Newcrest Mining (NCM) ignored the weak gold price and rose 2.7% yesterday (and in a mostly negative market) after surprising investors with what looks like a solid June quarter and financial year production report.
The weakening Aussie dollar in fact could be the culprit for the better than expected performance in financial terms, along with good cost controls in the year to June.
Both enabled the company to ride out weaker gold and copper prices, especially in the closing months of 2014-15.
As major mining companies pulled down the market for most of yesterday, Newcrest’s strength on the day stood out and the shares ended at $11.84.
In its report to the ASX, Newcrest said it had achieved its full year production targets for gold and copper, thanks in part to an effort in the June quarter that was its strongest of the 2015 financial year.
Gold production rose 1% over the year, copper production was up 12% and Newcrest’s all-in sustaining costs fell 4% in Australian dollar terms.
Only silver production failed to meet guidance, but it is not a significant mineral for the company – it’s actually a by product.
The company said it produced 2.42 million ounces of gold over the year to June, which was at the top end of guidance of between 2.3 million and 2.5 million ounces over the 12 months.
And while copper production fell 9% in the June quarter, over the financial year it rose to 96,816 tonnes, which was towards the lower end of the miner’s stated target of between 95,000 and 105,000 tonnes.
Newcrest said it was the ninth straight quarter of either meeting or exceeding its various production targets.
Newcrest made an average gross profit of $A533 per ounce of gold sold during the 2014-15 financial year, up from $A432 an ounce the previous year.
That was down to the 4% fall in all in costs and the fall in the value of the Aussie dollar which helped the company offset the sharp fall in gold prices over the year.
In fact the weaker Australian dollar saw Newcrest receive an average price of $A1,532 an ounce during the June quarter, up from $A1408 an ounce during the 2014 financial year.
Global gold prices dropped from $US1,325 an ounce to to $1,175 during the year, and are now just under $US1,100 an ounce.
