand intervention program now underway, supported by visible safety leadership across the site. Injury rates in the March 2022 and December 2021 quarters were restated following an internal review of injury classifications at Cadia.
Gold production of 187koz was 25% higher than the prior period driven by higher mill throughput with lower planned and unplanned maintenance during the period. In addition, gold head grade increased in the quarter with a higher proportion of high grade stockpile fed to the mill, as well as higher grade ore feed from Panel Cave 2 during the quarter.
Cadia's AISC of negative $315/oz reflects the benefit of higher gold and copper sales volumes, partly offset by a lower realised copper price. Cadia continues to manage the impacts of cost inflation, assisted by its fixed-price electricity contract which was extended in mid-2021 to the end of FY24, protecting Cadia from the recent increases in spot and contract electricity prices. The Power Purchase Agreement with the Rye Park Wind Farm is also expected to commence in 2024, which will help Cadia manage longer-term energy price risks.
Copper concentrate shipments were disrupted by the partial closure of the rail network in New South Wales following heavy rainfall in April and again in early July, however stock levels are expected to return to normal volumes during the September 2022 quarter4.
The Molybdenum Plant continued to ramp up during the quarter with the first molybdenum concentrate shipment delivered in June 2022.
The Cadia PC1-2 Feasibility Study is expected to be released by the end of September 20224. The early works program is progressing well with development activities, raise boring and preliminary earthworks for construction of the primary ventilation fans commencing in the quarter.
The two-stage Cadia Expansion Project is also on track for completion by the end of September 20224. First production from Panel Cave 2-3 is expected during the first half of FY23 and mill throughput rates are expected to start ramping up towards 35Mtpa in the December 2022 quarter4,18.
Cadia has commenced planning for the long-term continuation of mining operations known as the Cadia Continued Operations Project (CCOP). Community consultation is ongoing in relation to the key aspects of the CCOP, including a proposed development consent for a new Tailings Storage Facility adjacent to the current Southern Tailings Storage Facility, continued underground mining in the Cadia East area, additional off-site water storage and realignment of local roads19.
As highlighted in the March 2022 quarterly report, Newcrest settled an insurance claim in April 2022 in relation to the Northern Tailings Storage Facility slump on 9 March 2018. Settlement funds of US$75 million were received during the quarter.
Lihir's TRIFR of 0.6 recordable injuries per million hours was lower than the prior period reflecting the effectiveness of site safety campaigns, with a recent focus on hand safety. A review of total working hours in FY22 was completed during the quarter resulting in revised injury rates for the March 2022, December 2021 and September 2021 quarters.
Gold production of 213koz was 26% higher than the prior period, largely driven by higher mill throughput following completion of scheduled plant maintenance shutdowns in March 2022 and a reduction in unplanned downtime. Gold head grade also increased in the quarter reflecting additional higher grade expit ore feed from Phase 15 as mining continued to progress into the orebody.
Mining volumes increased by 24% during the quarter with Lihir delivering a record total material movement for a quarter. Higher mining rates are expected to continue in FY23 in line with the mining improvement program. Consistent with previous years, gold production is anticipated to be lower in the September 2022 quarter with the major plant shutdown scheduled in September 2022.
Lihir's AISC of $1,409/oz was 8% lower than the prior period which was largely driven by higher gold sales volumes, partly offset by additional Phase 16 & 17 production stripping and higher sustaining capital expenditure relating to the Phase 14A Feasibility Study.
The number of COVID-19 cases at Lihir remained very low during the period with the site continuing to successfully manage the 'endemic' phase of COVID-19. There were no material COVID-19 related disruptions to production, although Lihir did experience some supply chain challenges and interruptions to some project activities, with efforts made to minimise their impact on the overall cost and schedule.
Newcrest continued to progress the Phase 14A Feasibility Study during the period with ground support, upper drainage and shotcrete works completed and first medium grade ore delivered to the mill. The findings of the Feasibility Study are now expected to be released in the December quarter 20224.
The Lihir Front End Recovery Project is on track for completion during the September 2022 quarter4. The project aims to lower gold loss through the flotation circuits by generating a high-grade flash flotation concentrate from the High Grade Ore 1 (HGO1) grinding circuit. Construction of structures, equipment and services are nearing completion and the new electrical substation is currently being commissioned. Commissioning of the processing facilities is expected to commence in the September 2022 quarter4.
Red Chris recorded its lowest annual TRIFR on record at 6.2 recordable injuries per million hours for FY22, reflecting Newcrest's ongoing transformation of on-site safety behaviours and visible safety leadership. Injury rates were adjusted in the March 2022 quarter following an internal review of injury classifications.
Gold production of 14koz was 62% higher than the prior period largely driven by higher mill throughput following improved weather conditions. Gold recovery also increased in the quarter due to mill stabilisation, improved water quality and implementation of a pre-crusher blending program.
Red Chris' AISC of $1,258/oz was 18% lower than the prior period due to higher gold and copper sales volumes and the benefit of a weakening Canadian dollar against the US dollar. This was partly offset by a lower realised copper price and higher sustaining capital expenditure.
Drilling activities at East Ridge continue to expand the footprint and confirm continuity and extensions of the higher grade mineralisation. An Exploration Target for East Ridge has also been defined during the quarter. East Ridge is outside of Newcrest's initial Mineral Resource estimate and strike extents of this prospect remain open to the east. The latest drilling results for Red Chris and details of the East Ridge Exploration Target are included in the June 2022 Quarterly Exploration Report which was also released today.
Forward Looking Statements
This document includes forward looking statements and forward looking information within the meaning of securities laws of applicable jurisdictions. Forward looking statements can generally be identified by the use of words such as 'may', 'will', 'expect', 'intend', 'plan', 'estimate', 'anticipate', 'believe', 'continue', 'objectives', 'targets', 'outlook' and 'guidance', or other similar words and may include, without limitation, statements regarding estimated reserves and resources, certain plans, strategies, aspirations and objectives of management, anticipated production, sustainability initiatives, dates for projects, reports studies or construction, expected costs, cash flow or production outputs and anticipated productive lives of projects and mines. Newcrest continues to distinguish between outlook and guidance. Guidance statements relate to the current financial year. Outlook statements relate to years subsequent to the current financial year.
These forward looking statements involve known and unknown risks, uncertainties and other factors that may cause Newcrest's actual results, performance and achievements or industry results to differ materially from any future results, performance or achievements, or industry results, expressed or implied by these forward-looking statements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licences and permits and diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which Newcrest operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation.
Forward looking statements are based on Newcrest's good faith assumptions as to the financial, market, regulatory and other relevant environments that will exist and affect Newcrest's business and operations in the future. Newcrest does not give any assurance that the assumptions will prove to be correct. There may be other factors that could cause actual results or events not to be as anticipated, and many events are beyond the reasonable control of Newcrest. Readers are cautioned not to place undue reliance on forward looking statements, particularly in the current economic climate with the significant volatility, uncertainty and disruption caused by the COVID-19 pandemic. Forward looking statements in this document speak only at the date of issue. Except as required by applicable laws or regulations, Newcrest does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in assumptions on which any such statement is based.
Contact:
Tom Dixon
Tel: +61 3 9522 5570
Email: Tom.Dixon@newcrest.com.au
NEWCREST MINING 