Newcrest Mining Delivers Higher Production At Lower Cost In June Quarter

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Newcrest Mining Delivers Higher Gold Production At Lower Cost In June Quarter

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  • Total FY22 gold production of 1,956koz compares to revised FY22 guidance of 1,925koz - 2,025koz
  • FY22 copper production of 121kt, was 3 percent lower than market guidance
  • Lower June quarter All-in Sustaining Cost (AISC) was $896/oz, and $1,044/oz for the financial year
  • Lower June quarter AISC supported by weakening AUD against the USD on AUD denominated operating costs
  • Ongoing drilling success continues to advance multiple organic growth options across its portfolio
  • Steadily increasing gold and copper production, lower AISC and existing pipeline of organic growth projects, are positive for long-term outlook.

Newcrest Mining Limited (Newcrest or the Company) is Australia’s largest gold miner and is an explorer and operator of large-scale, long-life, gold mining operations. Newcrest is backed by an extensive pipeline of brownfield and greenfield exploration projects. Current gold reserves are equivalent to more than 24 years of production, at current rates. The Company’s gold mining operations are located in Australia, Canada and Papua New Guinea.

Strong June quarterly report

Higher gold production in the June quarter of 637koz has seen a continuation of rising gold production throughout FY22. This strong June quarter result follows quarterly production volumes of 487koz in the March quarter, 436koz in the December quarter and 396koz in the 3 months to September 2021. Total FY22 gold production of 1,956koz compares to revised FY22 guidance of 1,925koz - 2,025koz. Copper production for the June quarter was 39kt, resulting in FY22 copper production of 121kt, which was 3 percent lower than market guidance.

June quarter All-in Sustaining Cost (AISC) was $896/oz, and $1,044/oz for the financial year. The AISC margin for FY22 was 41 percent, which is equivalent to $732/oz for the financial year. The lower June quarter AISC was driven by a record-breaking annual cost performance at the Cadia mine and the benefit of a weakening AUD against the USD on AUD denominated operating costs. The AUD was trading above 76 cents in April 2022 compared to 69 cents today. Cadia achieved an annual AISC of negative $124/oz when its net cash operating costs are adjusted for finished goods inventory movements, divided by ounces sold.

Exploration Report

Newcrest continues to advance multiple organic growth options across its portfolio. The Brucejack transformation program is progressing well, and drilling continues to confirm the potential for resource growth at the Valley of the Kings deposit and the surrounding area.

The two-stage Cadia Expansion project and the Lihir Front End recovery Project are on track for completion by the end of September 2022. Cadia’s gold production at 187koz in the June quarter was 25 percent higher than the March quarter.

Strong drilling results at Brucejack, Red Chris and Havieron mine sites continue to expand the high-grade footprints and confirm continuity and extensions of higher grade mineraliastion.

FY22 was a highly successful year in terms of drilling success and Newcrest is well placed to progress its extensive drilling programs in the new financial year.

Looking Ahead

Newcrest’s conservatively geared balance sheet and high cash on hand balance supports its targeted annual dividend pay-out ratio of 30 to 60 percent of free cash flow.

The outlook for the Company’s mined commodities of gold and copper is positive at a time when the Company’s growth production profile for these commodities is growing strongly.

Newcrest’s steadily increasing gold and copper production is driving lower Company All-in Sustaining Costs. This fourth consecutive quarter of lower Company costs during the current challenging inflationary environment and the benefit of a weaker AUD and the existing pipeline of organic growth projects is shaping a positive long-term outlook for Newcrest shareholders.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at l.mosmann@kosec.com.au.

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