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Is Newcrest Mining Limited planning its way to a prosperous future?

A major milestone event occurred this week at the Cadia Valley for Newcrest Mining Limited (ASX: NCM). The Premier of NSW, Mike Baird MP, officially opened the Cadia East Gold Mine. It will be the largest underground mine in the country by 2016. Then gold production from the mine will reach 700,000 ounces per annum. That is more than the total annual production of Northern Star Resources Ltd (ASX: NST), or any other Australian gold mining company.

An innovative mining method is used at Cadia East. It is known as “panel cave mining.” Put simply this technology uses gravity by undermining the ore-body and letting ore fall in a controlled manner for subsequent extraction. The word “panel” refers to the process of dividing the ore-body into a series of parallel vertical sections for individual processing. The benefit of panel cave mining is the significantly lower cost of extraction compared with traditional methods, due to moving less waste to the surface.

Cadia has been mined for many years and this development will be a major expansion. To give some idea of the enormity of the project, it is expected that this undertaking will generate 1,900 direct and indirect jobs. Newcrest CEO, Greg Robinson, said at the official opening: “Cadia East is a large, long life asset and a cornerstone of our Company’s strategy. It is one of the largest gold and copper deposits in the world, with 2.8 billion tonnes of ore estimated to contain 37 million ounces of gold and 7.5 million tonnes of copper. With an approved mine life of 21 years, Cadia East will deliver significant economic benefits to the local community, the workforce and suppliers, local, state and federal governments, and of course Newcrest’s shareholders for the long term.”

Therefore, Newcrest is gearing itself for tremendous expansion over the next 20 plus years. Undoubtedly the innovation and investment of more than $2 billion is a strong vote of confidence for the future, the local gold industry, and this company.

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Motley Fool contributor Chris Koenig does not have shares in the companies mentioned.


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