Newcrest has staked its much of future success on the ability of its $A3.7 billion Canadian gold mine called Brucejack to live up to its potential as one of the richest known mines in the world.
In an announcement earlier this month that the takeover of Pretium had been done, Newcrest CEO Sandeep Biswas told investors the addition of Brucejack solidifies the company’s portfolio of mines for the next decade at least.
“Through this acquisition and the continued development of our outstanding organic growth pipeline, Newcrest’s base case gold production is expected to remain strong until at least 2030, and we have a range of further upside opportunities being progressed across the portfolio,” he said.
“This production profile is also expected to drive a major reduction in AISC, which makes Newcrest unique in the industry.”
Vladimir Putin’s invasion of Ukraine has boosted gold prices well past $US1,900 an ounce and copper back over $US4.60 a pound, which will provide a timely boost this year with the company facing cost inflation (especially from higher energy bills) like so many other miners.
Of course, it won’t be all down to the mine owned by Pretium, which Newcrest has just completed taking over – there will be help from the Havieron mine in the East Pilbara that will help breathe new life into the foundation mine for the company – Telfer.
And then there’s the huge Cadia mine in central NSW, Red Chris in Canada and the variable Lihir in PNG, plus a couple of other operations.
But from the takeover documents and recent quarterly reports, on top of the big strategy document released last August, it is clear that Newcrest will depend heavily on Brucejack maintaining the 300,000 plus ounces a year for much of the next decade if Newcrest is to achieve its aim of being a 2 million a year producer in 2030 – as it was in 2020-21 and could still be in 2021-22.
Newcrest expects Brucejack to produce between 95,000 and 115,000 ounces of gold during Newcrest’s ownership in the June 30,2022 financial year and it expects the mine to turn out around 311,000 ounces of gold for at least the next 13 years.
The extra this year from the Canadian mine will be welcomed by Newcrest whose December half year performance was ordinary.
Newcrest’s gold old production was down 20% in the half from the same period of 2020, copper production was down 27%, the all-in sustaining cost of $US1,194 an ounce was up 23% and the company’s all-in sustaining cost margin of $US502 an ounce was down 40% (That’s effectively its gross profit margin on gold)
Underlying profit was lower due to the planned upgrade of the Cadia, NSW SAG (grinding) mill motor, which was completed in November. Production was also lower at Lihir due to an expected fall in the grade of the ore.
Cadia has been cleared to boost production over the next couple of years which should see more gold and copper produced. Extra ounces of gold and tonnes are copper are expected to be in next month’s March quarter report, along with the first ounces from Brucejack.
Newcrest said earlier this month that it will reveal reveal details of Brucejack’s all-in sustaining cost (AISC), capital and exploration spend for FY22 in its March quarterly report in on April 28.
Ahead of that report Newcrest has revealed transformation plans for Brucejack which involves three phases it has outlined called: optimise, unlock and grow.
Under ‘optimise’, Newcrest will look to evolve the safety of the operation by implementing its NewSafe program and critical control management (CCM) program for high-risk tasks.
Phase one will also see the company adopt the latest technologies at Brucejack, including the deployment of semi-autonomous and autonomous remote capabilities.
As part of the ‘unlock’ phase, Newcrest will focus on boosting Brucejack performance by increasing mill throughput capacity and improving mining operations. The company will also aim to increase the process plant capacity from 3,800 tonnes per day to between 4,500 to 5,000 tonnes a day.
“Newcrest anticipates mining rates will increase with an optimised mine plan including updated mining inventories from the Valley of the Kings. The current North Block resource expansion drilling results will inform future Mineral Resources and Ore Reserves estimates to potentially unlock further value with additional ore feed to the mill.,” the company said in the ASX filing in early March.
“There is significant resource expansion potential in the Valley of the Kings system and surrounding areas including North Block, 1080 Level, Bridge Zone, West Zone and Gossan Hill.”
The ‘grow’ phase will involve near mine and extensional drilling to take advantage of Brucejack’s exploration potential. Newcrest says it plans to start an aggressive drilling program across the next several years around Brucejack with approximately 200,000 metres to be completed by the end of this year
“In parallel, our exploration team will be progressing an extensive drilling campaign across the Brucejack mineral claims which make up one of the largest epithermal footprints we have ever seen,” Mr Biwas said.
“The land package is largely unexplored and very early in its life, and we see significant upside potential beyond (the) Valley of the Kings and Golden Marmot (prospects).”
