Gold at $1,400 critical for Newcrest

Gold mining giant Newcrest Mining (ASX: NCM) has released its fourth-quarter production figures ahead of its full year results which are due to be released on 12 August. Production results for the quarter were solid with a 25% increase in gold and a 20% increase in copper over the prior quarter.

For the full year, Newcrest reported an all-in sustaining cash cost for production of $1,283 per ounce, management confirmed that they expect this to fall in FY 2014 due to reduced production stripping, lower sustaining capex and reduced corporate costs.

With a gold price that is currently hovering around the US$1,330 per ounce level, Newcrest’s all-in cash costs obviously don’t leave it much headroom. CEO Mr Greg Robinson reportedly stated that for operations in FY 2014 to be cash flow neutral will require a gold price around $1,400, which isn’t great news for shareholders.

Management also provided FY 2014 production estimates of between 2 and 2.3 million ounces of gold production and between 75 and 85 thousand tonnes of copper. This compares with FY 2013 production figures of 2.11 million ounces of gold and 80.4 thousand tonnes of copper.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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