Newcrest revises 2020 gold output forecast

Newcrest has updated its gold production guidance for the 2020 financial year, following disappointing results at the Lihir mine in Papua New Guinea and the Telfer mine in Western Australia.

The company has been facing difficult mining and geothermal conditions at Lihir, which has delayed access to ex-pit ore.

This has led Newcrest to focus on the less productive eastern side of the mine.

Both ex-pit and stockpile ore fed to the mill have been problematic for gold grade, recovery and mill throughput in the current financial year.

Newcrest now expects to produce between 2.1 million to 2.2 million ounces of gold, down from a previous guidance range of 2.375 million to 2.535 million ounces.

“Lihir has been challenged by difficult mining and geothermal conditions, leading to a sub-optimal blend of ore feed to the plant,” Newcrest managing director and chief executive Sandeep Biswas said.

“Operating improvements planned at Lihir for the remainder of the 2020 financial year will be insufficient to address its shortfall in production.

“Whilst I am pleased with the performance of Cadia and Red Chris it has not offset the disappointing performance at Lihir and Telfer.”

Newcrest expects to produce between 360,000 and 400,000 ounces of gold at Telfer, which is the bottom end of Telfer’s original gold production guidance range of 400,000 to 460,000 ounces.

The company reported an unplanned equipment downtime at Telfer in the September quarter last year.

Newcrest’s 2020 financial year guidance was also adjusted following the divestment of Gosowong and commencement of commercial production at the Fruta del Norte mine in Ecuador, South America.

The company achieved commercial production ahead of schedule and has included an estimated 20,000 ounces in the updated guidance to represent its interest in Fruta del Norte’s expected output until the end of the financial year.

Newcrest owns 32 per cent of Lundin Gold, which discovered the Fruta del Norte gold deposit, Ecuador’s largest gold deposit, in 2006.

Meanwhile in Canada, drilling at the Red Chris joint venture has confirmed the presence of a discrete “pod” of high grade mineralisation within the East Zone.

Newcrest also continued to expand drilling at the Havieron project in Western Australia, which demonstrated the continuity of high grade mineralisation.

The company plans to drill a further 20,000 metres to support the delivery of a maiden resource estimate in the second half of this year.

“I am extremely pleased with these high grade drill results which validate the potential that we saw in both Red Chris and Havieron,” Biswas said.

“These grades are amongst the most impressive seen in recent history and we are very excited about the potential to bring these ounces into production as soon as possible.”

“Using our leading capabilities in underground mining we are working to accelerate the potential of commencing the Red Chris exploration decline in late 2020 calendar year and the Havieron exploration decline by end of 2020 or early 2021.”

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