Market Release

12 October 2021

Red Chris Block Cave Pre-Feasibility Study confirms Tier 1 potential

  • Confirms Red Chris potential to become a world class, long life mine
  • Estimated 17% IRR and C$2.3 billion NPV over an initial 31 year mine life1,2,3
  • Projected average 316kozpa gold and 80ktpa copper production from Macro Block 1 in FY29-341,2
  • Impressive Block Cave Life-of-MineAll-In Sustaining Cost of -C$180/oz1,2,4
  • Initial Ore Reserve estimate of 8.1Moz Au and 2.2Mt Cu5
  • Further optimisation underway to assess opportunities proximate to the mining area, incl. East Ridge
  • MB1 Feasibility Study expected to be completed in the second half of FY236

Newcrest Mining Limited (ASX, TSX, PNGX: NCM) is pleased to announce that the Newcrest Board has endorsed the Red Chris Block Cave Pre-Feasibility Study (the Study) and approved its progression to the Feasibility Stage.

The Study confirms Newcrest's original investment thesis of unlocking the underground portion of this Tier 1 deposit by leveraging Newcrest's industry-leading block caving expertise and developing the asset to become a mainstay of Newcrest's portfolio for decades to come.

The Study is the first technical report issued by Newcrest on Red Chris since its acquisition of a 70% interest and operatorship in August 2019. Newcrest intends to release a National Instrument 43-101 (NI 43-101) technical report on Red Chris within 45 days of this release.

Newcrest Managing Director and Chief Executive Officer, Sandeep Biswas, said "The Red Chris Block Cave Pre-FeasibilityStudy confirms Red Chris's potential to be a long life, low cost mine capable of producing a total of 5.3Moz of gold and 1.7Mt of copper at very attractive cash margins. The study highlights the quality of the deposit with a C$2.3 billion NPV and 17% IRR, but we believe captures only part of the longer term opportunity at Red Chris."

"Since acquiring our 70% interest in Red Chris in August 2019 we have been focused on unlocking its future potential, which we have always believed to be significant, and which is confirmed by the Study. To date, we have had considerable exploration success at Red Chris, including our exciting East Ridge discovery and the existence of multiple high grade pods in the East Zone, both of which are outside the scope of this Study. East Ridge is a new zone of higher grade mineralisation located outside the initial Mineral Resource estimate, with intercepts to date highlighting the potential for resource growth over time. We are currently evaluating 'early mining' options for the high grade pods in the East Zone with the aim of generating additional cash flows prior to the completion of block cave construction."

"Red Chris is already in a Tier 1 mining jurisdiction. We believe that we can transform the asset into a Tier 1 operation through the application of our proven industry-leading block caving technologies and, in doing so, provide attractive financial returns to shareholders as well as multi-generational employment and other opportunities in Tahltan territory and in British Columbia" said Mr Biswas.

1 The Study has been prepared with the objective that its findings are subject to an accuracy range of ±25%. The findings in the Study and the implementation of the Red Chris Block Cave 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.

2 The production targets underpinning the Study estimates are contained in the column titled "Block Cave" in the table on Page 3 under the heading "Table of Key Study Findings". The production targets are based on the utilisation of ~89% of the Red Chris Gold Ore Reserves and ~82% of the Red Chris Copper Ore Reserves, being 8.1Moz Au and 2.2Mt Cu Probable Ore Reserves, as set out on Page 11, which have been prepared by a Competent Person in accordance with Appendix 5A of the ASX Listing Rules. Such Ore Reserves are subject to depletions for the period since 1 July 2021.

3 Using a discount factor of 4.5% (real).

4 As Red Chris' functional currency is CAD, the Study has been assessed in CAD. CAD values have been converted to USD using an exchange rate of 0.80.

5 Represents 100% of the Ore Reserve for Red Chris. Newcrest's joint venture interest in the Ore Reserve is 70%.

6 Subject to market and operating conditions, all necessary approvals, regulatory requirements and no unforeseen delays (including any delays due to COVID-19).

Newcrest Mining Limited - Level 8, 600 St Kilda Road, Melbourne - www.newcrest.com

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Summary of Findings (in 100% terms)1,2,4

  • Substantial low-cost gold and copper production growth in a Tier 1 jurisdiction:
  1. Total ore production of 406Mt producing 4.9Moz of gold and 1.5Mt of copper
    1. Average annual gold production of 158koz and copper production of 48.5kt over Life of Mine (LOM)
    1. Average annual gold production of 316koz and copper production of 80kt from Macro Block 1 (MB1) in FY29-34
    1. "Negative cost" gold production from the Red Chris Block Cave after accounting for copper credits, with an Average All-In Sustaining Cost (AISC) of C$-180/oz(US$-144/oz)
  • Attractive investment returns:
    1. Estimated total capital expenditure of C$2.6 billion (US$2.1 billion)7 for the development of Macro

