Newcrest (ASX: NCM) (TSX: NCM) (PNGX: NCM) Interim Chief Executive Officer, Sherry Duhe, said, 'We continued to deliver on our strategy in 2023, with our pipeline of high-quality organic gold and copper growth projects marking a number of important milestones.
At Lihir, the Phase 14A Feasibility Study was released early in the quarter, demonstrating attractive financial returns with upside potential as we look to unlock additional high grade mineralisation outside the current Ore Reserve. We then significantly increased the Exploration Target at East Ridge, highlighting the exciting opportunity this discovery presents for the future of Red Chris, and in April, the Wafi-Golpu Framework MOU was signed, moving us closer to developing this world-class copper-gold deposit.
Our third quarter performance has positioned us well to achieve our Group FY23 production guidance. We expect gold and copper production to increase in the June quarter and remain on track to deliver a strong FY23 result, supported by continued momentum in gold and copper prices.
Following the rejection of Newmont's two non-binding indicative proposals to acquire Newcrest during the quarter, a further non-binding indicative proposal was received in April, valuing Newcrest at over A$29 billion and representing a 46% premium to our share price prior to their initial proposal in February. The revised proposal highlights our outstanding portfolio of long-life gold and copper assets, our high-quality growth and exploration pipeline, and the achievements of our exceptional people. The Newcrest Board has agreed to provide Newmont the opportunity to conduct confirmatory due diligence on an exclusive basis, enabling it to put forward a binding proposal. Through this period, we will remain steadfastly focused on our business and the safety and wellbeing of our people, to continue delivering value for our shareholders,' said Ms Duhe.
Overview
Gold production was in line with the prior period7 with an improved operating performance at Brucejack, Lihir and Fruta del Norte offset by lower gold production at Cadia, Telfer and Red Chris. Higher gold production at Lihir was driven by increased mill throughput following improved rainfall during the quarter, as well as higher gold head grade. Gold production at Brucejack also increased compared to the prior period with operations returning to full capacity following the fatality in October 2022. Gold production at Cadia was mainly impacted by lower mill throughput compared to the prior period.
Newcrest remains on track to deliver its full year Group production guidance for FY232. Gold and copper production is expected to increase in the June 2023 quarter driven by higher mill throughput across all operations with a lower planned maintenance schedule6. Gold head grade is also expected to increase at Lihir, Brucejack and Telfer6. While Brucejack successfully resumed operations following the fatality in October, gold production is now expected to be 300koz for FY23 driven by lower mill throughput and head grade. Further details on FY23 guidance expectations are outlined on page 9 below.
Newcrest's AISC of $1,012/oz3 for the quarter was 7% lower than the prior period, driven by a higher copper realised price, lower production stripping expenditure at Lihir and Telfer and lower sustaining capital expenditure at Red Chris, Cadia and Brucejack. In addition, gold production was higher at Brucejack, Lihir and Fruta del Norte, driving an increase in gold sales volumes for the Group. This was partly offset by the impact of a stronger Australian dollar against the US dollar on operating costs.
Injury rates decreased during the quarter reflecting the strong focus on safety as control improvement programs continued across all sites to address major hazards. Injury rates were reviewed during the quarter which resulted in a restatement of the previously reported frequency rates at Brucejack and the Group.
Cadia achieved its best safety performance on record with no recordable injuries during the quarter, reflecting the benefits of a detailed safety review undertaken in the prior period. The site is focused on further embedding its safety culture to ensure everyone remains committed to identifying and addressing potential hazards and risks.
Gold production of 133koz was 21% lower than the prior period, mainly driven by lower mill throughput following an unscheduled mechanical breakdown of the concentrate filter presses at the Blayney dewatering facility. A planned shutdown to Concentrator 1 and Concentrator 2 was brought forward while maintenance activities were successfully completed at Blayney.
Mill throughput rates are expected to continue ramping up towards 35Mtpa during the June 2023 quarter with no further scheduled maintenance planned6,21. Newcrest continues to work proactively with the New South Wales Department of Planning & Environment to satisfy all conditions for the permitted processing capacity increase to 35Mtpa in a calendar year21.
Gold head grade decreased during the quarter in line with expectations. As highlighted in the December 2022 quarterly report, gold head grade is expected to decrease through FY23 as mining transitions into lower gold grade ore sources, while copper head grade is anticipated to remain consistent with prior periods6. Gold and copper recovery rates improved for the third consecutive quarter reflecting the ongoing benefits of the recovery improvement projects which were commissioned as part of the two-stage plant expansion project.
During the quarter, the PC2-3 project delivered first ore to the mill. This is a significant milestone for Cadia's next panel cave, with activity now focused on the cave establishment phase and final project completion. Activity on the PC1-2 project continued during the quarter with development commencing on the extraction level, ongoing raise boring activities and construction of the primary ventilation system now well progressed.
