24/JAN/2012 Weather biggest risk for Newcrest
Weather poses the biggest risk to Newcrest Mining achieving its goals in 2012, says chief executive Greg Robinson.
The Melbourne-based gold miner has a big year ahead with two major expansion projects - the Cadia East project in New South Wales and the Lihir upgrade in PNG - set to be delivered in 2012 at costs beyond $1 billion each.
The company has already had to downgrade its annual gold production forecasts by 6 per cent, and Mr Robinson said the weather posed the biggest risk to further slippages.
''Honestly the physical side of the sites we are in pretty good shape, it's always the weather that worries me,'' he told analysts today.
Newcrest will be one of several Australian miners to closely watch the development of a cyclone off Australia's north-west this week, which threatens the Pilbara region. The company's massive Telfer gold mine is located in the Pilbara, south east of Port Hedland.
The company vowed to meet its annual costs guidance, despite costs for the December quarter rising 2 per cent higher than the previous quarter to $606 per ounce.
On the current high gold prices, Newcrest is making more than $1000 of profit on each ounce of gold it produces.
Mr Robinson said Newcrest's plan to set up a secondary listing on the Toronto Stock Exchange remained on track to launch in the first quarter of 2012.
Newcrest shares were 76 cents higher at $32.96 shortly after midday.
Stock Resource managing director Grant Craighead said it was a tough quarter for Newcrest but that had already been flagged to the market, which was expecting it.
Newcrest also lost production from their Cracow and Mt Rawdon mines, which were sold to Evolution Mining in a sale during the quarter.
‘‘When you combine the loss of production at Cadia with a couple of of discontinued operations there is a weak headline number,’’ Mr Craighead said. ‘‘While this is a disappointing quarter, it had been well flagged to market and should represent a low point in the cycle.
‘‘It should be a steadily upward production outlook for the indefinite future.’’