The future looks bleak for the loss making Hidden Valley mine, which could be closed down within 12 months according to The Australian newspaper [see story below].
Hidden Valley is jointly owned by Newcrest and Harmony Gold.
The latest financial figures from Newcrest show production costs of $1,564 an ounce are outstripping the price of gold.
According to The Australian, Newcrest are “reviewing all strategic options in relation to the future “ and “without further investment in pre-stripping operations, the mine will halt in about 12 months”.
- Newcrest trying to dump Hidden Valley
- Harmony in a spot over Hidden Valley
- Newcrest ponders options for PNG’s Hidden Valley gold operation
Dividends back at Newcrest despite weak quarter
Barry Fitzgerald | The Australian | July 26, 2016
Leading gold producer Newcrest is set to resume dividend payments after a three-year hiatus despite finishing off the 2016 financial year with a weak June quarter production report.
Underpinning the resumption of dividends expectation was Newcrest’s $US800 million or 27 per cent reduction in net debt in the June year to $US2.1bn, helped as it was by strong margins of more than $US400 an ounce.
The debt level is down from peak debt of $US4bn in 2013, the last time dividends were paid.
Analysts expect Newcrest to announce at least a US5c a share dividend when it releases its results next month. That is expected to be US10c a share for 2017 and as much as US40c a share in 2018.
The group’s June quarter production report, released yesterday, was disappointing across all operations, according to Credit Suisse mining analyst Michael Slifirski.
Gold production for the period of 598,037 ounces was below the 636,521 ounces in the preceding March quarter, and all-in sustaining costs rose by 9 per cent $US787 an ounce.
Production for the full year was marginally higher at 2.4 million ounces, just over the line to meet the group’s guidance for production of between 2.4 million to 2.6 million ounces.
Chief executive Sandeep Biswas said Newcrest had delivered a solid performance considering challenges at some sites.
“The 27 per cent reduction in net debt reflects our focus on cash generation,’’ he said.
Gosowong’s overall output was down from 38,865 ounces in the preceding March quarter to 17,644 ounces.
At the half-owned Hidden Valley mine in PNG, lower grade and lower treatment rates brought a production cost blow-out to $US1562 an ounce, up from $US542 an ounce in the preceding March quarter.
The partners are reviewing are “reviewing all strategic options in relation to the future’’ of Hidden Valley. Without further investment in pre-stripping operations, the mine will halt in about 12 months.
At the mainstay Cadia mine in NSW, production was down from 203,512 ounces in the preceding March quarter to 178,754 ounces. Premature failure of liners in a concentrator resulted in higher than normal downtime.
All-in costs continued to impress at $US394 an ounce.