Newcrest to review high cost mines

The slump in gold prices has forced Newcrest into reviewing its high-cost mines, and further cost cutting may also be on the horizon.

In a March quarter update Newcrest said it was earning an overall margin of $785 an ounce with a gold price of $1,584/oz, but prices have dipped even further than the miner's conservative forecast, and currently hover around $1,400/oz.

 

The company said it had made a number of cost cutting measures in response to tough conditions over the quarter, including assessing all investment in higher cost operations.

 

Newcrest also paused some studies for projects with a longer term payback, made organisational changes, and pledged to continue to renegotiate with suppliers in order to drive down costs.

 

Costs in most parts of the business rose this quarter, with new plants at Cadia East and Lihir ramping up, and poor weather hurting performance at the Telfer mine in Western Australia.

 

Moving forward the company said it expected “progressively lower cash costs” in the future.

 

Last week the price of gold fell by around $US300/oz in a fortnight to below $US1400, a two-year low for the commodity.

 

The crash has already resulted in a number of major moves in the sector, with Tanami Gold putting their Kimberly-based Coyote mine into care and maintenance.

 

Barrick Gold is also rumoured to be looking to sell three gold mines in WA in order to reduce debt.

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