Newcrest Mining (ASX:NCM) share price slides on production decrease

Gold miner Newcrest Mining released its quarterly report this morning. Here are the details.

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Hand holding gold nugget reflecting Newcrest Mining share price today

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Shares in gold giant Newcrest Mining Ltd (ASX: NCM) are losing ground in early trading and changing hands at $24.89 apiece, down 0.64% on yesterday’s closing price.

This follows the company releasing its Q1 FY22 activities and earnings report today.

Here we cover the salient points of Newcrest’s performance in the three months ending 30 September 2021.

Newcrest Mining share price dips as Q1 gold production slides

Newcrest outlined several investment highlights in its quarterly report, including:

  • Group gold production of 396,214 ounces and copper production of 24,527 tonnes
  • All-In Sustaining Cost (AISC) of USD$1,270 per ounce, up from $799/ounce from the previous quarter
  • AISC margin of $406 per ounce, down 58% from the last quarter of $975/ounce
  • No fatalities on site, in continuation with FY21
  • Realised gold price of $1,722/oz, down from $1,780/oz the quarter prior
  • Realised copper price of $9,348 per tonne, a 15% increase on FY21, but 36% quarter on quarter decrease
  • Gold and copper production expected to increase in Q2.

What else happened this quarter for Newcrest?

Gold production decreased by 27% from the previous quarter at about 396,000 ounces. Gold sales were realised on a spot price of $1,722/oz, which was also a slight decrease from the last quarter.

Newcrest sold a total of 350,000 ounces of gold across its operations.

The decrease in gold production was attributed to “lower mill throughput rates” at its Cadia, Lihir and Teffer sites.

Newcrest also saw a higher AISC on its gold production in Q1, reflecting lower gold and copper sales numbers. It also had more mining waste and lower realised copper prices.

The company also released the findings from pre-feasibility studies (PFS) at its Red Chris, Haveiron, Lihir and Cadia sites. Newcrest stated that each of the “four organic growth options” are estimated to deliver an internal rate of return (IRR) of 16% or more.

The PFS also projected a 50% reduction in the company’s AISC over the next decade, whilst maintaining projected gold production of about 2 million ounces per annum through to FY30.

Aside from this, Newcrest explained that the commissioning of the Moly Plant at its Cadia site is ongoing and first production is expected by November.

What did management say?

Speaking on the announcement, Newcrest managing director and CEO, Sandeep Biswas said:

Newcrest’s production in the September quarter was in line with our expectations and reflects the replacement and upgrade of the SAG mill motor at Cadia, the completion of the re-bricking of Autoclave 4 at Lihir and other planned maintenance shutdowns across the Group which is consistent with prior years. We expect gold and copper production to increase in the December quarter with lower planned shutdown activities and completion of the SAG mill motor replacement and we remain on track to meet our FY22 guidance.

What’s next for Newcrest Mining?

The company maintains that it is tracking well to meet its FY22 guidance. It projects gold production of 1,800koz to 2,000koz from all its operations.

That appears to be a slight decrease on FY21 production volumes of 2,093,322 ounces.

It also forecasts copper production of 125kt to 130kt in FY22, mostly from Newcrest’s Cadia and Red Chris sites.

Those estimates appear to be wound back from FY21 as well, where Newcrest produced 142,724 tonnes of copper.

The Newcrest Mining share price has struggled year to date, posting a loss of 7.85% since January 1. The share price has dropped 18.66% over the past year.

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