Gold producer Newcrest Mining has reduced its annual guidance, after slower than expected commissioning and ramp up at its Hidden Valley project in Papua New Guinea.
The company said in its March production report released yesterday that gold production was now expected at the lower end of its original guidance of 1.81 to 1.91 million ounces.
Third quarter gold production was 416,651 ounces, 6% lower than the previous three months, but 14.22% up on the prior corresponding quarter.
The company said annual production would probably be in the range of 1.81 million ounces, plus one per cent or minus three per cent.
The shares eased 9c to $33.88.
But guidance for copper was maintained at the higher range of 85.0000 to 90,000 tonnes for the year.
"All sites are expecting significant uplifts to production during the June quarter mainly driven by grade with Hidden Valley lifting on greater throughput and recover," the company said in yesterday’s report..
"Copper production was 20,598t with increased output expected during the upcoming quarter."
The company said its Hidden Valley joint venture in Papua New Guinea had experienced an extended commissioning and slower ramp-up than expected and Newcrest downgraded full year production guidance from the mine to 65,000 to 75,000 ounces.
It was the second time guidance at Hidden Valley had been downgraded, after it was originally put at 110,000 to 125,000 ounces.
"The reduced Hidden Valley guidance… has had an effect on the overall annual guidance,’’ Newcrest said.
Cost guidance was expected to be maintained for each site, with costs expected to be at the lower end of the guidance range, Newcrest said.
At the Telfer mine in Western Australia, production for the quarter was 152,495 ounces of gold and 8,086 tonnes of copper, both of which were lower than the preceding quarter.
"Gold production was lower than the record production level established in the previous quarter but in line with plan reflecting lower expected ore grades in the open pit,’’ Newcrest said.
Total copper production in the March quarter of 20,598 tonnes was down 13.67% on the previous three months and down 12.11% on the March quarter last year.
The company achieved a gold price in the quarter of $1,144 per ounce and a copper price of $3.64 per pound.
Newcrest this week said it would sweeten the terms of its takeover offer for Lihir Gold. The bid currently stands at one Newcrest share for every 9 ordinary shares in Lihir plus 22.5 cents cash per Lihir share.
And Iluka Resources had some rare good news about demand for its mineral sands products in the first quarter: it saw growth in demand in its key markets.
The company said in its quarterly production report that it had started increasing output in response to this upturn.
The move to cut production during the global financial crisis to better match short term demand seems to be finally paying off.
Production of zircon, used primarily in ceramics, was up 31.8% in the quarter on December quarter, but still down a sharp 39% on the corresponding period a year ago, before the company cut production.
But rutile production was up 23.4% from the December quarter and 36.4% above the March three months in 2009.
Synthetic rutile production rose 1.5% from the previous quarter, but fell almost 38% from the same quarter of last year.
After hedging, total sales revenue for the March quarter was $39.9 million, down 33% on the preceding three months but up 290% on the same period of 2009.
Sales, however, were below budget for the quarter, but had been made up.
"This is a timing difference which has already, in large part, been made up in the second quarter," the company said.
"Iluka expects sales to remain constrained by production for the remainder of 2010 and into 2011," it said.
It said zircon demand across all its main markets had rebounded strongly.
"Zircon sales in the first quarter of 2010 were higher than in the directly comparable first quarter of 2008 and only marginally lower than the fourth quarter of 2009.
"On the basis of sales and orders year-to-date, Iluka’s 2010 opening zircon inventories are expected to be reduced to minimal levels by mid year," the company said in the statement to the ASX.
"As Iluka has advised previously, a large proportion of first half zircon sales are being drawn from lower margin inventory and from residual production from the Mid West of Western Australian. In response to higher demand, full production has recommenced at the Virginia operations following production cuts implemented in the second half of 2009.
"Production from Murray Basin Stage 2 and Jacinth-Ambrosia will increase in the second quarter and is expected to be at planned levels in the second half of the year."
The company said the stronger than budgeted start to the year reflected a number of un-contracted bulk shipments, especially to Europe, as demand recovered from the lows of 2009.
The company said the rising demand reflected an improvement in North Amer