Blocks (MB)1, 2 and 3, as well as process plant and infrastructure

  1. Internal Rate of Return (IRR) of 17% (real, after tax)
    1. ~31 year mine life at an average annual mill throughput rate of 12.8Mtpa
    1. Payback of 3.2 years8
    1. Net Present Value (NPV) of C$2.3 billion (US$1.8 billion)3
  • Initial Ore Reserve estimate for Red Chris of 480Mt @ 0.52g/t Au and 0.45% Cu for 8.1Moz Au and 2.2Mt Cu5
  • Considerable exploration success delivered to date, with the discovery of East Ridge and a new zone of higher grade mineralisation south west of the Main Zone, neither of which are included in the initial Mineral Resource and Ore Reserve estimates:
    1. High grade intercepts from East Ridge continue to expand the known mineralisation, supporting the potential for further Mineral Resource growth and additional mining fronts
  1. Pipeline of early stage targets within the surrounding exploration tenements

The Study builds on Newcrest's experience and success with block cave developments in Australia, with the block cave mining method particularly well suited to the porphyry deposits found at Red Chris and throughout the Golden Triangle region of British Columbia.

The Study underpins an initial Ore Reserve estimate of 8.1Moz Au and 2.2Mt Cu5. The Study and ongoing drilling results indicate significant orebody optionality which will be further tested during the Feasibility Stage. Parallel studies to assess further upside are underway to consider the 'early mining' of high grade pods located in the East Zone with the aim of generating additional cashflows prior to the completion of block cave construction, and accommodating the potential development of the new East Ridge discovery and further resource upside. Newcrest's experience at Cadia shows that orebodies of this type are unique and carry significant embedded optionality, providing opportunities for further value creation for shareholders over the mine life.

The availability of hydro-generated grid power combined with the efficient, low cost, block cave mining method is expected to reduce the project's carbon footprint compared to other mining methods.

The next major project milestone will be the Red Chris Block Cave Feasibility Study for the implementation of the first of three Macro mining Blocks, MB1, which is expected to be completed in the second half of FY236.

7 Exclusive of previously approved Early Works funding totalling C$135 million (on a 100% basis). See Newcrest release titled "Red Chris receives regulatory and funding approval" dated 11 February 2021.

8 Payback is the earliest date that net accumulated free cash flow is equal to zero. This is calculated from first commercial production which is defined as the date of achieving critical hydraulic radius for the Red Chris block cave.

Newcrest Mining Limited - Level 8, 600 St Kilda Road, Melbourne - www.newcrest.com

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Table of Key Study Findings9

Study Outcomes

Area

Measure

Unit

Block Cave1,2

LOM10

Production

Average ore milled / throughput (max)

Mtpa

13.6

13.6

LOM

Years

31

36

Ore Mined:

406

480

Ore Mined - Open Pit

Mt

63

Ore Mined - Stockpile

11

Ore Mined - Block Cave

406

406

Average gold grade

g/t

0.56

0.53

Average copper grade

%

0.46

0.45

Gold produced

Moz

4.9

5.3

Copper produced

Mt

1.5

1.7

Average annual gold production

koz

158

148

Average annual copper production

kt

48.5

48.6

Capital

Project capital7

C$m (real)

2,632

2,758

Operating

AISC

C$/oz sold

(180)

(60)

Economic

Gold price

US$/oz

1,500

1,500

assumptions

Copper price

US$/lb

3.30

3.30

CAD:USD exchange rate

0.80

0.80

Financials

NPV3

C$m (real)

2,283

IRR

% (real)

17

Payback period8

Years

3.2

Free cash flow generation (post tax)

C$m (real)

5,030

An indicative summary of key expected milestones is summarised as follows6:

Red Chris Block Cave - Key Project Milestones

Date

Gating Feasibility Study to Execution

2H FY23

First Ore

2H FY26

First Production of Gold/Copper

FY27

9 Financial figures are represented in CAD Real FY22 terms. No nominal inflation factors have been included in the documented financials.

10 The production targets are based on the utilisation of 100% of the total Red Chris Ore Reserves, being 8.1Moz Au and 2.2Mt Cu Probable Ore Reserves, as set out on Page 11, which have been prepared by a Competent Person in accordance with Appendix 5A of the ASX Listing Rules. Such Ore Reserves are subject to depletions for the period since 1 July 2021.

Newcrest Mining Limited - Level 8, 600 St Kilda Road, Melbourne - www.newcrest.com

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Potential Exploration Upside

The Red Chris porphyry corridor has the potential to host multiple porphyry deposits as demonstrated by Newcrest's recent exploration success, including:

  • Extending the known porphyry corridor 800m east of the Mineral Resource estimate
  • Discovery of East Ridge, which contains the best drill results to date outside of the East Zone. East Ridge has the potential to increase the resource base and provide additional mining fronts
  • A new higher grade zone has been discovered south west of the Main Zone that potentially could provide further mining optionality
  • In addition, the Project contains a pipeline of early stage exploration targets within the surrounding exploration tenements and the nearby GJ property

Refer to the section titled "Potential Exploration Growth" on Page 14 for a summary of drill results.

