Newcrest Mining (NCM) shares dipped 2.2% yesterday on weak gold pries, despite good news on the production front at its vital Cadia Mine in NSW.
The shares closed at $11.57 after gold prices were weak in Asia after a fifth successive weekly loss last week.
Investors ignored the news that the mill failure at the Cadia mine has been repaired faster than previously estimated.
In fact it seems Newcrest has been able to avoid a production downgrade for the first half at least because of the problems at its biggest mine.
The mill, which processes 70% of ore at the Cadia mine, failed on October 18 and led to analyst concerns it could be out of action for months.
And because Newcrest had reported a weak September quarter, the mill failure saw the company’s full year guidance under threat and analysts were sharpening their pencils
But the miner announced yesterday that the mill was back at “full capacity”, but still needs work to bring it back to optimal efficiency.
Newcrest said its guidance for production, capital spending and costs remained unchanged despite the 35 day outage.
NCM 1Y – Newcrest shares lower as Cadia returns to “full capacity”
Newcrest had re-arranged its production flows at Cadia to try and maintain throughput and stockpile ores.
Newcrest said yesterday the mill (called a sag mill) is not 100% and will need more repairs.
"Engineers have determined that the mill motor will eventually require a full rewind. The timing of the rewind will be subject to the availability of long lead time parts and will be incorporated into the maintenance schedule when it is considered convenient or appropriate to do so,” the company said.
"Installation of the conveyor to bypass the mill, transporting ore from the high pressure grinding rolls to the ball mill circuit, remains on schedule to be completed in early December 2015. This will provide future operating flexibility.
"Stockpiles which have been generated over the last five weeks are expected to be fully processed by the end of the current financial year,” Newcrest added.
