'Seismic Event' Shakes Newcrest Guidance
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Newcrest (NCM) has suspended operations at its huge Cadia mine in NSW after what the gold producer said was a “seismic event” on Good Friday.
The company told the ASX there have been no injuries at the site. Despite a solid performance by gold over the easter break, the news of the shut down of Cadia saw Newcrest shares sold down by 4.5% to $23.98 on the ASX yesterday.
"Newcrest’s geotechnical engineers inspected the mine accesses and certified those areas as safe prior to the movement of personnel to surface. All our people were safely transferred to the surface and mining operations temporarily suspended,” the company said yesterday.
CEO, Sandeep Biswas, said in yesterday’s statement “The safety of our people involved in the assessment of damage and remediation activity is paramount, as is the safety of our workforce generally, as we decide when and how mining operations recommence.
"An assessment of the damage caused by the seismic event is in progress. The preliminary assessment is that there has been no major damage to the mine and associated infrastructure in the areas inspected. The assessment of Panel Cave 1 (“PC1”) has not been fully completed and the final mine assessment remain subject to further verification.
“Newcrest has been working with the New South Wales Mining Inspectorate who has approved access to the mine for the purpose of re-establishing critical services, conducting inspections and undertaking engineering assessments of existing ground support and other key infrastructure.
"Where damage to ground support has been observed, rehabilitation of these areas has also been approved by the Inspectorate. This rehabilitation work has commenced.
"The initial assessment of ground support within the Panel Cave 2 (“PC2”) extraction level and crusher chambers is that the level of damage appears to be minimal. Ongoing work is still required to confirm the integrity of the visually-intact ground support.
"PC1 appears to have sustained some damage to the access ways. A cautious approach is being taken to assess any damage to the PC1 extraction level by using a remote-operated camera prior to personnel being permitted into that area. This work is expected to occur over the course of the next few days.
"Assessment of fixed plant infrastructure such as crushers and the conveyor system is still ongoing. However, early indications are that minimal damage has been sustained to the PC2 crushers, conveyor system and transfer stations. The PC1 crusher station is still being assessed.
"Surface operations were not adversely affected and have continued uninterrupted. Newcrest has commenced an investigation into the event, supported by several independent parties.
“From a services perspective, power has been re-established to around 90% of the mine, the mine de-watering system has been re-started, the mine communication system is fully functional, and the mine ventilation system is presently working at capacity,” the company said yesterday.
But there will be a financial impact - unquantified at the moment as to the cost of the clean up and repairs and the loss of output from the group’s most productive mine. But the impact won’t be long lasting, according to Newcrest.
"Cadia is not expected to meet its production guidance for the 2017 financial year. It is too early to be definitive about the impact on the Group’s production guidance for the 2017 financial year. Once plans for recommencement of mining operations are finalised an updated guidance range for the 2017 financial year will be provided.
"The preliminary assessment is that the seismic event is not anticipated to significantly impact Cadia’s production beyond the 2017 financial year,” the company added.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.