Newcrest Mining has downgraded its full-year gold production guidance following a 16% fall in production in the first quarter of calendar 2011 (the third quarter of its financial year).
Newcrest said the impact of external events on March quarter production had cost it 100,000 ounces of gold production.
At current world gold prices, that’s around $149 million of lost sales.
Newcrest said in its March production review yesterday that it now expected full-year production in calendar 2011 now to be 2.82 million ounces of gold, plus or minus 35,000 ounces.
That means output could be 100,000 ounces or more short of the earlier guidance of 2.85 million ounces to 2.95 million ounces for the year to June 30.
The shares fell 32c to $40.80 on the news, despite gold prices hitting a new high of $US1,497 an ounce overnight Monday after Standard & Poor’s cut America’s credit outlook to negative.
Guidance for copper production remains at 75-80,000 tonnes with no change to group cost guidance.
Newcrest blamed the heavy rain and the political unrest in the Ivory Coast for the 16% fall in production in the three months to March.
Newcrest said that gold production in the quarter had been 604,791 ounces, with copper production 13% higher at 20,098 tonnes.
The fall in gold production had led to higher gold cash costs for the quarter of $497, up from $440 per ounce in the previous quarter.
"Extreme rain events on the east coast of Australia impacted Cadia Valley operations (near Orange in NSW) during the March 2011 quarter," Newcrest said.
"Access to the high grade zone at the base of the open cut was restricted until the end of February resulting in production being approximately 40,000oz lower than planned."
Production from the newly acquired Lihir mine in Papua New Guinea was 40,000 ounces below expectations because of lower rainfall, however, limiting the availability of fresh water, which impeded pit operations.
Operations at Bonikro in the Ivory Coast remain suspended as a precaution against civil unrest following the election result there, which was resisted by the incumbent president until his capture last week by African and international forces.
Newcrest said this cost it 20,000 ounces of production.
With the Bonikro operation remaining closed, it would continue to cost the company 8000 ounces per month until it reopens.
Planned production had been re-established now both at Cadia and at Lihir which Newcrest acquired in 2010 in the takeover of Lihir Gold.
Newcrest had more to say about the exciting and very large gold copper prospect in which it has a 50% interest in PNG.
Newcrest said the exploration target for the Wafi-Golpu prospect in PNG has been increased to 40 million ounces (Moz) of gold and Moz gold and 15 million tonnes of copper (previously 30Moz gold and 8Mt copper) as recent drilling has significantly increased the extent and grade of mineralisation at Golpu.
"This targets growth of epithermal deposits to between 100 and 200 million tonnes at a grade range between 1.5 and 2.0 grams per tonne plus porphyry deposits to a range of 1,100 and 1,500 million tonnes at grades between 0.8 and 1.5% copper and 0.6 to 1.0g/t gold.
"Building upon study work carried out in 2007 and recent encouraging drilling results, the joint venture participants have approved expenditure of nearly A$100m for a pre-feasibility study to identify development options for the world class mineral endowment at Wafi-Golpu, near the provincial capital of Lae in northern PNG," Newcrest said in yesterday’s production report.
More gold was found near the existing mines on Lihir Island and at Goswong in Indonesia and near the big Telfer mine in WA.
Newcrest also said the huge Cadia East Underground mine is on track to start production in 2012.
"The Cadia East Underground project will be Australia’s largest underground mine, exploiting a Mineral Resource of 2,347Mt containing 33.2Moz of gold and 6.59Mt of copper.
"The project was formally approved by the Newcrest board in April 2010 with first production scheduled for second half of 2012.
"Work on the Cadia East project continues to schedule and budget. The project has now committed A$1.5B and is greater than 33% complete," Newcrest said.
