It shouldn’t surprise that a mining company has reported that wet weather affected its business in the December half year.
For some it’s the lingering impact of the heavy rains and flooding from early in 2011, for others it was the impact of wet weather in the last month or two of the December half year.
Gold mining giant Newcrest Mining is in both camps and will again be tested in 2012.
The company has a big year ahead with two major expansion projects – the Cadia East project in NSW and the Lihir upgrade in PNG – due to be completed and on stream later this year.
Both cost more than $1 billion each, so a lot is at stake.
Newcrest said the Cadia and Lihir projects "continued in line with plan during the quarter with the completion of the major Cadia East project tie-ins and the commencement of power supply from the new Lihir power plant".
"Both projects remain on track to deliver planned production growth in line with scheduled completion dates and estimated project costs."
The wet weather in 2011 has already seen the downgrade of its annual gold production forecasts by 6% and that too will be under pressure in the next six months with the La Nina wet weather pattern still lingering and cyclones off the WA coast which could threaten its huge Telfer mine.
Newcrest yesterday reported a 20% fall in quarterly production in the three months to December from the same quarter of 2011, in line with its recent forecast, thanks to heavy rain in Papua New Guinea and lower ore grades. Output however was up 3% from the September quarter.
Gold output fell to 579,073 ounces in the December quarter from 722,783 ounces a year earlier.
It said last month that it expected December quarter production to be between 575,000 and 585,000 ounces.
Newcrest shares were 75c higher at $32.95 yesterday in a market that finished flat.
Newcrest reiterated it still expects production for the year to June 2012 to be between 2.43 million and 2.55 million ounces, from 2.7 million ounces in the 2011 financial year.
Copper production in the latest December quarter was 18,171 tonnes, down from 19,228 in the September quarter.
Guidance for copper production of 75,000 to 85,000 tonnes, plus group operating costs and capital expenditure, was also maintained.
"Gross cash margin increased by 1% to A$1,042 per ounce associated with a higher realised gold price of A$1,648 per ounce during the quarter," Newcrest said in yesterday’s report.
"Cash costs of A$606 per ounce were 2% higher than the previous quarter reflecting reduced by-product credits associated with a lower achieved copper price."
On exploration, Newcrest said, "Exploration drilling during the quarter identified new zones of high grade mineralisation at Gosowong, Lihir, Telfer and Wafi-Golpu whilst initial results from new drilling programs in Cote d’Ivoire and Tandai, Indonesia are encouraging".
And copper and gold miner PanAust is looking for a lift in production from its major operation in Laos and a rise in earnings.
PanAust will report its financial results for 2011 in February, but said yesterday that unaudited earnings for the year were $US285 million ($A271.34 million).
Earnings in 2012 were expected to be between $US340 million ($A323.70 million) and $US400 million ($A380.83 million), the company said.
PanAust said in its December quarter report that it produced 59,897 tonnes of copper in concentrate in the year to December 31 at its Phu Kham operation, within its previously issued guidance range.
The company sees this rising to between 63,000 and 65,000 tonnes of copper in concentrate in 2012 at Phu Kham.
The cash cost of production was $US1.01 ($A.0.96) per pound for the year to December, and PanAust expects an average cash cost of between $US1.05 ($A1) and $US1.15 ($A1.09) per pound in 2012.
The company said yesterday that at December 31 it had cash of US$155 million, debt of US$45 million (noncurrent), undrawn debt facilities of US$55 million, and mobile equipment lease facilities drawn to a total of US$64 million.
PanAust said its cash balance coupled with strong cash flow from Phu Kham and existing facilities places the company in a strong position to meet its anticipated major cash commitments over the first half of 2012 which include the balance of project expenditure at Ban Houayxai (approximately US$15 million to US$27 million) and Phu Kham Upgrade (approximately US$66 million) together with an estimated net payment of over US$30 million due to the government of Laos for the 2011 tax year.
Panaust shares fell 13c to $3.60.
And Oil Search has ridden 2011’s mostly strong oil prices to produce a 26% jump in revenue for the year.
The Papua New Guinea-focused oil and gas producer said its operating revenue in the year to December 31 was $US732.9 million, up from $US583.5 million in the previous year.
The rise was driven by a 45% increase in realised oil prices, the company said in the December exploration and