Cadia's AISC of negative $154/oz largely reflects the benefit of a higher realised copper price and lower sustaining capital expenditure compared to the prior period. This was partly offset by lower gold and copper production driving a decrease in gold and copper sales volumes for the quarter, as well as the impact of a stronger Australian dollar against the US dollar on operating costs.
Lihir delivered outstanding safety performance during the quarter with zero recordable injuries. This is only the second time in ten years that Lihir has achieved zero recordable injuries in a quarter, reflecting the significant focus on safety with the rollout of Newcrest's NewSafe program and improved awareness on preventing hand injuries.
Gold production of 168koz was 9% higher than the prior period mainly due to higher mill throughput, with increased rainfall during the quarter resulting in additional water supply to the plant. Medium term weather forecasts indicate rainfall levels will continue to return to normal in the June 2023 quarter. Lihir is progressing a range of activities to increase water availability, including internal water recycling, water storage solutions and improving water efficiencies within the processing plant. Despite the higher rainfall, mill availability was impacted by the bi-annual scheduled plant shutdown in March 2023, as well as other unscheduled mill downtime events during the quarter.
Gold head grade increased during the quarter reflecting additional higher grade ex-pit ore feed from Phase 15 and Phase 16. This is expected to continue in the June 2023 quarter as mining progresses into the higher grade zones within the Phase 16 orebody6. This was partly offset by lower gold recovery compared to the prior period with a lower sulphur content in the mill feed and capacity constraints in the autoclave.
Total material movement was lower than the prior period following knock on effects from increased rainfall, lower truck availability and impacts from a temporary change to haul routes. Mining volumes are expected to increase in the June 2023 quarter6, in line with the ongoing benefits from the mine improvement program.
Gold production is expected to increase in the June 2023 quarter with increased mining rates, a better quality feed blend, higher gold head grade and a lower planned maintenance schedule6. As previously highlighted, Lihir is expected to deliver around the lower end of its production guidance range for FY23 following water supply restrictions and unplanned mill downtime events in the first half.
Lihir's AISC of $1,343/oz was 13% lower than the prior period mainly due to higher gold production driving an increase in sales volumes, as well as lower production stripping and sustaining capital expenditures.
In January 2023, the Newcrest Board approved the Lihir Phase 14A Feasibility Study, endorsing the project into full implementation. Phase 14A is another step forward in realising the full potential of Lihir with the cutback expected to deliver additional high grade gold production over the next four years. Phase 14A activities continued to progress during the quarter with ground support works at Bench 1 nearing completion and mining underway in Bench 2. The civil fleet is almost completely mobilised to site and Lihir is on track to deliver high grade ore from Phase 14A in FY246.
Newcrest continues to assess a range of options to unlock additional high grade mineralisation outside the current Ore Reserve with the potential to extend the elevated production profile beyond FY31. Work to assess the application of steep wall technologies in the northern and eastern extents of the Kapit orebody, as well as an alternative lower cost and simpler seepage barrier design is underway. Design optimisation work and any associated impact on the long term production profile is on track for completion in CY236.
Forward Looking Statements
This document includes forward looking statements and forward looking information within the meaning of securities laws of applicable jurisdictions. Forward looking statements can generally be identified by the use of words such as 'may', 'will', 'expect', 'intend', 'plan', 'estimate', 'target', 'anticipate', 'believe', 'continue', 'objectives', 'outlook' and 'guidance', or other similar words and may include, without limitation, statements regarding estimated reserves and resources, internal rates of return, expansion, exploration and development activities and the specifications, targets, results, analyses, interpretations, benefits, costs and timing of them; certain plans, strategies, aspirations and objectives of management, anticipated production, sustainability initiatives, dates for projects, reports, studies or construction, expected costs, cash flow or production outputs and anticipated productive lives of projects and mines. The Company continues to distinguish between outlook and guidance. Guidance statements relate to the current financial year. Outlook statements relate to years subsequent to the current financial year.
These forward looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance, and achievements to differ materially from any future results, performance or achievements, or industry results, expressed or implied by these forward looking statements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licences and permits and diminishing quantities or grades of resources or reserves, political and social risks, changes to the regulatory framework within which the Company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation. For further information as to the risks which may impact on the Company's results and performance, please see the risk factors discussed in the Operating and Financial Review included in the Appendix 4E and Financial Report for the year ended 30 June 2022 and the Annual Information Form dated 14 December 2022 which are available to view at www.asx.com.au under the code 'NCM' and on Newcrest's SEDAR profile.
