Newcrest (ASX:NCM) share price slides on quarterly update

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The Newcrest Mining Ltd (ASX: NCM) share price is slipping in morning trade, down 1%.

Below we look at the ASX gold and mineral producer’s quarterly report for the 3 months ending 30 June.

What quarterly update did Newcrest report?

Newcrest’s share price is slipping despite the company reporting that strong fourth quarter results enabled it to deliver on its production and cost guidance for the full 2021 financial year.

Gold production came in at 542,000 ounces, up 6% on the previous quarter. The company credited the strong performance of its Cadia and Telfer mines for the increase. Its Lihir mine saw production fall by 4%, with some unplanned downtime in the autoclaves and lower head grade, as well as recovery rates dragging on output.

Newcrest also reported 38,000 tonnes of copper production for the quarter.

Higher copper prices along with increased copper and gold sales volumes at several of its mines helped drive down the All-In Sustaining Cost (AISC) to $797 per ounce in the June quarter, $96 per ounce lower than the prior quarter.

The AISC margin (what Newcrest sells the gold for minus what it costs to produce it) came it at 55% for the June quarter, or $984 per ounce.

The company achieved this despite increased cost for treatment, refining and transportation, and royalties.

For the full 2021 financial year, Newcrest reported an AISC of $905 per ounce, which works out to an AISC margin of 49%, or $884 per ounce.

Newcrest had forecast gold production for FY21 to come in 1,950,000 ounces and 2,150,000 ounces. With the strong quarter, it’s met guidance with FY21 production of 2,093,322 ounces of gold produced. This was down from the 2,171,118 ounces of gold produced in FY20.

Commenting on the update and the company’s growth outlook, Newcrest’s CEO, Sandeep Biswas said:

We have made significant progress advancing our multiple organic gold and copper growth options during the quarter. At Red Chris and Havieron we commenced decline development works which are the critical path to reaching commercial production. We are also on track to release the outcomes of several of our exciting growth studies through the remainder of the calendar year which we believe will help articulate the future potential of our business.

Newcrest also noted it’s pursuing its goal of net zero carbon emissions by 2050, and its record as an industry leader in low injury rates.

Newcrest share price snapshot

With the price of gold down 12% in the past year, Newcrest’s share price has struggled, currently down 24% over past 12 months. By comparison the S&P/ASX 200 Index (ASX: XJO) is up 21% in that same time.

Year-to-date the Newcrest share price is down 4%.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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