Red Chris Block Cave Feasibility Study

The Red Chris Block Cave Feasibility Study for the implementation of MB1 is expected to be completed in the first half of CY236, with the study scope to include:

  • Further optimisation of mill throughput rates, including for different resource growth scenarios
  • Detailed block cave footprint design and scheduling focused on access infrastructure and MB1
  • Material handling system detailed design, including crusher, conveyor, and associated project infrastructure to support the LOM
  • Processing plant optimisation and detailed design at a Feasibility Study level
  • Design of the MB1 Tailings Impoundment Area (TIA) to Feasibility Study level and refinement of the TIA design for MB2 and MB3
  • Refinement and calibration of water balance and water quality models to enable better decision-making capabilities for the Project, and to mitigate impacts to the receiving environment
  • Enhancing water resource stewardship through optimisation of processes to minimise consumption and maximise reuse
  • Prioritised detailed design of the Operational Accommodation Complex to allow for early implementation
  • Design of the surface infrastructure to Feasibility Study level of detail
  • Further analysis and inclusion of next generation mining systems, including Single Pass Cave Establishment (SPCE) and the use of electric power to offset diesel in the mining process
  • Finalisation of the contracting and procurement strategy for the Execution stage
  • Consolidation of all costs and schedules into a Feasibility Study financial estimate

Newcrest Mining Limited - Level 8, 600 St Kilda Road, Melbourne - www.newcrest.com

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Project Description1

Newcrest is the operator of the Red Chris Mine (the Mine), which is owned 70% by Newcrest and 30% by Imperial Metals Corporation through an unincorporated joint venture. The Mine is currently an open pit operation that produces approximately 10 to 11Mt of ore per annum.

Newcrest completed an internal Concept Study in CY20 that identified the potential to transition to block cave underground mining and informed the need for an Early Works Program focusing on the construction of an Exploration Decline.

The Study commenced in June 2020 and has recommended transitioning the existing open pit to an underground mine using the block cave mining method. From the Exploration Decline, the Access Decline will be developed to provide personnel and material access to the mining blocks. A conveyor within an independent decline, fed by a jaw-gyratory crusher, would provide ore handling facilities as well as a second egress.

Three macro mining blocks (MB1, 2 and 3) would be mined sequentially using Load Haul Dump machines directly into the underground crusher in MB1 and MB2, while a truck loop would be added in time to haul ore from MB3 to the crusher in MB1. While the mine has been costed using a diesel fleet, the designs also allow for the electrification of the mining fleet as well as the use of automated equipment. Further studies on these applications are being progressed as part of the Feasibility Study.

The Study includes upgrades to the existing processing plant to treat underground ore at a throughput rate of 13.6Mtpa which would require an additional coarse ore stockpile, new SAG mill, additional rougher flotation capacity using StackCell technology, an upgraded regrind circuit, a new cleaner scalping Jameson Cell, and duplication of existing concentrate thickening and filtration equipment.

The Study also investigated an Upside Case to 15Mtpa which would require SAG mill configurations to allow increased throughput at a coarser grind. HydroFloat coarse particle flotation technology will be installed on the rougher tailings to maintain copper and gold recovery as the grind is coarsened.

Two key considerations of the Study have been the handling of tailings produced from mining as well as water stewardship. Studies to accommodate tailings storage have confirmed that tailings from MB1 can be accommodated within the already permitted TIA. For MB2 and MB3 a design has been undertaken to further raise the north and south TIA dams using centreline raises, replace reclaim dams and construct the northeast dam. This would provide an ultimate capacity of 550Mt tailings. Plans for the management of the tailings dam volume which will minimise the need for additional makeup water have also been developed.

Infrastructure to support the underground mine would include an Operational Accommodation Complex and services such as roads, water, sewage and communications. Power would be supplied through the existing transmission line with expansions to on-site facilities.

The Tahltan Nation is the First Nation on whose Territory the Red Chris Mine is situated. Newcrest has developed a strong working relationship with the Tahltan Nation and operates under an Impact, Benefit Co-Management Agreement (IBCA) with the Tahltan Nation. The Agreement includes provisions for royalties, education, training, employment, and contracting opportunities as well as how the two parties will work together on social, environmental and cultural heritage matters.

A range of engagement and consultation occurs regularly with Tahltan Central Government, Tahltan leadership, local communities and the larger Nation. Recently, engagement has been focused on upcoming permitting processes and related assessments.

Newcrest has identified a pathway to obtain the required regulatory approvals for the Project and is actively engaged with the Tahltan Central Government and government agencies in relation to the approvals required to enable execution of the Project in a phased manner.

Newcrest Mining Limited - Level 8, 600 St Kilda Road, Melbourne - www.newcrest.com

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Newcrest Mining Limited published this content on 12 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 October 2021 22:01:05 UTC.