Forward looking statements are based on management's current expectations and reflect Newcrest's good faith assumptions, judgements, estimates and other information available as at the date of this report and/or the date of Newcrest's planning or scenario analysis processes as to the financial, market, regulatory and other relevant environments that will exist and affect Newcrest's business and operations in the future. Newcrest does not give any assurance that the assumptions will prove to be correct. There may be other factors that could cause actual results or events not to be as anticipated, and many events are beyond the reasonable control of Newcrest. Readers are cautioned not to place undue reliance on forward looking statements, particularly in the current economic climate with the significant volatility, uncertainty and disruption caused by global events such as geopolitical tensions, the inflationary environment and rising interest rates and the ongoing COVID19 pandemic. Forward looking statements in this document speak only at the date of issue. Except as required by applicable laws or regulations, Newcrest does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in assumptions on which any such statement is based.
Non-IFRS Financial Information
Newcrest's results are reported under International Financial Reporting Standards (IFRS). This document includes certain non-IFRS financial information within the meaning of ASIC Regulatory Guide 230: 'Disclosing non-IFRS financial information' published by ASIC and 'non-GAAP information' within the meaning of National Instrument 52-112 - Non-GAAP and Other Financial Measures published by the Canadian Securities Administrator.
Such information includes All-In Sustaining Cost (AISC) and All-In Cost (AIC) as per updated World Gold Council Guidance Note on Non-GAAP Metrics released in November 2018. AISC will vary from period to period as a result of various factors including production performance, timing of sales and the level of sustaining capital and the relative contribution of each asset. AISC Margin reflects the average realised gold price less AISC per ounce sold.
These measures are used internally by Management to assess the performance of the business and make decisions on the allocation of resources and are included in this document to provide greater understanding of the underlying financial performance of Newcrest's operations. The non-IFRS information has not been subject to audit or review by Newcrest's external auditor and should be used in addition to IFRS information. Such non-IFRS financial information/non-GAAP financial measures do not have a standardised meaning prescribed by IFRS and may be calculated differently by other companies. Although Newcrest believes these non-IFRS/non-GAAP financial measures provide useful information to investors in measuring the financial performance and condition of its business, investors are cautioned not to place undue reliance on any non-IFRS financial information/non-GAAP financial measures included in this document. When reviewing business performance, this non-IFRS information should be used in addition to, and not as a replacement of, measures prepared in accordance with IFRS, available on Newcrest's website and the ASX and SEDAR platforms.
Ore Reserves, Mineral Reserves and Mineral Resources Reporting Requirements
As an Australian Company with securities listed on the Australian Securities Exchange (ASX), Newcrest is subject to Australian disclosure requirements and standards, including the requirements of the Corporations Act 2001 and the ASX. Investors should note that it is a requirement of the ASX Listing Rules that the reporting of Ore Reserves and Mineral Resources in Australia is in accordance with the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) and that Newcrest's Ore Reserve and Mineral Resource estimates and reporting comply with the JORC Code.
Newcrest is also subject to certain Canadian disclosure requirements and standards, as a result of its secondary listing on the Toronto Stock Exchange (TSX), including the requirements of National Instrument 43-101 - Standards of Disclosure for Mineral Projects (NI 43-101). Investors should note that it is a requirement of Canadian securities law that the reporting of Mineral Reserves and Mineral Resources in Canada and the disclosure of scientific and technical information concerning a mineral project on a property material to Newcrest comply with NI 43-101.
Newcrest's material properties are currently Cadia, Lihir, Red Chris and Wafi-Golpu. Copies of the NI 43-101 Reports for Cadia, Lihir and Wafi-Golpu, which were released on 14 October 2020, and Red Chris, which was released on 30 November 2021, are available at www.newcrest.com and on Newcrest's SEDAR profile.
Technical and Scientific Information
Reliance on Third-Party Information
This document contains information that has been obtained from third parties and has not been independently verified, including estimates and actual outcomes that relate to production and AISC for Fruta del Norte. No representation or warranty is made as to the accuracy, completeness or reliability of the information. This document should not be relied upon as a recommendation or forecast by Newcrest.
Long Term Outlook
Newcrest released an indicative longer-term outlook in October 2021 based on the findings of the Cadia PC1-2 Pre-Feasibility Study dated 19 August 2021, and the Red Chris Block Cave, Havieron Stage 1 and Lihir Phase 14A Pre-Feasibility Studies dated 12 October 2021. The PFS findings are indicative only, subject to an accuracy range of +/-25% and should not be construed as guidance. Newcrest released the Cadia PC1-2 Feasibility Study on 11 November 2022 and the Lihir Phase 14A Feasibility Study on 25 January 2023. Newcrest is currently progressing the other studies through the Feasibility Stage, which will take into account revised inflationary expectations and updated project economics. As a result, it is expected that the indicative longer-term outlook will be updated on completion of the remaining studies.
Contact:
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NEWCREST MINING 
