Newcrest Mining has more than doubled its half-yearly profit amid lower gold and copper prices, thanks to record production at the Cadia operations in New South Wales.
Gold production at Cadia (453,000 ounces) increased by 51 per cent on the same period the previous year, reflecting record mill throughput levels and gold head grade increase.
This pushes Newcrest’s production to 1.2 million ounces of gold at a record low half-yearly cost of $747 per ounce.
A weaker Australian dollar against the US dollar also favourably impacted Cadia’s operating costs, pushing it to a record low half yearly cost.
Meanwhile, improvement in gold head grade at Lihir in Papua New Guinea (PNG) resulted in a 5 per cent increase in gold production during the half year ending 2018.
At Telfer in Western Australia, gold production slid by 1 per cent to reflect lower mill throughput offsetting the higher gold head grade and recovery.
Gosowong, meanwhile, recorded lower gold sales attributed to lower gold production (20 per cent than the period prior) and timing of shipments.
Commenting on Newcrest’s group performance, managing director Sandeep Biswas said, “We safely increased production, lowered unit costs, doubled profit and significantly increased free cash flow to further reduce net debt, all in a period when gold and copper prices were lower.”
Newcrest has now achieved 10 consecutive halves of positive free cash flow to cumulatively generate over $3.5 billion of free cash flow since January 1 2014.
The company aspires to have exposure to five Tier 1 ore bodies by the end of 2020, with two to four Tier 2 assets and a strong pre-production pipeline within 10 years.
Cadia, Lihir, Wafi-Golpu (joint venture with the PNG Government) and Fruta del Norte (27 per cent stake through Lundin Mining) are all considered Tier 1 prospects.
Newcrest has lined up a strong pipeline of significant growth options, including the expansion of the Cadia processing plant to deliver 33 million tonnes per year.