Newcrest Mining, an Australian-based mining corporation focused on precious metal exploration, development, and sales, recently reported its March quarterly output figures, showing staggering deliveries keeping it on track to meet 2023’s fiscal year goals. As one of the largest gold mining companies in the world, Newcrest Mining constantly focuses on expanding output to meet the growing demand rates of 2023. In the last fiscal quarter, Newcrest Mining produced 510,000 ounces of gold and 31,000 tons of copper.
The company believes that the gold figures fall in line with prior expectations, given the improved operating efficiency at Brucejack, Lihir, and Fruta del Norte, offsetting the lower performance rates from Cadia, Red Chris, and Telfer.
“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 explained in its press release.
The company remains confident that it’s on track to fulfill its full-year production guidance for FY23. Newcrest Mining believes both gold and copper outputs will increase again by June 2023, raising the next quarter’s output levels before closing the fiscal year. With lower-than-planned maintenance schedules and high mill throughputs, the company expects excellent progress entering summer.
“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,” Newcrest stated in the report.
The company’s all-in-sustaining costs equated to $1,012 per ounce during the quarter, showing a 7% drop in production expenses from the previous period. With improved copper realized prices, reduced production stripping costs at Telfer and Lihir, and decreased sustaining capital expenditure at Cadia, Brucejack, and Red Chris, Newcrest was able to reduce all-in sustaining costs to amplify outputs for the third quarter of the fiscal year.
Newcrest is not just one of the largest gold mining corporations in the world but also the most significant producer on the Australian Securities Exchange. The company owns and controls an expansive portfolio of exploration projects and mines throughout Canada, Australia, and Papua New Guinea.
In early February, Newmont Corporation, another one of the world’s largest mining companies, offered to buy out Newcrest Mining for $16.9 billion. Newmont Corporation, headquartered in Greenwood Village, Colorado, would have become an unstoppable mining force if the Australian deal had gone through. It was already the world’s top producer, and this acquisition would have allowed it to double the output of its closest competition.
Days following the proposal, Newcrest’s shares shot up by 14.4%. Unfortunately for Newmont, many analysts saw this price as a lowball offer, and evidently, Newcrest did as well. Newcrest has turned down similar offers in the past, including an $18 billion bid from Barrick Gold Corp. in 2019, Newmont’s closest competition.
“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 $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 well-being of our people, to continue delivering value for our shareholders,” Ms. Duhe of Newcrest Mining explained in the report.
Turning down Newmont’s offer may have given Newcrest the extra motivation necessary to ramp up production. Moving into the final quarter of the fiscal year, the company and most analysts predict more excellent output from Newcrest as well as all the other top players in the gold mining game. As inflation runs rampant across the globe and gold demand levels soar, mining companies must capitalize on the opportunities to increase production to meet growing needs.
With each news story like this, one trend continues emerging: the gold industry is on fire. As always, investors should consult their financial advisors with further questions before making any portfolio moves.
