Peter Ker July 26, 2012
Newcrest Mining has warned that its most troublesome gold mine, Lihir, has a complicated six months ahead, but is gradually being brought under control after a series of disappointing interruptions to production.
The comments by Newcrest chief executive Greg Robinson come after the company revealed it had met its revised guidance for gold production in the year to June 30, 2012.
Newcrest shares have risen strongly this morning on the back of the production figures, with the stock 81 cents higher at $22.96 shortly before midday.
Newcrest is Australia’s biggest listed gold producer, but has endured a bad year in financial year 2012, with a series of production downgrades eroding trust levels with investors.
The company originally vowed to produce as much as 2.92 million ounces in the year to June 30, 2012, but was forced to reduce that number multiple times, culminating in April’s guidance that gold production would be between 2.25 million ounces and 2.35 million ounces.
The company today reported within that April guidance, with full year production of 2.28 million ounces.
Problems at the Lihir mine in Papua New Guinea – which Newcrest only acquired in September 2010 – were the main reason for that series of downgrades, and Mr Robinson gave analysts cautious hope that the mine’s problems were increasingly under control.
“We are getting better at running that mine consistently,” he told an analysts briefing shortly before midday.
“But it’s a very busy six months ahead as we bring it into commissioning.”
Mr Robinson said guidance for Lihir was being kept “deliberately very broad” in case more problems emerged in financial year 2013.
The upgrades at Lihir are now 91 per cent complete, with the project due for completion by December 2012.
The company will be hoping today's guidance puts a floor beneath the company's share price, which has tested multi-year lows recently, even though gold traditionally performs well in times of economic uncertainty.